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Facility Management: Running A Tight Ship
Keep Up With Repairs And Maintenance Even In Tough Times
Large, multi-site senior living organizations and small, single-site facilities alike have had to tighten their belts as they try to remain on an even keel. For many, declining revenues have resulted in delayed building repairs, deferred equipment replacements, and shelved maintenance innovations—any or all of which can cause even bigger problems down the road. So it’s important to keep up—even in tough times.
For those organizations that have put off repairs and maintenance, how do they catch up? If they need to invest money in a facility that needs a lot of work, where do they start? When they’re finally able to move on major renovations, what’s the best approach? Where are the pain points, and what are the remedies?
Before investing in any existing facility, it’s important to evaluate its long-term viability—what John zumBrunnen, president of zumBrunnen, Inc. in Atlanta, Georgia, calls “the four Rs”:
- Repair the facility, perhaps fix the roof or replace some equipment;
- Renovate it with new paint or carpets or improve the efficiency;
- Reposition it for different uses; or
- Replace it with a new facility.
“The evaluation process is too often mismanaged,” cautioned zumBrunnen. “Questions are usually posed to architects, developers, or contractors, who may let their own preferences interfere with the best answers. Therefore, it’s best to find someone who can provide an independent analysis of the building, an evaluation of its condition, and justify any conclusions drawn.”
Value engineering in facility design
The “value engineering” process is the biggest problem in facility design, whether it’s a new build, an expansion, or a renovation, according to zumBrunnen. In many cases, the owner comes up with a concept and a budget; the architect designs the concept; and, upon review, it becomes evident that the project can’t be built to that budget. So in the last critical days of signing contracts and finalizing the financing, the project has to be cut back.
“That’s backwards,” he said. “The project should be designed from the lowest price up instead of the highest quality down. That way, the owner has an option to add to the budget as money appears to be available and will get a better design, a better finished product, and ultimately more for the money.”
Often, too, the owner (who is anxious to meet occupancy requirements), the architect, consulting engineers, and the people performing the actual work poorly manage the finalization of the building project. The owner must make sure that the building is properly and fully commissioned, equipment is tested and performs up to standards, and that employees are trained to make sure they know how all the equipment works. “The commissioning process should never be short-circuited,” advised zumBrunnen.
Then, once that’s done, the owner should have a plan in place where all the assets have been identified and inventoried, and that information becomes part of a preventive maintenance program that people are properly trained to execute. Perhaps most importantly, the owner should set up a long-term reserve fund for equipment repair and replacement.
The importance of having a replacement reserve fund must be emphasized. By estimating repair and replacement costs over the next 30 years, for example, an owner can determine how much money per month, or per year, per resident to deposit in the sinking fund to ensure that money is available to maintain the facility in the manner mandated by the organization’s mission. That effectively precludes worrying about choosing which maintenance to defer, as well. And if a breakdown occurs unexpectedly or prematurely, what would otherwise be a huge financial problem—perhaps over an extended period of time—instead is a minor inconvenience for a few days or weeks.
“You’re going to have hiccups,” said zumBrunnen, “but you don’t want them to disrupt your operations and undermine the financial strength of your community. That’s what planning is all about.”
Prioritizing repairs and maintenance
Determining what repairs and maintenance must be done first and what can be put off until later is always a matter of planning and of triage—prioritizing—and managing those decisions. It’s a mistake to react moment by moment. “Assess the facility building by building, find out what’s wrong, what needs to be fixed, what it will cost, what you can afford when, and how you’ll fund the program,” zumBrunnen advised. “Write down what needs to be done and strategically think through your priorities.”
First and foremost are life-safety code compliance issues, which must always be handled immediately. If a life-safety problem is not fixed, someone may be hurt or killed—and besides the possibility of a tragic loss of life, it may result in a costly lawsuit. The physical plant, the building itself, must be sturdy and safe enough for the resident to live in; the backup power generation system must work; and the dining program must provide quality food. Life safety items are not negotiable.
Aesthetic issues, however, usually are negotiable. For example, should you replace the worn carpet in the dining room and hallways, or should you paint the exterior of the building? Will not replacing the carpet in the public areas affect the community’s marketability? Will not painting now create additional damage? Will deferring one or the other project make it more expensive to do later on?
Cost issues benefit from a long, broad view and require research. Will the more expensive solution actually lower operating costs? Are government programs, grants, or other incentives available? Is alternative financing available for items needing replacement—perhaps leasing rather than purchasing office equipment or a new vehicle? Can a capital fundraising program make up a shortfall? Would residents be interested in pitching in and working on one of these projects?
Investing in building repairs and renovations
Older buildings can become significantly inefficient without major renovations to the infrastructure. Lighting, electricity, gaping holes in walls…you must truly pick your battle, according to Brett Nicol, Program Consultant at Direct Supply, Inc. in Milwaukee, Wisconsin. “The upkeep of older buildings that are inefficient and situations where the owner isn’t able or can’t afford to renovate are major challenges,” he said. “What do you fix, what do you patch, and what do you change short of tearing down the building and reconstructing it?”
