That really depends on who is doing the visioning, and just as important, who is doing the decision making.
The fiscal and political market landscapes across the US and international communities continue to drive chief decision makers (CDMs), particularly those leading organizations with large and/or geographically separated operating units, to evaluate how best to reduce operating cost by leveraging their facilities more efficiently and effectively, while minimizing the risk to business continuity.
So, I think it is safe to say the employment of asset management business practices as they pertain to facilities, namely “a systematic process for maintaining, upgrading, and operating physical assets cost effectively” will continue to be of interest to facility professionals if their leadership and the customers they support recognize and respect the value received by doing so.
The Federal Facilities Council (FFC) 2007 report, “Core Competencies for Federal Facilities Asset Management Through 2020: Transformation Strategies”, stated momentous events that occur over a decade ago brought home the essential role of facilities and infrastructure in supporting the daily operations of businesses and governments and the quality of life for American.
The US federal government, with a total portfolio of more than 500,000 facilities at the beginning of this century, still has significant role to play in reducing their environmental impacts in the local communities, while meeting a growing expectation that building efficiency, reliability, cost efficiency, and sustainability will become even more important as we progress further into the 21st century.
Yet up until the 1990s, the US government, like most large organizations that owned a large portfolio of facilities, managed them through an in-house workforce which typically focused on the tactical issues that arose in the day-to-day operation of individual buildings.
As facilities became more complex, operating cost continued to climb, and available resource to address them began to dwindle over the past decade, new functions were assigned to the supporting facility management (FM) organization—strategic planning, construction coordination, utility management, space planning, and project management. According to the FFC’s report, these are the essential areas of expertise and the skills base required to discharge these responsibilities broadened to include financial management and business-related skills.
In 2011, the International Facility Management Association (IFMA) released its research report, “Facility Management Forecast – Exploring the Current Trends and Future Outlook for Facility Management,” and affirmed the FFC’s determination the FM profession continues to mature and evolve.
IFMA’s report also shared FMs today are expected to understand the following driving trends influencing their company’s core business;
Sustainability: This topic continues to grow in importance and prominence worldwide, organizations have begun to incorporate it into business goals and culture, and has moved from an emphasis primarily for new construction to influencing existing building operations.
Complex Building Technology: Development in this area increasingly offers opportunities since FM can leverage them to better manage facilities, but it also needs to ensure adequate training is in place to educate practitioners on new systems.
Aging Building Stock: As building systems reach and exceed their expected operating lives, challenges compounded by the global recession, significant issues of “repair or replace” must be addressed.
FM Data Management: Increasing quantity and complexity of data available to FM through new reporting protocols poses challenges and opportunities for the profession. More facility departments have added the ability to convert raw data into usable and meaningful information that fosters informed decision making.
Finding Tomorrow’s Top Talent: The effort to recruit top talent into FM is gaining greater importance, and the profession will need to increase its branding and outreach.
Elevate FM: There’s a growing desire to improve the recognition and perceived value of the profession within the corporate hierarchy; many achieved successes in this arena through careful alignment with their organization’s mission and by emphasizing facility professionals’ role as managers of significant assets and enablers of the organization’s mission, vision, and values.
Evolving Skill Sets and Business Acumens: Organizations are increasingly expanding their FM expectations to include both technical and business acumen, while that latter will require professionals to think and act strategically and to communicate their positions in the language of the C-suite.
Enhancing Productivity: There’s a growing recognition that FM contributes to the health and well-being of building occupants, thereby benefiting efficiency, productivity, and profitability — key pillars of an organization’s bottom line.
A facility organization’s ability to recognize the total cost of operating their facilities, their impact on business operations, workforce health and safety, and the environment, in combination with technological, geopolitical, and socioeconomic trends, will be able to provide value to the end users, while seeking to achieve greater operational efficiency and supporting organizational effectiveness.
Best practices employed by public and private sector organizations demonstrate an effective and sustainable facility asset management program (FAMP), supported by adequate tools, can maximize the functional life, operational efficiency and performance of facilities assets and their supporting infrastructure. An enterprise-wide, portfolio-based life cycle approach towards maximizing the value and use of these assets help an FM organization shift their focus from reactive, short term responses, to proactive long-term solutions. In general, FAMP offers five core components:
1. Asset Inventory and Condition Assessment
After establishing organizational priorities, asset demands and available financial resources, the FM should inventory all facilities and supporting infrastructure comprising their portfolio. The inventory should include sub components, such as building foundation and structural elements; plumbing, mechanical, irrigation, and electrical systems; building envelope and roofing systems and hazardous materials.
