Last week, I highlighted the upside of the Facility Condition Index as a benchmarking tool but pointed out some of the limitations that people should recognize as they start to make business decisions based solely on FCI. Today, I am going to talk about some of the issues that can arise when you try to compare your organization’s FCIs with those of another organization.

Just for reference purposes, I will provide the calculation for FCI once again…

FCI = Deferred Capital Renewal and Maintenance Need Over a Given Period of Time   x100 
Current Replacement Value (CRV) of the Facility

How does our FCI compare to others?  This is a question that I often get from clients that have recently completed a Facility Condition Assessment (FCA) and have a “hot off the presses” FCI for their buildings and their portfolio as a whole.  Understandably, organizations want to know how they compare with others like them.  Often, it is Senior Executives or Board Members that are interested in the “big picture” comparison.  It is this senior-level interest that makes it so important for each of you to understand how to best answer the question so you don’t step on a landmine. 

Just doing a straight comparison between your FCI and the published number of another organization/institution can create some issues, and could lead to embarrassment for you in front of your most senior stakeholders.   

First, you need to make sure that the number of years of future renewal in your FCI matches the peer comparator.  This is one reason why we recommend that our clients don’t just call it an FCI, but add the number of years to the name, i.e. 5-Year FCI.  Comparing a 5-Year FCI to a 3-Year FCI doesn’t make a lot of sense.  Your portfolio (assuming you are the 5-Year) will look a lot worse than your peers almost certainly as you are capturing a longer time horizon in your calculation.  

Ideally, you should also understand the methodology used to calculate the CRVs for your peer’s facilities.  (For more information on calculating CRVs, please check out our recent webinar by clicking here.)  If your peer has used a methodology that has underreported their CRVs, their FCIs will be higher than yours. 

In theory, FCI should only include replace-in-kind scenarios for existing elements within buildings.  However, in my experience, many organizations use a modified FCI that can include upgrades/enhancements, code issues, etc.  In theory, this would be more of a Facility Needs Index as opposed to an FCI, but many organizations do present it as an FCI. 

There can be other “traps” in comparing FCIs with peer organizations, but these are the most common issues that I see clients facing.  The moral of the story is that you need to be careful and try to dig a little deeper before you start throwing comparisons around with your senior stakeholders.  It can be a powerful tool, however, you just need to understand it first.