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A Primer on Facility Asset Management

Presented by William Faesenmeier

Presenter

Bill FaesenmeierFacilities Asset Management Product Manager

24 years experience in Consulting Engineering industry Areas of Specialization

> Facilities Engineering, Facilities Asset Management> Facility condition assessments, asbestos and lead-based paint consulting, ADA surveys,

environmental site assessments, industrial hygiene, indoor air quality, construction lender representation services, code compliance reviews

> Information management systems, software design

10 years experience in Architecture, Real Estate Development and Construction Management

Bachelors degree in Environmental Design with a focus on Architecture, Miami University

Todays Agenda

Data Sources Definitions Supporting Software Focus on Facility and Space Management Tools Value of a CPMS Q&A

DEFINING & EXPLAINING

TERMS & DEFINITIONS

What is Facility Asset Management?

Definition:

Facility Asset Management

facility - something designed, built, installed, etc., to serve a specific function affording a convenience or service: transportation facilities; educational facilities; a new research facility

asset - a useful and desirable thing or quality. An item of ownership convertible into cash; total resources of a person or business, as cash, notes and accounts receivable, securities, inventories, goodwill, fixtures, machinery, or real estate (opposed to liabilities)

management -the act or manner of managing

manage - to take charge or care of

Definitions from Dictionary.com

Definition:

Facility Asset Management

manage - to take charge or care offacility - something designed, built, installed, etc., to serve a specific function affording a convenience or service: transportation facilities; educational facilities; a new research facility

asset - a useful and desirable thing or quality. An item of ownership convertible into cash; total resources of a person or business, as cash, notes and accounts receivable, securities, inventories, goodwill, fixtures, machinery, or real estate (opposed to liabilities)

Asset management. refers to any system that monitors and maintains things of value to an entity or group

Too Broad

Wikipedia

Wikipedia Definition

Asset management is a systematic process of maintaining, upgrading, and operating physical assets cost-effectively.

It combines engineering principles with sound business practices and economic theory, and it provides tools to facilitate a more organized, logical approach to decision-making.

Thus, asset management provides a framework for handling both short- and long-range planning.

Asset Management: Advancing the State of the Art Into the 21st Century Through Public-Private Dialogue, FHWA and AASHTO, 1996

FHWA/AASHTO Definition

Asset management is..a methodology needed by those who are responsible for efficiently allocating generally insufficient funds amongst valid and competing needs.

The American Public Works Association Asset Management Task Force

APWA Definition

Enterprise asset management is the business processes and enabling information systems that support management of an organization's assets, both physical assets, called "tangible", and non-physical, "intangible" assets.

Not bad..but still too broad..

and we dont deal with intangible assets.

Wikipedia

EAM Definition

Infrastructure asset management is the combination of management, financial, economic, engineering, and other practices applied to physical assets with the objective of providing the required level of service in the most cost-effective manner.

It includes the management of the whole life cycle (design, construction, commissioning, operating, maintaining, repairing, modifying, replacing and decommissioning/disposal) of physical and infrastructure assets.[1]

Operating and sustainment of assets in a constrained budget environment require some sort of prioritization scheme.[2]

[1] Local Government and Municipal Knowledge Base

[2] Wikipedia

IAM Definition

http://en.wikipedia.org/wiki/Asset_management%23cite_note-1http://en.wikipedia.org/wiki/Asset_management%23cite_note-1

Public asset management (also referred to as corporate asset management) expands the definition of enterprise asset management (EAM) by incorporating the management of all things of value to a municipal jurisdiction and its citizens' expectations

Again. primarily speaks to public sector, utilities, property

and transport systems

PAM Definition

Customer focused Mission driven System oriented Long-term in outlook Accessible and user friendly Flexible

U.S. Department of Transportation Federal Highway Administration Office of Asset Management, 1999

Desirable Features of an Asset Management Program

Strategic goals Inventory of assets (physical and

human resources)

Valuation of assets Quantitative condition and

performance measures

Measures of how well strategic goals are being met

Usage information Performance-prediction capabilities

Relational databases to integrate individual management systems

Consideration of qualitative issues Links to the budget process Engineering and economic

analysis tools

Useful outputs, effectively presented Continuous feedback procedures

U.S. Department of Transportation Federal Highway Administration Officeof Asset Management, 1999

What Should it Include

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SupportingSoftware

Facility Asset Management Software

The search for facility asset management software returned over 4.8 million results.Not as many results as facility asset management, but quite large.