Establishing an accuracy inventory of facility assets provide a foundation for the remaining steps in this competency area.
Once the inventory is documented, the FM team can determine the facility and equipment condition through a life cycle condition assessment, which may be based on the industry-wide use the Facility Condition Index (FCI), a factor of deferred maintenance and current replacement value, as well as the year of last replacement for major facility components and equipment.
These methods, combined with the expert opinion of the facility or equipment maintenance personnel, can produce a reliable, cost-effective method used to establish a baseline condition of the portfolio. This data can be used to also find data to track the remaining useful life, primary failure modes and failure triggers.
To determine optimal asset condition level by asset, FM can make a link between asset condition and their organization’s mission (or business) objectives. The idea behind this linkage is that asset condition is only a means to enabling accomplishment of the organization’s strategic and operational goals.
Therefore, FM should work with organizational leadership to determine the minimum asset condition threshold to ensure that asset performance standards are met so that they can support business metrics, such as on-time service, customer satisfaction and safety.
2. Portfolio Management Decision Making
By combining asset condition and organizational mission, organization leadership, with the assistance of FM, can identify strategic asset portfolio opportunities using an Asset Priority Index (API).
API is a quantitative metric, used by NASA, the National Park Service, and other federal agencies, to help their respective leadership assess the priority, or level of importance, of assets relative to one another. It is a critical tool that FM uses to support portfolio-level decision making.
Ultimately, the ability to prioritize assets based on asset condition and mission support enables leadership to align funding and to allocate resources for the most valued assets in their organizations.
In addition, leadership is empowered by this understanding of the relative importance of assets to make critical budgetary and programmatic decisions.
API is recognized by the Federal Real Property Council as a valid approach to comply with its “Mission Dependency” data requirements. Furthermore, API has been recognized as a best practice and adopted by ASTM as a Standard (ASTM E-2495).
By combining API and FCI, organizational leadership can identify key and surplus assets:
High API–high FCI area (top right quadrant) are key assets that should receive increased management attention and/or additional investment
Low API–low FCI area (bottom left quadrant) should receive less O&M budget and should be assessed for potential transfer to where API can be increased
Assets in low API–high FCI area (bottom right quadrant) should be divested.
Once high-priority investments are identified, FM can work with organizational leadership to develop business cases to systematically consider asset upgrade financial costs, qualitative and quantitative benefits, and risks by project alternatives.
Each alternative is evaluated independently and then compared side by side to facilitate management decision making. Typical outputs include Net Present Value (NPV), Return on Investment (ROI), Internal Rate of Return (IRR) and Payback Period.
Qualitative factors are displayed graphically to show the level of expected benefits and possible risks.After the business case has been made, numerous capital investments profiles can be developed to optimize asset condition/performance.
By combining deferred maintenance, asset design life and year of last replacement, leadership can use different capital funding profiles to determine the resulting impact on asset condition and, therefore, asset performance.
3. Data Analysis & Capital Investment Planning
The adaptive integration of IT-enabled analytical capabilities will afford FM an opportunity to get a collective view of the asset inventory and attribute data, as well as its asset measured performance within the context of organizational goals, from individual facilities to the entire enterprise’s portfolio.
This integrative asset planning and management capability provides visibility to the information that will help FM to better understand their asset’s current performance capability, estimate short- and long-term life cycle costs, determine user-introduced funding scenario impacts, and create multi-year capital investment plans and budgets based on requirements, funding expectations, or both.
The resulting enterprise-wide FAMP data analysis and decision-making capability will empower facility professionals to confidently perform the gap analysis used to advocate for investment program funding required for making changes to the organization’s facility asset portfolio, based on near and long-term mission (or business) priorities.
Their recommendations data-driven, informed determinations should provide the organizational leadership with confident program investment recommendations that will maximize facilities asset performance and value, as critical enablers of organizational business operations.
4. Facility Commissioning/Ownership Transition
Recognizing the importance of the commissioning process to the effective handover of newly-acquired facilities, a multidisciplinary team of commissioning authorities should be used that can provide the expertise required to commission the specialized building systems.
The primary goal of a commissioning team is to facilitate the design, installation, and testing of the building’s systems in accordance with the design intent and operational levels of service needs for the organization. Systems that impact water, energy, life safety, and indoor environmental quality are all focal points of this commissioning process.
We have found commissioning efforts to be most effective when incorporated throughout the planning stages, with designers and facility operators included in the process.
