Capital planning and operational maintenance are often viewed as separate business categories. Usually, little effective connection is made of the realities of maintaining a facility to the strategic view of the capital program.
Some consultants will provide guidance on the premise that capital planning is a specialty that actually precludes maintenance — that it is only a financial modelling exercise.
Likewise, some expensive enterprise software tools are marketed (intentionally or not) on this premise. These tools provide graphic reporting to allow for ‘what if’ scenarios related to capital funding models and timing assets’ end of life. They do not always properly account for the long-term effects of maintenance programs or the lack thereof.
In order to prepare a capital plan, there must at least be a minimum inventory of the property and building assets. At its simplest, a financial capital plan allowance can be developed to cover a specified number of years, and be broken down into simple categories such as substructure, shell, interiors, services and site work. At its most complex, the plan can include these categories broken down to various levels, such as those described in ASTM Uniformat II Classification for Building Elements.
A building condition assessment (BCA) is often performed to both identify asset inventory and establish the current state of assets. What most BCA consultants provide is a financial model that includes a reserve fund study based on the current reserve balance, linked to an adjudged age and a life cycle table of replacement of the assets. While this provides a general long-term overview, it is often lacking in detail.
Details relating to the unique aspects of the building, for instance, would include the costs associated with the removal and replacement of an asset, such as the requirement to demolish and reconstruct a wall to change a piece of equipment, or the cost of the crane to lift it up to the penthouse. These project costs must be funded from the capital reserves, but they are not included in the supply and install costs provided by consultants who are utilizing industry standard costing tools.
Unconnectedly, the maintenance of the assets is often managed by a separate database, like a work order system such as a computerized maintenance management system (CMMS). The opening and closing of the work orders is based either on the scheduled preventive maintenance, or on the demand (and emergency) maintenance. In addition, the capital work projects are likely managed outside of either the CMMS or capital planning databases.
Ideally, these capital work projects would be managed using a module in the CMMS linking to the inventory of assets involved in the project. Both the results of the maintenance and the feedback of the projects would provide valuable information. Reporting on trends in equipment performance across a portfolio, changes in scopes of projects, and changes to assets due to operational maintenance decisions would create a dynamic capital plan.
What should obviously be common between the capital and the maintenance plans are the assets. Yet rarely does strategic capital planning utilize the maintenance system. Some consultants may say that once a BCA is performed, a facility manager may not have to do one again if he or she is accurately feeding the maintenance system with the updates. While this would be ideal, it would require a dynamic capital and maintenance planning system.
It is rare that a company has the resources or the right system in place to achieve this. Therefore, BCA’s are required on a regular basis. However, getting the right information from the BCA will require a consultant that truly understands a business’ expectations. This requires that the facility manager be clear and succinct in the request for proposal specifications.
To effectively manage capital assets, the facility manager needs to be able to identify exactly where repairs and upgrades are required, accurately calculate the estimated costs of those requirements, and then prioritize the requirements according to the organization’s objectives.
Financially, the facility manager will need to provide funding scenarios that demonstrate the impact of different spending levels. In order for this to be accurate, the inputs of the maintenance trends and the uniqueness of the buildings as they affect changing the assets need to be recognized. The best way to achieve this is with a dynamic program that ties the maintenance closely with the capital planning.
Robb Dods is a senior facility management advisor and director of education with AM FM Education Services. His areas of specialty include capital asset strategic planning, facility operations planning, and facility risk evaluation. Dods is a supporter of the IFMA Toronto Chapter in its efforts to promote educational development opportunities in the FM field.