Dealing With a ”K-Shaped” Recovery in Facility Asset Management

As we begin to come out of COVID-19 we are starting to see evidence that different clients are preparing for very different phases of their Asset Management Programs.

In some cases, clients are expecting a windfall from various government stimulus plans.

In other cases, clients are looking to retrench and are preparing for a period of reduced funding. This two-tiered recovery has been called K-Shaped since different organizations and sectors are preparing for very different situations.

Even though the situation will be very different depending on which side of the “K” that your organization is facing, the one thing that remains true is that you and your organization need a data-driven, prioritized, multi-year capital plan.

The Top Half of the “K” – Up and to the Right – Generational Windfall

For the lucky organizations that have received or plan to be on the receiving end of increased funding coming out of COVID-19, it might seem as though having a solid plan is not as necessary since you have, or will have, more money than you can spend in some cases.

However, this logic does not hold. It is easy to spend money, but it is not always easy to spend money wisely. Your team’s priority should be to spend the available money in the wisest way that will be most beneficial to your operations. This can include exploring upgrades and new technologies that will lower operational costs, improve functional performance and/or address grandfathered and other code issues. This is where a Multivariable Prioritization (MVP) process can assist in integrating organizational objectives and mission-related considerations into our plans.

We have observed many different sectors receive funding increases over the years only to see market conditions change dramatically due to misalignment with supply and demand. For instance, following the School Renewal Initiative, Ontario District School Boards (Boards) received a significant increase in capital renewal funding that continues to this day.

Disruption of the Supply/Demand Curve

In the early days of the funding, the Boards and the markets in which they operate were unprepared for the increased funding. For many major building components (e.g. roof, HVAC, pavement, etc.) the Boards were competing for limited supply in their markets and prices increased significantly.

We heard anecdotes of roofing contractors putting forth inflated bids they had no intention of winning and being picked. Ultimately, what this meant was that the amount of Deferred Capital Renewal and Maintenance (DCRM) that was being addressed was far less than the money required to pay for it.

This was especially true for Tier 2 markets, where they were used to drawing contractors for larger markets. The need in the core market was so high that some Boards could not even get contractors to bid on work in their area as there was too much demand “close to home” for the contractors.

This not only impacted the Boards, but everyone else in the market (Colleges, Universities, Hospitals, Municipalities, Private Owners and Managers) had to deal with limited availability to contractors and materials and increased costs.

Internal Capacity Challenges

In addition to the market challenges, many Boards simply did not have the resources to effectively manage the new volume of projects. Due to funding quirks, the additional renewal money could not be used to hire new staff.

Other Boards went to outside consultants to support them in executing their additional work. However, this generally resulted in increased costs as well, when compared to using internal resources.

What Happened?

The result was that many Boards have ended up deferring available renewal funding for in some cases multiple years as there were simply not enough resources to do the work.

Having available funding sitting there and ongoing important DCRM needs is not a situation that any stakeholder involved in the sector wanted.

Over time the market adjusted, and Boards and other market participants began to get more strategic in how they built their multi-year capital plans, considering their own internal capacity issues as well as market limitations.

Stay tuned for our next blog post in this series.

Roth IAMS Awarded Sourcewell Contract

Canadian-based Facility and Infrastructure Asset Management company, Roth IAMS is pleased to announce that they were the highest ranked proponent awarded a cooperative purchasing contract for Facility Assessment and Planning services with Sourcewell.

Sourcewell is a self-sustaining government agency offering a cooperative purchasing program with more than 400 competitively solicited contracts to government, education, and nonprofit entities throughout North America. By utilizing Sourcewell contracts, participating agencies save time and money by capturing the buying power of more than 50,000 organizations.

The award by Sourcewell followed a rigorous Request for Proposal process resulting in contracts that meet or exceed local procurement requirements.
 


 

“We are very excited to partner with Sourcewell as we expand across Canada and into the U.S. and continue to strive to achieve our vision of solving the world’s deferred capital renewal and maintenance backlog crisis,” said Bill Roth, President, Roth IAMS.

“From Preventative Maintenance Planning to Facility Condition Assessments and beyond, Roth IAMS takes a data-driven approach to ensure we are providing our clients with the right tools and information to make informed decisions when it comes to renewing the built environment,” added Roth.