This is where it gets confusing..and perhaps on purpose.

Facility Condition Assessment Software

Over 5.1 million results..and the first entry is not specifically a Facility Condition Assessment product.

Facilities Condition Assessment Software

Over 5.8 million resultsSo Many Choices. So Little Time

Asset Lifecycle Model for Total Cost of Ownership

A Framework for Facilities Lifecycle Management, APPA, FFC, Holder, IFMA, NASFA

Building Information

Management Framework

(BIMF)

Integrated WorkManagement System

IWMS

Real Estate & Lease

Management

Project Management

Facilities & Space

Management

Maintenance Management

Sustainability & Energy

Management

REPM

ELMS

IPD CAFM

CAD

BIM

CMMS

CPMS

JOC

EHS

BMP

EPP

EAM

EMS

Real Estate and Lease Management(examples AppFolio, Buildium, Property Matrix, ProLease)

Lease Analysis, Administration and Accounting Site Selection & Site Management Strategic Planning RFP Analysis Portfolio Management Transaction Management Tax Management Broker Transaction Management

5 Components of IWMS

(Capital) Project Management (examples Microsoft Project, Primavera, Prolog, Eclipse)

Capital Planning Funding Design (new facilities, expansions, remodeling) Bidding Procurement Cost and Resource Management Project Documentation and Drawing Management Scheduling Critical Path Analysis


Facilities and Space Management

The International Facility Management Association (IFMA) defines facility management as the practice of coordinating the physical workplace with the people and work of the organization.

CAFM CAD BIM CPMS


Computerized Maintenance Management System (examples: MAXIMO, MicroMain, Datastream 7i)

Asset Management Work Requests and Work Order Administration Preventative Maintenance Unscheduled Maintenance Warranty Compliance and Administration Maintenance Scheduling Inventory Management and Purchasing Vendor Management Facility Condition Monitoring


Sustainability and Energy Management Systems(examples: EnergyCAP, INTELEX, e3EIM, Sustainability Cloud)

Energy Consumption Water Consumption Waste Production GHG Emissions Sustainability Performance Metrics Energy Benchmarking BMS Integration Carbon Emissions Tracking Energy Efficiency Project Analysis


Environmental Sustainability and Compliance

Energy Efficiency Waste Management Nonrenewable Minerals Consumption Renewable Groundwater Supplies Pollution Absorption Recycling Carbon Credit Calculation Certification Employee At-Home Working Facilitation

The 6th Component of IWMS

FOCUSANDSpace Management

TOOLS

Computer Aided Facilities Management (CAFM)(examples: Archibus, Aperture Technologies, FM Systems)

Asset Management Space Management Room Booking Move Management Strategic Planning Telecommunications Cable Management Physical Security Administration CAD and BIM Integration

Facility and Space Management Tools

CAD (Computer Aided Design)(examples: AutoCAD, Microstation, InfraWorks 360, TurboCAD)

Building Design Infrastructure Design Plant Design Product Design 2D and 3D Modeling Simulation Rendering


BIM (Building Information Modeling)(examples: Autodesk Revit, ArchiCAD, Archibus EIM)

Digital representation of physical and functional characteristics of a facility

Building design extended beyond 3D Integrates Time as the 4th dimension Integrates Costs as the 5th dimension Combination of objects that include their geometry,

relations and attributes


CPMS (Capital Planning and Management Systems)(examples: xpparagon, BUILDER)

Systematic management process to plan and budget for known cyclic repair and replacement requirements that extend the life and retain the usable condition of facilities and systems.

Often called Capital Renewal. Planned investment program that ensures that facilities will function at levels

commensurate with the priorities and missions of an organization.

Included are major building and infrastructure systems and components that have a maintenance cycle in excess of one year.


Major Functions of a CPMS

of aCPMS

Facility assets are reported to equal 25 to 40 percent of the value of any private sector business or public sector institution. Typically tracked as an asset on the balance sheet

but

Until recently, less than 10% of these businesses and institutions managed these assets as they would other business assets, such as labor, equipment, or production processes. Typically tracked as a cost item on the income statement

Capital and expense budgets often managed by different groups and funding decisions made independent of each other

Harvard University Study

The Facilities Dichotomy

The next low hanging fruit that provides business an opportunity to reduce costs, and thus increase shareholder value, is Facility Asset Management.