If you’re going to invest in a facility that needs a lot of work from top to bottom and money is tight, start with projects that don’t cost a lot and that pay back quickly. “Efficient lighting programs, or relamping—transitioning from incandescent lamps to compact fluorescent and even LED lighting—is an amazing quality investment in overall plant maintenance with huge operational cost savings and a very quick payback,” said Nicol. “Even though they’re just light bulbs, consider that senior living communities keep their lights on 24 hours a day, every day. And the labor cost of changing burned-out bulbs is huge in both dollars and time. The changeover is not a particularly large expense, and ROI is less than a year in nearly all cases that are done properly.
High-efficiency HVAC systems are also important upgrades to consider. The demands for comfort of living have really changed for residents currently moving into senior living facilities. They want individual room or unit heating and cooling controls and are willing to pay for it. “So that’s what the industry needs to do,” said Nicol, “and it actually saves money on the back end. A properly selected high-efficiency HVAC system can save up to $140 per unit per year compared to an inefficient model, and the ROI is less than a year. With the useful life of a unit being seven to 10 years, that’s a significant cost advantage.”
The best—or most appropriate—solutions are always the ones that best fit the needs and the budget of the individual provider. But if a provider has the ability to spend a little extra money for higher quality products that require less maintenance and last longer, that can also produce significantly lower operational costs over time.
From an interior design perspective, for example, the selection of finishes such as decorative wall coverings, flooring materials, and furniture fabrics must be commercial/health-care grade, moisture-resistant, and durable enough to sustain the heavy cleaning and scrubbing required by the facility’s maintenance program. “These products may cost a little more up front but won’t have to be replaced for at least five years,” explained Laura Schalk, Senior Lead Interior Designer for Direct Supply’s Aptura Division.
To meet overall goals, some providers will unlock capital dollars to support a renovation or construction; other providers just don’t have the capital to move around and must, instead, rely on a makeshift repair or temporary solution. Many options may be considered; however, the discussions on how to meet the community’s long-term needs with limited resources should always involve the community’s overall mission and goals.
“Green” and “sustainable”
“Green” and “sustainable” have now become almost a given for commercial products, as society continues to move in that direction. And unlike in the past, where less-efficient products or processes with “green” in their names cost more, that’s changed. Now, “green” chemicals and “green” cleaning solutions are competitively priced and just as effective as good-old ammonia, but they don’t put at risk the health of residents and staff.
Labor is also a major contributor to environmental efficiency. Consider implementing a floor-care program, for example, that maximizes labor hours by providing more efficient equipment and “green” products that clean better and quicker, perhaps using less water or chemicals, so the task is completed in a shorter amount of time. That’s environmentally sound and cost-efficient.
The U.S. Green Building Council now has a LEED program to help owners and operators measure operations, improvements, and maintenance on existing buildings. Administering the LEED EBOM (Existing Building Operations Maintenance) pre-screening questionnaire to each building on a campus determines whether the building qualifies for certification; and if not, it identifies the inefficient operations and maintenance areas that need to be improved.
The pre-screening questions cover fundamental efficiency improvements—converting light bulbs, for example—that should be made regardless of whether the building owner is seeking certification, as well as operating than 10 years old, there’s a strong probability that certain systems are reaching the end of their economic life.
There is a cost associated with becoming LEED-certified—not so much because of the material specifications used in creating the project but in the fees to generate the certification. And while being certified is certainly a worthy achievement, it is more prevalent in the commercial realm simply because of the associated costs.
Going through the actual certification process may or may not be cost-justifiable; but if a nearby competitor is promoting a LEED-certified building, that might tip the balance. In any event, any senior living facility that truly complies with accepted “green” and “sustainable” standards may promote its environmentally sound practices of buying environmentally safe products, using recycled materials, recycling waste materials, and so forth.
Networking and the ‘net
The benefit of networking with peers, which is always a good idea, is their first-hand experience (good or bad). Facility management professionals who are AAHSA members, for example, can sign up for its facility management online forum and ask or respond to questions and share information related to maintaining, renovating, and constructing senior living facilities.
Whatever the topic, though, finding innovative plant management and maintenance products can be as simple as using an online search engine. In preparation for a presentation recently, zumBrunnen spent a little time searching online and rather quickly found 30 or 40 innovative new products that maintenance people should all know about. For example: Some paints guarantee that you’ll never have to paint again; other paints provide R-11 thermal insulation with one good coat. Researching online can also uncover rebate, incentive, and grant programs offered by federal, state, or local government or by local utilities for certain changes, improvements, or upgrades.
“It’s interesting how many times a person is mired in a problem but never bothers to plug a couple of words into a search engine,” said zumBrunnen. You’ve got to network with your peers when you’re in a quandary, but first search the Web. There’s hardly a question that can’t be answered online. Just typing a topic into Google results in a flood of information. It’s so simple. It doesn’t cost anything. And it saves so much time.”
Reproduced with permission from Senior Living Business, Volume 4, Issue 5, May 2010. For more information, please visit www.seniorcareinvestor.com