In our last two posts, we explored the two most common types of building models that are used to develop forecasts of future capital renewal needs, the Building-Type Model (BTM) and Client-Informed Model (CIM). This week we are going to take things to the next step, the on-site validation of the model.
Given that models may not accurately represent the real-world elements within a portfolio, and generally rely solely on lifecycle modeling (date of installation plus expected useful life equals the replacement year), there is a fair amount of risk of potential errors in models. To help close that gap with the real-world, some clients choose to do on-site validation of models.
In future posts, I am going to go over Time-Limited Assessments and Element-Level Inventory assessments. For the purposes of this post, I am not going to differentiate between the two as I will save that for later in the series. Rather, I will focus now on the benefits and drawbacks of building upon your model through on-site assessment.
When a model has been completed for an asset, it provides a solid starting point for the on-site assessors to build on through the site walk through. The assessors will generally:
- Adjust the dates of installation based on observations, observable manufactured dates and review of make, model serial numbers. Etc.;
- Update quantities (often expanding beyond the square footage of building unit cost basis);
- Remove modeled elements that are not present within the building;
- Add elements that are present that were not included in the model; and
- Most importantly adjust the Remaining Useful Life of the elements based on a condition assessment of the element.
The general quality of the original model can have an impact on the updated dataset. Garbage-in, garbage-out as they say.
The result is most often a more accurate and condition-based (as opposed to purely lifecycle) forecast of future capital renewal need, which has increased value in terms of prioritized multi-year capital planning.
However, the costs are considerably higher than creating a modeled dataset. Additionally, the more granular dataset will require more effort to maintain over time as you complete capital renewal projects.
For clients that have moved beyond the need for just an estimate for future capital renewal needs, the investment in on-site assessment is well worth it and is a big step towards enhancing your asset management capabilities.