Over the past few years, there is an increased awareness of the financial value of establishing and maintaining fact-based, standardized facilities asset management programs.

With this awareness, we have seen an increased focus from providers of facility condition assessment services, facilities consulting, and computerized maintenance management and asset management software programs.

The Opportunities

If you Manage facilities like you manage your business, and Convert facilities into financial terms

You will.. Improve the condition of the assets, and Reduce overall cost of facility ownership

The Opportunities

Recommended Strategies to improve asset management:

Establish uniform condition assessment criteria

Standardize criteria for inventory of property assets

Use of computerized inventory and cost databases

Standardize costing methods using a common metric

Adoption of a comprehensive, valid, engineering based assessment systemthat incorporates life-cycle planning into facilities maintenance

Government Accounting Office, Sept. 1999

How to Improve FAM?

What do you own? What is it worth? What is the deferred maintenance? What is its condition? What is the remaining service life? What do you fix first?

Why Industry Needs Asset Management Tools, Dr. D.J. Vanier, National Research Council Canada, 1999

6 Whats of Asset Management

....annual budgets for maintenance and repair should be

set at 2% to 4% of the current replacement value (CRV) of

the constructed facilities

Federal Facilities Council, 1996

Facility Metrics

Example M&R Cost Analysis

Facility Type Area (SF) Cost/SF CRV Avg Life (yrs)Office Building, 2-4 stories 1,000,000 146.00$ 146,000,000$ 58Retail Store 1,000,000 126.19$ 126,190,000$ 50Factory, 1 story 1,000,000 114.55$ 114,550,000$ 58

3,000,000 386,740,000$ 55

Rate CostsAnnual M&R Spending 3.0% 11,602,200$ Cost/SF 3.87$ Average Lifespan (yrs) 55Lifespan M&R Costs 638,121,000$ Total Costs over Lifespan 1,024,861,000$

Sheet1

Facility TypeArea (SF)Cost/SF CRVAvg Life (yrs)

Office Building, 2-4 stories1,000,000$ 146.00$ 146,000,00058

Retail Store1,000,000$ 126.19$ 126,190,00050

Factory, 1 story1,000,000$ 114.55$ 114,550,00058

3,000,000$ 386,740,00055

RateCosts

Annual M&R Spending3.0%$ 11,602,200

Cost/SF$ 3.87

Average Lifespan (yrs)55

Lifespan M&R Costs$ 638,121,000

Total Costs over Lifespan$ 1,024,861,000

5 Year FCA CostsCostCost/YearCost/SF/Year% of Annual M&R

Software (initial cost + 5 years maint)$ 67,490$ 13,498$ 0.0040.12%

Assessments (2 times over 5 years)$ 750,000$ 150,000$ 0.0501.29%

$ 817,490$ 163,498$ 0.0541.41%



Assessments (3 times over 10 years)$ 1,125,000$ 112,500$ 0.0380.97%

$ 1,234,985$ 123,499$ 0.0411.06%




$ 4,369,940$ 79,453$ 0.0260.68%

Building TypeMedian (1)66% Survival (2)33% Survival (2)

Assembly554075

Education624586

Food Sales554174

Food Service503571

Health Care554273

Large Office654692

Mercantile & Service503669

Small Office584182

Warehouse584182

Lodging533874

Other604481

Average56.540.878.1

Buildings Energy Data Book

Department of Energy

2011

Note(s):1) PNNL estimates the median lifetime of commercial buildings is 70-75 years. 2) Number of years after which the building survives. For example, a third of the large office buildings constructed today will survive 92 years later.