5. Asset Maintenance
For existing assets and after investments are made and to keep assets running at optimum levels, an appropriate maintenance regime will ensure the FAMP value is maintained. For the most critical assets, FM should go beyond planned or even predictive maintenance programs and strive for mature maintenance processes, such as reliability centered maintenance (RCM).
RCM yields the highest level of equipment reliability for the least amount of maintenance expense. RCM can be the most cost-efficient maintenance program—it eliminates unnecessary equipment maintenance or system overhauls. However, RCM may have significant startup costs associated with staff training and equipment needs.
The integration of the FAMP competencies better enable the efficient, effectiveness, and economic delivery of facility & infrastructure mission capabilities.
They also empower FM leadership with the ability to answer core questions that address how best to manage facilities to achieve greater efficiency and effectiveness: What inventory of facilities and equipment does the organization control (“as-is” portfolio)? What is the condition of each facility and its related equipment? What level of funding is required to properly sustain the portfolio the facilities and equipment portfolio over time? How do I determine when it’s best to divest instead of continuing to invest in a facility? Which facilities and equipment projects are the highest priorities, and where should the organization focus resources? How should the organization monitor the performance of its assets over time and had better integrate the budgeting process for these assets with their performance?
Why consider creating a High-Performance Facility Management Organization? I think the answer is quite simple. It is impractical to suggest FM could provide the high-performance facilities so many of today’s business leaders seek, without the ability of organizing and delivering the skills, experience, and knowledge of those who have the capability of those who can do so.
In its report to Congress, the High-Performance Building Council (part of the National Institute of Building Sciences) stated, “High-performance buildings, which address human, environmental, economic, and total societal impact, are the result of the application of the highest-level design, construction, operation and maintenance principles — a paradigm changes for the built environment.”
In an era where continuing budget cuts, modernization, and technological advances, as well as and environmental sustainability continue to directly influence a shift in how we manage facilities, a “high performance” capabilities edge is needed by FMers to further validate how the services our teams provide are vital to organizational business continuity and longevity.
The Center for Creative Leadership published a 1999 report entitled, “High-Performance Work Organization: Definitions, Practices, and An Annotated Bibliography,” that stated there was no general accepted definition for high-performance work organizations, or HIPOs. The Center’s report did offer 5 components or dimensions of HIPO, as derived from the synthesized summary from leading scholars and researchers in this field of study: (1) self-managing work teams; (2) employee involvement, participation, empowerment, (3) total quality management; (4) integrated production technologies; and (5) the learning organization. A 2013-released eHow money article shared a definition that’s very applicable in the context of the current trends and outlook for the FM profession.
According to the contributing author, “A high performance organization is a company that is considered more successful than its competitors in areas such as profitability, customer service and strategy.”
So, armed with a standardized systematic FAMP approach, a high-performance FM organization would be uniquely suited to address the technological, environmental, geopolitical, and socio-economic trends affecting public and private sector facilities, as captured in current FM as well as Real Estate reports published in the US and Europe.
An FM organization’s ability to examine their organizational leadership effectiveness, strategic and operational planning capability, appropriate levels of customer focus, performance-based data and knowledge management, and results-driven workforce development, can help determine people, place, process and technological improvements needed to provide enhanced facility service, improved efficiency and reduced O&M operating costs, in accordance with business strategic goals, and the desires of leaders who established them.
The Prussian Philosopher Immanuel Kant once said, “The best way to predict the future is to invent it.” The most successful facility professionals will be those who proactively meet the today’s challenges and turn them into tomorrow’s opportunities.
FM organizations that can systematically enable the efficient, effective, and economic functionality of their facility portfolio, will be able to also reinvent themselves from any previous lingering perceptions from their leaders and customer of being just “business support” to a new normal reality of “business critical” enabler of mission operations.
Thomas “Tom” L. Mitchell, Jr. serves as Senior Vice President and Chief Operating Officer for FM3IS Associates, LLC – an advisory and assistance support facility management consulting firm specialized in providing solutions that advance the performance of an organization’s three most valuable resources – their workforce, workplace, and work processes. He is a fellow of the International Facility Management Association (IFMA) and served as chairman of the IFMA 2009-2010 Board of Directors. He presently serves as chairman of the Florida A&M University Facility Management Degree Program Advisory Council, a director on the US National Institute of Building Science’s Board of Directors, and as a member of the US State Department Bureau of Overseas Building Operation Industry Advisory Group.