As we get into the mid-to-late 2010s, many clients were making informed decisions based on FCAs (as well as Energy Audit, Accessibility, etc. reports). Using mostly 5-year projections of capital renewal needs, clients started making internal (within their organizations) and external (Federal, State/Provincial Governments) business cases for additional funding.
When all you have is a 5-year projection of need, as each year passes your forecasting horizon is reduced. Typically, FCAs are updated every five years. By the time a client updates their FCAs they would not have any future picture of their needs.
One of the foundational principles of facility asset management is that each year there are going to be new items that require attention. In one instance, one of our clients had made a commitment to their board to cut their 5-Year Facility Condition Index (FCI) in half based on funding 50% of their initial 5-year need. The challenge was that over the course of the 5 years of the program, millions of dollars of renewal need rolled into the 5-Year planning horizon.
At the end of the 5-year program the FCI had increased. The client had to go back to their Board “hat in hand” to explain the increase in CI and focus on how the program they implemented had made things better than they would have been, but had not resulted in an overall improvement after 5-years and millions of dollars of additional funding.
Once you start to take a longer-term view of needs, many organizations will have to settle for a “Less Worse” approach in the short term. At the end of the day it may not feel like a compelling argument. However, it is critical to set clear and achievable expectations with your stakeholder, especially for any new approach to your renewal program.
In order to provide a longer-term view of renewal need, the FCA industry had to start to abandon the limited forecast period. Instead, we started to provide a complete, detailed element-level inventory of buildings (at Uniformat II Level 3/4 as opposed to Level 1/2, which was the first step in the evolution). In having an inventory, with dates of construction/installation, estimated costs and expected useful lives, clients could develop longer-term forecasts of renewal need. As such, FCA data no longer “got stale” so quickly.
As the industry started to look to longer term forecasts one new area that became critical was the idea of cyclical renewals. For example if you do a 20-year forecast of renewal need you should consider multiple replacements of some elements (those that have an EUL less than 20 years). Making sure that you “accounted for” these multiple replacements is critical to more accurate forecasting and more trust worthy data.
At this point, we have seen many clients start to explore the integration of capital and maintenance planning. As a result, more and more organizations are starting to gather equipment-level inventory (as opposed to element-level that is included in a typical FCA). We will leave this part of the story for another blog series.
In theory, with a detailed inventory of building, and using cyclical renewals you can project an unlimited forecast of renewal needs. We have seen several clients that have wanted 50 to 100 year projections of need. These longer term forecasts would not have been possible years before. Through their FCAs, clients now had a complete dataset for their buildings in terms of capital renewal forecasting long into the future.
Armed with a complete dataset that can provide a longer-term planning capability, we have started to shift the focus from the data, to the story that you tell, informed by your data. That story will have to wait until our next post.
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