Benefits of Updating Your “Life Term” Capital Replacement Plan and Budget

by Doug McMillan, P.E., President, zumBrunnen, Inc.

Congratulations! You completed that big first step. You had zumBrunnen visit your facility, and you developed, in collaboration with us, a comprehensive “life term” capital replacement budget and reserve plan. It took a lot of work, not only from our team, but also from you and your staff by participating in inspections, conducting meetings with various department heads and maintenance staff, and reviewing draft budgets for all areas of your campus.

The initial effort is now complete, and zumBrunnen presented the final report and budgets to your residents, senior leadership team, and board members. We also provided software training to your staff. You now have a detailed report and powerful software package to manage your capital assets and keep your physical facilities in top shape so you remain competitive in the marketplace.  You also gained a comprehensive financial tool to ensure your capital reserves are adequate and allows you to do not only short-term projects, but also 20+ year planning and even “life term” projections, as the software will allow you to project indefinitely into the future.

So, you may be asking, where do we go from here, and how do I ensure the plan is properly implemented? The key is simply keeping the plan and software updated and current. The plan zumBrunnen delivered to you is a snapshot in time based on the condition of the campus while the study was being conducted. This evaluation also includes recommendations for repairs, replacement and maintenance, as may be applicable, at the time of the study.

To keep the information current and usable, it is critical you update the data in the report at least once a year. One of the recommendations we stress to our clients is to use the “individual year” report feature in the software to show what capital items we projected for major maintenance or replacements in any given year. The report will generate a table showing only the items for the chosen year for which we predicted major maintenance or repairs. This table may contain 2 items or 50 items, but it will provide a checklist of things to inspect during the budgeting process for the upcoming year to determine if, in fact, this work needs to be done.

At the end of the year, it is critical you input the actual cost of the work performed for each individual item. You also need to add any capital items and costs that may not have been shown and revise the dates if you decided to defer any of the recommended work. By doing this, you ensure the cost data and the dates the work was performed are as accurate as they can be.

As you saw during the software training process, the software is very user-friendly, and updating the data is quick and easy. However, we are always available by phone or via an on-line GoToMeeting conference if you run into any problems or have any questions during this effort. We want to assist you in any way we can to help you keep the data updated and the software current.

The financial reports the software can generate will be much more accurate and useful to you if the data is kept updated. This should be a process you can do in-house based on the training your staff received from zumBrunnen, and this should be done at least annually.

The next step we recommend you take to keep the report and budget files useful is to perform a more comprehensive update on a 3- to 4-year cycle. This update involves not only the steps we mentioned above, but also consists of zumBrunnen visiting your campus again for a follow-up walk-through of your facilities and meetings with your staff. This gives us the chance to inspect work you have since completed and re-inspect critical items, such as roofs, major equipment, and systems, to assess their current condition.

As you know, things can change quickly when it comes to your physical assets, and staying on top of potential problems can save you money in any number of ways. We may see some trends that need to be changed from a maintenance perspective. We may discover some small defects and recommend repairs that will be much less expensive if undertaken now rather than later (before the small problems have a chance to grow into big ones).  Additionally, we keep current industry trends to improve efficiencies.

This 3- to 4-year update will also allow zumBrunnen to review your past few years’ worth of capital expenses to make sure they are properly captured in the software and confirm all the budget line items are in their proper place. Your team will get a chance to sit down with one of our Project Managers and be a part of this process, so they will be actively involved on the use and updating of the software. This process takes much less time than the original study, is accomplished for a fraction of the cost, and is invaluable in keeping your software and budget plan current and accurate.

In conclusion, we are confident we provided you with a useful and easy-to-use tool to help you manage the condition of your campus and help you budget the necessary reserves to keep your facility in first class condition. We appreciate the trust you have shown in us to help you through this process. Keeping your study current and up-to-date is one way you can ensure future success.

About the Author:

Doug McMillan, P.E., is President of zumBrunnen, Inc. He began his career in 1980, and he joined zumBrunnen, Inc. in 1998. McMillan received his Bachelor of Science degree in Civil Engineering from the Georgia Institute of Technology in Atlanta, GA. He is a former Resident Engineer with the U.S. Army Corps of Engineers, and he is a member of the Society of American Military Engineers (SAME) and the American Society of Civil Engineers (ASCE). McMillan is a licensed professional Civil Engineer in the state of California.

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