Budgeting for facilities maintenance and repair activities

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Author: Federal Facilities Council | Standing Committee on Operations and Maintenance.

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About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution.

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Budgeting for Facilities Maintenance and Repair Activities Report Number 131 Federal Facilities Council Standing Committee on Operations and Maintenance

NATIONAL ACADEMY PRESS Washington, D.C. 1996


NOTICE

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NOTICE

The Federal Facilities Council (FFC) (formerly the Federal Construction Council) is a continuing activity of the Board on Infrastructure and the Constructed Environment (BICE) of the National Research Council (NRC). The purpose of the FFC is to promote continuing cooperation among the sponsoring federal agencies and between the agencies and other elements of the building community in order to advance building science and technology–particularly with regard to the design, construction, and operation of federal facilities. Currently, the following agencies sponsor the FFC: Department of the Air Force, Office of the Civil Engineer Department of the Air Force, Air National Guard Department of the Army, Corps of Engineers Department of Energy, Office of Associate Deputy Secretary of Field Management Department of the Navy, Naval Facilities Engineering Command Department of State, Office of Foreign Buildings Operations Department of Veterans Affairs, Office of Construction Management Food and Drug Administration General Services Administration, Public Buildings Service Indian Health Service National Aeronautics and Space Administration, Facilities Engineering Division National Institutes of Health National Institute of Standards and Technology, Building and Fire Research Laboratory National Endowment for the Arts, Design Arts Program National Science Foundation Smithsonian Institution, Office of Facilities Services U.S. Information Agency, International Broadcasting Bureau U.S. Public Health Service, Office of Management U.S. Postal Service, Facilities Department As part of its activities, the FFC periodically publishes reports like this one that have been prepared by committees of government employees. Since these committees are not appointed by the NRC, they do not make recommendations, and their reports are considered FFC publications rather than NRC publications. For further information on the FFC program or FFC reports, please write to: Director, Federal Facilities Council, Board on Infrastructure and the Constructed Environment, 2101 Constitution Avenue, N.W., Washington, DC 20418.


NOTICE

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FEDERAL FACILITIES COUNCIL STANDING COMMITTEE ON OPERATIONS AND MAINTENANCE Chairman James Walton, U.S. Army Corps of Engineers, Department of the Army Vice Chairman Richard McCrone, Engineering Management and Field Support Office, Department of Veterans Affairs Members Subrata Banerjee, Bureau of Health Resources Department, U.S. Public Health Service Hao Bui, Facilities Engineering Branch, International Broadcasting Bureau Jodi Ernst, Office of Facilities Services, Smithsonian Institution Paul Fardig, Engineering Support Services Branch, U.S. Public Health Service Tariq Farooqi, Refurbishment Division, International Broadcasting Bureau Gary Fennell, Facilities Division, Air National Guard Paul Fennewald, Maintenance Branch, U.S. Postal Service Don Fournier, Energy and Utility Systems Division, Construction Engineering Research Laboratories Geoffrey Frohnsdorff, Building Materials Division, National Institute of Standards and Technology William Graham, Engineering Management and Field Support Office, Department of Veterans Affairs Ben Herrick, Network Support Division, International Broadcasting Bureau John Iaconis, Public Buildings Service, General Services Administration


NOTICE

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William Johnson, Facilities Engineering Branch, Indian Health Service Greg Krisanda, Office of Foreign Buildings Operations, U.S. Department of State Pete Lastik, Facilities Division, Air National Guard Patrick Miller, Office of Plant Services, Smithsonian Institution William Morrison, Facilities Division, Air National Guard Robert Neathammer, Facility Management Division, U.S. Army Construction Engineering Research Laboratories Charles Pittinger, Jr., Facilities Engineering Division, National Aeronautics and Space Administration Douglas Rowand, Facilities Division, Air National Guard Steve Salter, Naval Facilities Engineering Command, Department of the Navy John Scalzi, Structures and Building Systems, National Science Foundation James Schoonover, Office of Foreign Buildings Operations, U.S. Department of State J. Ronald Smith, Facilities Management Branch, Food and Drug Administration, U.S. Public Health Service Gregory Tsukalas, Facilities Policy Division, U.S. Army Corps of Engineers Donald Uzarski, Engineering and Materials Division, U.S. Army Construction Engineering Research Laboratories John Vilgos, Maintenance Engineering Branch, National Institutes of Health Nongovernment Liaison Members Dianne Davis, American Public Works Association Robert Hummer, Association for Facilities Engineering Staff Lynda Stanley, Director, Federal Facilities Council Lena Grayson, Project Assistant