FAM Costs

1st Year FCA Costs Cost Cost/Year Cost/SF/Year % of Annual M&RSoftware (initial cost + 1 years maint) 37,500$ 37,500$ 0.013$ 0.32%Assessments (Initial Assessment @10/SF) 300,000$ 300,000$ 0.100$ 2.59%

337,500$ 337,500$ 0.113$ 2.91%

5 Year FCA Costs Cost Cost/Year Cost/SF/Year % of Annual M&RSoftware (initial cost + 5 years maint) 67,500$ 13,500$ 0.005$ 0.12%Assessments (2 times over 5 years) 600,000$ 120,000$ 0.040$ 1.03%

667,500$ 133,500$ 0.045$ 1.15%

10 Year FCA Costs Cost Cost/Year Cost/SF/Year % of Annual M&RSoftware (initial cost + 10 years maint) 105,000$ 10,500$ 0.004$ 0.09%Assessments (3 times over 10 years) 900,000$ 90,000$ 0.030$ 0.78%

1,005,000$ 100,500$ 0.034$ 0.87%

Sheet1

Facility TypeArea (SF)Cost/SF CRVAvg Life (yrs)

2-4 story Office Bldg1,000,000$ 146.00$ 146,000,00058

Retail Store1,000,000$ 126.19$ 126,190,00050

Factory, 1 story1,000,000$ 114.55$ 114,550,00058

3,000,000$ 386,740,00055

RateCosts

Annual M&R Spending3.0%$ 11,602,200

Cost/SF$ 3.87

Average Lifespan (yrs)55

Lifespan M&R Costs$ 638,121,000

Total Costs over Lifespan$ 1,024,861,000

1st Year FCA CostsCostCost/YearCost/SF/Year% of Annual M&R


Assessments (Initial Assessment @10/SF)$ 300,000$ 300,000$ 0.1002.59%

$ 337,500$ 337,500$ 0.1132.91%




$ 667,500$ 133,500$ 0.0451.15%




$ 1,005,000$ 100,500$ 0.0340.87%




$ 4,042,500$ 73,500$ 0.0250.63%

ROI187.0%

Building TypeMedian (1)66% Survival (2)33% Survival (2)

Assembly554075

Education624586

Food Sales554174

Food Service503571

Health Care554273

Large Office654692

Mercantile & Service503669

Small Office584182

Warehouse584182

Lodging533874

Other604481

Average56.540.878.1

Buildings Energy Data Book

Department of Energy

2011

Note(s):1) PNNL estimates the median lifetime of commercial buildings is 70-75 years. 2) Number of years after which the building survives. For example, a third of the large office buildings constructed today will survive 92 years later.

If you could extend the life of your portfolio only one year over a ten year period.

You would save $11.6 mil in M&R costs = Benefit Cost total $1.0 mil over 10 years for FAM program = Cost

Return on Investment (10 years) = 1,054%

Return on Investment (55 Year Life) = 187%

Return on Investment

With the knowledge gained from a FAM Program,

On a 3 MSF portfolio, do you think you could maintain these facilities at the same level of service, spending $3.83/SF vs $3.87/SF on M&R over the next ten years?

Yes?

Then you implemented your FAM Program at no cost!

FAM at No Cost

Questions? Comments?

Thank you for joining this presentation,

A Primer on Facility Asset ManagementBy Bill Faesenmeier

[email protected]

Contact XP SolutionsAmericas: +1 888 554 5022 [email protected] Pacific: +61 7 3310 2302 [email protected]: +44 0 1635 582555 [email protected]

www.xpsolutions.com

A Primer on Facility Asset ManagementPresenterTodays AgendaSlide Number 4What is Facility Asset Management?What is Facility Asset Management?What is Facility Asset Management?Definition:Definition:Wikipedia DefinitionFHWA/AASHTO DefinitionAPWA DefinitionEAM DefinitionIAM DefinitionPAM DefinitionDesirable Features of an Asset Management Program What Should it IncludeSlide Number 18Facility Asset Management SoftwareFacility Condition Assessment SoftwareFacilities Condition Assessment SoftwareAsset Lifecycle Model for Total Cost of OwnershipBuilding Information Management Framework (BIMF)Integrated WorkManagement System5 Components of IWMS5 Components of IWMS5 Components of IWMS5 Components of IWMS5 Components of IWMSThe 6th Component of IWMSSlide Number 31Facility and Space Management ToolsFacility and Space Management ToolsFacility and Space Management ToolsFacility and Space Management ToolsMajor Functions of a CPMSof aCPMSThe Facilities DichotomyThe OpportunitiesThe OpportunitiesHow to Improve FAM?6 Whats of Asset ManagementFacility MetricsExample M&R Cost AnalysisFAM CostsReturn on InvestmentFAM at No CostQuestions? Comments?

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