Whether your business is providing health care, education, spiritual guidance or some form of housing services, your buildings not only provide a safe environment in which to provide services, but also serve as valuable assets in attracting and retaining the people you serve and those you employ. Ensuring facilities are efficient, attractive and well-maintained is an essential part of any successful business plan and is critical to fulfilling mission.
For most businesses, their campus facilities are often their greatest financial asset, and when considering replacement costs, they may also prove to be their greatest financial liability. The overall appearance of their campus will affect their image in the market place, be an indicator of their financial stability, and directly impact the bottom line. Therefore, preserving facilities is critical to fulfilling mission. This requires many of the same short- and long-term planning techniques used when managing any other type of asset or program.
A fundamental component in developing an effective strategic capital replacement plan for your facility, and the sole topic of this discussion, is to conduct periodic and thorough facility condition assessments. The intent of such an assessment is to identify deferred maintenance and those systems that need to be renovated, repositioned, or replaced. For the best results, this work should be performed by independent industry professional consultants that provide these services as a part of their primary business. These consultants should not have any interest in the findings or recommendations; i.e. contractors or architects may have a conflict of interests.
When conducting your facility condition assessment, be sure to consider the following:
Contamination:
Environmental issues, such as asbestos, lead paint, soil contamination, etc., should be identified in your facility condition assessment. If you are considering a capital project that requires financing or if you are going to refinance your existing facility, any investors and lenders will require as a minimum, a current Phase I Environmental Report in accordance with industry standards. If there were issues, or are any remaining issues to be resolved, then the corrective action taken, or to be taken, will require industry standard documentation.
Construction Compliance:
In today’s construction environment, the general contractor is a project manager more than a constructor, hence the construction contract terminology, “construction manager.” The architect is the designer, not the inspector. Quality control inspection services to assure compliance are not a part of the architect’s standard contracts and must be specifically contracted as an additional service. For most construction projects, compliance is left to the subcontractor, with generally little or no compliance oversight. Unfortunately, this can lead to non-compliant work resulting in expensive repairs after warranties have expired. Therefore, it is cost effective to manage quality control by engaging a construction monitor or construction consultant as your owner representative, independent of the contractor and design professionals during construction.
For existing buildings, the facility assessment consultant should look for and identify non-compliant or poorly designed construction details, where visually apparent. If evidence justifies further investigation, destructive testing may be required. Even something as seemingly minor as a crack in a wall can foretell significant construction-related expenses down the road. If you find a presence of mold or water damage, be sure to identify and correct the root causes, not just the symptoms.
Roofs, exterior finish systems, and windows are among the first items to be “value engineered.” Therefore, it is crucial that they be properly detailed and installed; they are the first line of defense for moisture intrusion. Carefully assess their current condition to avoid a high-priced budget surprise in the future. Likewise, the condition of sidewalks, pavement, and other site improvements should be evaluated, as they deteriorate from use and exposure to the elements; and if routine repairs and maintenance are deferred, costs will only escalate and may also prove to be a safety issue.
Mechanical, Electrical, and Plumbing Systems (MEP), Appliances, and Equipment:
There are multiple factors that may impact the necessity to repair, overhaul, upgrade, or replace these systems. These factors may include one or more of the following: catastrophic failure, obsolescence, operating and maintenance costs, quality of maintenance, comfort, safety, capacity, environment, governing codes, insurance, litigation, and availability of capital. It is vital to evaluate and understand the condition of these systems to avoid costly and unbudgeted repairs or replacements, and to guarantee that funds will be available when needed.
Security and Life Safety Systems:
These systems are mentioned separately from MEP systems, appliances, and equipment because they are most likely to be subjected to replacement factors beyond the owner’s control. Insurer requirements, protection against litigation, and state and federal regulations are only going to prove to be more costly and difficult to predict and respond to. In addition, the performance of your security and life safety systems can act as a valuable differentiation tool for marketing.
Floor and Wall Finishes, Furnishings, Fixtures, and Other Soft Goods:
The cosmetic appearance and amenities of a property can be vital to attracting and retaining the people you plan to serve and employ. The refreshment and replacement of these items vary depending on your business model and other variables. As an example, in retirement communities, an entry-fee model versus a rental model typically has contractual requirements for refreshing units. In addition, competition and demographics frequently dictate upgrading. In recent studies, it has been determined that entry-fee retirement communities spend anywhere from 25% to 40% of their 40-year capital replacement budget just on unit turns and common-area carpet, paint, and wall coverings. Understanding these requirements and adequate funding is necessary to maintaining your property’s appeal.
Summation:
The preceding list of considerations is a good place to start when assessing your facility. However, a comprehensive facility condition assessment is multi-faceted, and the typical administrator may not have each of these crucial elements on his or her radar, or the time or the staff to address them. Both from an internal perspective as well as when reporting to other parties, such as boards, investors or lenders, utilizing independent and objective professional consultants should provide the best results. When partnering with an outside party, seek the best talent you can afford. Hire professionals, such as construction monitors or construction consultants, that specialize in providing facility condition assessment services as one of their primary services. Also, make sure the study is objective; in other words, do not hire consultants that may benefit from the findings of an assessment, such as architects or contractors.
John zumBrunnen is Founder of zumBrunnen, Inc., an independent construction and building consulting firm founded in 1989. zumBrunnen has a BS in mechanical engineering from the University of North Dakota, completed the US Army Corps of Engineers Training Program in 1972, and is a member of LeadingAge on national and state levels. zumBrunnen has 40+ years of experience in construction, property assessment, development, and reserve budgeting. He is the inventor of the FacilityForecast® software system and a respected author and speaker in the industry.
