Deferred Maintenance - Fmanm

Deferred Maintenance - Fmanm

DEFERRED MAINTENANCE The Elephant in the Room INTRODUCTION Email: [email protected] University of New Mexico BA Architecture (1981) Institute for Environmental Education (1980 1981) Registered New Mexico Architect (1986 - today) Project Manager State of New Mexico, Property Control Division (1981-85) Statewide Building Inventory and Condition Assessment (1985-86) Manager State of New Mexico, Property Control Division, Facilities Management Bureau (1986-91) Deputy Director State of New Mexico, Building Services Division (1991-2009)

National President National Association of State Facilities Administrators (2003-2004) Maintenance Director Rio Rancho Public Schools (2009-2013) Facility Manager for Sandia Laboratory Federal Credit Union (2013 - today) WHAT IS DEFERRED MAINTENANCE? Federal Financial Accounting Standard 40 definition of Deferred Maintenance and Repairs. (25 pages) Maintenance and repair activities that were not performed when they should have been or were scheduled to be and which, therefore, are put off or delayed for a future period. Maintenance and repairs are activities directed toward keeping fixed assets in an acceptable condition. Activities include preventive maintenance; replacement of parts, systems, or components; and other activities needed to

preserve or maintain the asset. Maintenance and repairs, as distinguished from capital improvements, exclude activities directed towards expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, its current use. WHAT IS DEFERRED MAINTENANCE? Maintenance and Repairs are not Capital Projects but it may be a Capital Expense. Capital Project: Long-term investment project requiring relatively large sums to acquire, develop, improve, and / or maintain a capital asset (such as land, buildings, roads). THE ISSUE IS? Projects put on

hold, repair that is neglected, and preventive maintenance that is ignored add up to a costly and complex problem. Buildings.com - June 5, 2006 88% of Facility Managers say that deferred maintenance is an issue. Average age of a Commercial Building in the US is 32 years. Facilities Maintenance

Decisions survey HOW TO ADDRESS DEFERRED MAINTENANCE Identify why projects, maintenance, and repairs have been deferred. Recognize and understand the scale of the problem. Quantify and communicate the financial impact of deferred maintenance. Prioritize projects and develop a strategy to secure adequate funding. Understand your funding. Conduct preventive maintenance and complete repairs promptly to avoid backlog redevelopment. As Facilities Managers we must plan and communicate the long-term needs of our facilities, in order to support the successful operations of the company we serve.

WHY? Funding Budgeting. Manpower Not sufficient for the work load. Lack of expertise. Maintenance could interrupt or interfere with operations. Must be scheduled, delayed or cancelled. Parts Are Not Readily Available. Identify these parts in advance. Determine if they should be in stock or where they can be acquired.

SCALE OF THE PROBLEM Building and Condition Inventory Size, Age, Value, Use, Major Systems, Major Equipment, Special Features, Accessibility, Historic , Environmental etc. Assessment Perhaps a third party is needed. Involve maintenance staff. Perform Inspections and Reporting as part of PM Program. FCI (Facility Condition Index) FCI= Maintenance/Repair/Replacement $ / Current Value $ $325,000 / $2,000,000 = 0.1625 (Poor) Good >0.05. Fair (0.05-0.1). Poor (0.1 and Over) How Big is the Problem (Example)(Bite Size Nugget) National Park Service (Sept 30, 2017) (In Billions of $) TOTAL Deferred Maintenance: $11.607

Deferred Maintenance for Paved Roads and Structures: $5.900 Deferred Maintenance for All Other Facilities: $5.707 Highest Priority Non-Transportation Facilities: $2.459 SCALE OF THE PROBLEM Building and Condition Inventory Date Installed Expected Life of the System (Sample) 5 years Carpet, Lamps 10 years Paint, 20 years Roof, Roof Top Equipment, Millwork, Plumbing Fixtures Escalators, Fire Alarm 30 years Boiler, Chiller, Asphalt, Landscaping, Elevators 32 years Average Building Age 50 years Electrical Systems, Concrete

Potential Opportunities for Upgrades (Cost Savings) Lamps Convert to LED HVAC Equipment Higher SEER (Seasonal Energy Efficiency Ration)Rating Xeriscape Rebates Renewable Energy Systems COMMUNICATE Estimated Risk Potential Life Safety issue?

How does it affect the functioning of the business? Subsequent Escalation of Costs Inverse Square Rule for Deferred Maintenance (Tod Geaslin) If you defer maintenance, you can expect future expenses to be equal to or greater than the cost of the part squared or 15 times the total repair cost. Example: $100 part ($1002 = $10,000) or $600 repair ($600 x 15 = $9,000) Historic Data Add credibility to your financial predictions. Provide examples. Work Order System Budget / Expenses PRIORITIZE Currently Critical (NOW!)

Immediate action needed to return a facility to normal operation, stop accelerated deterioration or correct a cited safety hazard. Fire Marshall / Insurance Inspectors / Code Compliance Systems Failure Maybe an EMERGENCY. (See Part 2)(You must have a process for these situations) Potentially Critical (1 Year) Will become critical within one year if not corrected expeditiously. Predictive plans Moved up from Necessary. Necessary, not yet critical (2-5 Years) Will require reasonably prompt attention to precluded predictable deterioration or potential downtime and the associated damage and higher costs. Identify these issues as early as possible.

PRIORITIZE An emergency condition is a situation which creates a threat to public health, welfare, safety or property such as may arise by reason of floods, epidemics, riots, equipment failures or similar events. The existence of the emergency condition creates an immediate and serious need for services, construction or items of tangible personal property that cannot be met through normal procurement methods and the lack of which would seriously threaten: The functioning of the business The preservation or protection of property The health or safety of any person State of New Mexico Procurement Code Regulations (Section 1.4.1.59)

UNDERSTAND (Buckets and Cups) What are the funding sources? (Buckets) Where are the funds allocated? (Cups) Ops SB9 Bonds AVOID BACKLOG Emphasize Preventative Maintenance. Goal: 70% of all work orders are PM in nature. Separate PM Team. Do not find out once it is too late.

Work Order System Reports KPIs (Key Performance Indicators) Early Intervention Make repairs sooner than later. Spend Money now or spend money later. Develop your Business Case Potential Cost Savings AVOID BACKLOG Top 10 Building Systems to Inspect

1. Roofs 2. HVAC 3. Paved Surfaces 4. Plumbing 5. Electrical 6. Fire and Life Safety Systems Develop Schedules appropriate for the particular system and inspect and or test on a regular basis. Yearly Six Months Monthly Weekly

7. Elevators 8. Escalators 9. Pools and Fountains 10.Landscaping 11.Utility Tracking Also take into consideration when is the best time to test and inspect. IN SUMMARY Spend money now or spend more money later once everyone understands the rapid escalation of costs, obtaining adequate funds should be easier. By making the business case for funding and

proactively managing maintenance every day, youre less likely to develop a deferred maintenance backlog that seems too overwhelming to overcome. Jana J. Madsen, Managing Editor at Buildings Magazine. QUESTIONS?

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