Facility Condition Index (FCI) has been and remains one of the most common metrics that facility and asset manager use to benchmark the buildings within their portfolios, and their overall portfolios.  

As I am sure most of you know…..

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

It is an easy to understand way to compare the condition of buildings as a function of the overall building value.  For example, if you have $2M of DCRM, it is a very different situation if the building’s CRV is $4M versus $40M.  Although the total amount of DCRM is the same, the impact to the building overall is very different.  

Once you get beyond benchmarking and you get into actual asset management, it becomes a little more precarious to rely too heavily on FCI.  

The biggest issue that I have with FCI is that every dollar of DCRM is created equal. There is no prioritization.  For example, $100K in carpet need is equal to $100K in HVAC need.  I think we can all agree that in most, if not all cases, the HVAC need would have a higher priority than the carpet.  So, as you look to make more impactful business decisions (do we keep it and renew or dispose/demolish), you need to dig a bit deeper into your FCI to see exactly what the DCRM represents.  

Additionally, when making these critical decisions, there are likely many other non-condition related criteria that you should consider that are not reflected in a “text book” FCI.  Examples of these other key decision drivers are:

• – Functional adequacy of the building
• – Presence/absence of hazardous materials
• – Accessibility and Code Liabilities
• – Energy savings opportunities/potential

None of this is to say that you shouldn’t use FCI.  It is a great benchmarking tool and can give you an overview of the condition of your portfolio.  However, once you determine that you need to make a hard decision related to a specific building or group of buildings, we recommend that you diver deeper into the DCRM and get a more complete view of the asset overall (unless the FCI is so prohibitively large that the decision is easy without considering anything else).

Next week, I am going to focus on some of the challenges of comparing your FCI with other FCIs posted by other organizations.  In the meantime, if I have piqued your interest in FCI and you want to go deeper to understand the calculation of CRV, please check out the webinar that my colleague Ayden Townsend and I recently gave by clicking here.