PREFACE

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PREFACE

Dig a well before you are thirsty.–Chinese proverb Maintenance of buildings and other constructed facilities–an important part of our national assets–demonstrates confidence in the future and recognition of the investment made by preceding generations for the sake of their children. The closing decade of the 20th century finds us beset by many indications that public policy is failing, either by conscious decision or insufficient foresight, to protect the value of these assets. Some observers write of “America in ruins” and describe the fragile foundations upon which our economic prosperity rests. Alarming characterizations of the condition of our schools, other public buildings, and transportation systems abound, seemingly with good reason. Credible analyses indicate that we are systematically neglecting the maintenance of public facilities at all levels of government. We are spending our assets and wasting our inheritance. The earliest signs of neglect are often subtle and escape the notice of those unprepared by training or experience to recognize them. Herein lies a major element of the problem: It is difficult, in times of tight budgets and competing demands for public resources, to convince those responsible for public policy that neglect can lead to losses. We seem to need a disaster to focus our attention and motivate action. Yet we and the committee whose deliberations are the basis for this report subscribe to the wisdom of the Chinese proverb above. We argue not that disaster is upon us but that our experience demonstrates that greater commitment is needed if disaster is to be avoided. We hope that our work will enhance this commitment.

About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. PREFACE vi


CONTENTS

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CONTENTS

1

Introduction

2

Determining Current Replacement Values

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3

Items Appropriately Included In Federal Maintenance And Repair Budgets For Facilities

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4

Items Not Normally Included In The 2 To 4 Percent Guideline For Federal Maintenance And Repair Budgets For Facilities

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5

Minimizing Facilities Maintenance And Repair Costs Through Structured Management Techniques And Advanced Decision Support And Diagnostic Tools

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6

Summary

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Findings And Recommendations From Committing To The Cost Of Ownership

30

Appendix A:

1

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Appendix B:

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Responses To The Committee's Questionnaire On Budgeting For The Maintenance And Repair Of Federal Facilities 33


INTRODUCTION

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1 Introduction

In 1990 the Building Research Board's (BRB) Committee on Advanced Maintenance Concepts for Buildings prepared a report entitled Committing to the Cost of Ownership—Maintenance and Repair of Public Buildings. The report was widely distributed, and the following finding and recommendation was quoted often: “An appropriate budget allocation for routine M&R [maintenance and repair] for a substantial inventory of facilities will typically be in the range of two to four percent of the aggregate current replacement value of those facilities (excluding land and major associated infrastructure). In the absence of specific information upon which to base the M&R budget, this funding level should be used as an absolute minimum value. Where neglect of maintenance has caused a backlog of needed repairs to accumulate, spending must exceed this minimum level until the backlog has been eliminated.”1

Because maintenance and repair budgets typically include numerous small projects for which it is uneconomical to develop detailed justification, federal agencies—like most facility owners—often are in the situation

1The

complete summary of the committee's findings and recommendations is reproduced in Appendix A.


INTRODUCTION

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mentioned by the committee; namely, lacking “specific information upon which to base the M&R budget.” And since most federal agencies have experienced difficulties from time to time getting funds for needed maintenance and repair work, the budget guideline proposed by the committee (i.e., 2 to 4 percent of the aggregate current replacement value of the facilities in an agency's inventory) was endorsed by many managers of federal facilities. Consequently, at the time the report was published it was widely believed that the guideline would be widely adopted and that it would be of great value to federal facilities managers in their budget discussions within their own organizations and with congressional committees. Indeed, some agency officials thought the use of the guideline would usher in a new era of stable, adequate funding for facilities maintenance and repair in the federal government. To evaluate the impact of the report on federal agencies, the FFC's Standing Committee on Operations and Maintenance conducted a survey to determine the views of the agencies on the guideline and the extent of their use of it. The results of the survey, which are presented in Appendix B, indicate that although the report has been widely distributed and frequently quoted, the guideline has not been widely adopted by federal agencies and that it has not solved M&R budgeting problems in federal agencies. The survey revealed several impediments to the use of the guideline: •

Lack of understanding of how to implement the guideline and its application across an entire inventory of facilities. • Lack of statistical validation of the guideline in its use of a formula rather than hard numbers. • Lack of agreement across agencies in determining which items should and should not be included in an M&R budget. • Lack of a consistent approach across agencies on a method for determining current replacement value.