The Roth IAMS LLC launch into the U.S. market enables clients from coast-to-coast across North America to leverage the Sourcewell partnership to support and enhance their on-going Asset Management programs.

Learn more about Sourcewell at sourcewell-mn.gov, and its contract with Roth IAMS at rothiams.com/sourcewell.

A Tribute to Tim Marshall

On May 4, the Roth IAMS family sadly lost one of its most important members. Tim Marshall passed away suddenly while recovering from major surgery as part of his battle with cancer. Tim was doing well post-surgery. He was eating well, participating in a fitness routine and was in his normal good spirits. In fact, he had told me he hoped to be back to work in four to six weeks the last time I spoke to him.

I don’t know exactly how to sum up 17 years of friendship in words, but I am going to try.

I first met Tim in 2003 when we were both working on the Ontario School’s Province-Wide Condition Assessment Program. I can still remember the call with Roy Shore, then President of PPTI, to tell me about their new Project Manager. Roy said to me “I think you will really get along with him.” As usual, Roy was right.

Ever since then, we have been continuous colleagues in various forms and with various companies. I hired Tim twice during the last 10 years and in the intervening times, his firm and mine were always business partners, mainly due to Tim’s presence at the other firms.

We bonded over our love of our work and the love of our children. The two topics always kept us with lots of things to talk about as we spent many hours in cars and on planes heading to client meetings, sales presentations, and company meetings. Although there is isn’t a lot of positivity that has come out of the COVID-19 situation that we find ourselves in, one of the things I am most grateful for is that Tim’s daughter Jennifer was home from the Bahamas, where she lives normally.

This meant that Tim had Jennifer and her husband by his side through the diagnosis, the surgery, the recovery and right up to his passing. He told me how wonderful it was the last time we spoke.

In 2014, just before I started Roth IAMS, while my family and I were on vacation, mine and Tim’s mutual friend and colleague Roy passed away unexpectedly. Tim was the one who called to tell me. We shared our grief and attempted to cheer each other up by laughing and remembering the good times the three of us had had. Tim and I spoke of Roy often over the years, most recently just before Tim’s diagnosis. Our friendship and shared memories of Roy were another bond that Tim and I had.

Tim became a trusted sounding board for me to bounce ideas off of. I always knew I would get a straight answer from Tim. I knew if he told me he thought something was a good idea, it was. I also knew if he told me I was full of sh** (his words not mine!) that I should go back to the drawing board for a second look.

Over the past two years, as we began to develop our asset management software, SLAM, I spent more time with Tim than any of my other colleagues. His insight and understanding of both the consulting and software side of the business was invaluable to me and the rest of the SLAM team. I am so grateful for his contribution to the product, as well as for this time that I got to spend with him.

Tim took great pride in his service and was a proud veteran. It is funny because we never really talked a lot about his service, maybe it was because he felt that I couldn’t relate. However, recently, on the last business trip that I took with Tim, we had dinner with our colleague David Neufeld in Regina. David and Tim (both veterans) shared stories the entire dinner. I probably heard more about Tim’s service during that dinner than I had in the previous decade. I am so very thankful that I had that opportunity because it allowed me to hear about a part of Tim’s life that, until that point, hadn’t been that visible to me.

I will always regret that I never got the opportunity for Tim to show me how to scuba dive, despite his many attempts to do so. I will always remember the many stories of his frequent diving trips and I loved to see the photos he would take of the latest marine life that he encountered. It was a true passion for Tim. A lesson I have learned through all of this is to make the most of everyday and not to let any opportunities pass you by.

Tim’s too soon departure will leave a void in the Roth IAMS and SLAM teams, that we will never truly fill. He was a friend, a colleague, and a mentor to us all. I know that by drawing on the mentorship, the leadership, and the hard work that Tim put into the firm, we will continue to grow stronger in the future. I know that somewhere Tim is looking down on us, probably with a cold beer, cheering us on. I can almost hear him saying “get over it and move forward, there is lots of work to do.” Tim’s legacy will drive our team forward to achieve new heights, built on the foundation that Tim was a key part in laying.

We will miss you my friend. We are all better for having known you and the mark you left on our lives will never be forgotten! Say hi to Roy for us!