The committee determined that it could not solve all of these but that it could provide help in some areas. Specifically, the committee looked more closely at methods for determining current replacement value and at the items that are appropriate to include in M&R budgets and those that are not. The committee worked to develop definitions for those items to establish a common understanding across agencies. The committee also


INTRODUCTION

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identified structured management techniques and advanced decision support and diagnostic tools that can be used to help minimize facilities maintenance and repair costs. The committee hopes that the present report will encourage agencies to standardize their M&R budgets and to develop common definitions for terms used in keeping M&R records, which would permit easier comparison of M&R expenditures. HOW THE STUDY WAS CONDUCTED The committee began its study by assembling lists of terms used by various federal agencies in connection with the operation, maintenance, repair, and rehabilitation of their facilities. From those lists the committee identified key terms relating to the Building Research Board's committee guidelines that were common to many agencies. The committee next developed definitions for the common terms with which the majority of agencies could agree. Finally, using the agreed-upon terms, the committee determined how the agencies might prepare budgets for facilities-related activities in accordance with the BRB committee guideline. ORGANIZATION OF THE REPORT This report includes four chapters in addition to the introduction. In Chapter 2, methods of determining “current replacement values” are presented and discussed. In Chapter 3, the items that are appropriately included in M&R budgets—and to which the 2 to 4 percent guideline would apply—are identified and defined. In Chapter 4, facilities-related items that are not normally included in the 2 to 4 percent guideline in an M&R budget are identified and defined. Chapter 5 provides suggestions for minimizing facilities M&R costs through structured management techniques and advanced decision support and diagnostic tools. A summary of the committee's view on the application of the BRB-recommended guideline is presented in Chapter 6. In proceeding through this report, the reader should recognize that the range of 2 to 4 percent of the current replacement value is a large range and that the type of facility and level of maintenance will effect the


INTRODUCTION

4

maintenance cost. Since federal agencies have a wide range of types of facilities, and a wide range of level of maintenance requirements, the range of 2 to 4 percent of current replacement value is necessary. The reader should also note that the budget cycle can have many phases, which can be confusing. For purposes of this report, the first phase of the budget cycle is defined as the period when estimates are made for the coming year's requirements. The second phase is when the budget is compiled and sent forward. The third phase is when the current year's budget guidance is issued. The final phase is when the budget is executed. Most facilities managers only participate in the first and final phases. GENERAL DEFINITIONS Various terms used in connection with the preparation of M&R budgets will be defined in subsequent chapters as they are introduced. The committee believes that the following general terms need to be defined early in the report. ADDITION—Addition, expansion, and extension each constitute a physical increase to a real property facility that adds to the overall external dimensions of the facility. As a general rule, if the dimensions used to record the facility in inventory are increased, an addition has occurred. ADEQUATE [FACILITY]—An adequate facility is fully capable of supporting its current use without modifications or repairs that require approval and funding from a higher authority. ALTERATION—An alteration is the work required to adjust interior arrangements or other physical characteristics of an existing real property facility so that it may be more effectively adapted to or utilized for its designated purposes. See also REHABILITATION And CONVERSION. AREA, GROSS FLOOR—The total usable areas of all floors measured between the exterior faces of outside walls. It includes full areas of basements, on-grade and above-grade floors, services and equipment rooms, boiler plant and heater rooms, mezzanines, penthouses, enclosed passages, and raised covered platforms. It also includes half areas of covered open


INTRODUCTION

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porches, covered (but not enclosed) passages, and uncovered raised platforms. Excluded is all enclosed space with an average ceiling height of less than seven feet. AREA, NET FLOOR—Includes the total gross area excluding basements not suited as office space, elevator shafts and machinery space, exterior walls and interior partitions, mechanical equipment and water supply equipment space, permanent corridors and hallways, stairs and stair towers, and toilet and cleaning gear space. AREA, OCCUPIABLE—Occupiable area means that portion of the gross area that is available for use by an occupant's personnel or furnishings, including space that is available jointly to the various occupants of the building, such as auditoriums, health units, and snack bars. Occupiable area does not include the space in a building that is devoted to its operations and maintenance, including craft shops, gear rooms, and building supply storage and issue rooms. Ceiling-high corridors solely serving a single space assignment are “occupiable.” Occupiable area is computed by measuring from the occupant's side of ceiling-high corridor partitions or partitions enclosing mechanical, toilet, and/or custodial space to the inside finish of permanent exterior building walls or to the face of the convector if the convector occupies at least 50 percent of the length of the exterior wall. When computing occupiable area separated by partitions, measurements are taken from the center line of the partitions. BASE—See INSTALLATION. BUILDING—A roofed structure suitable for housing people, materials, and/or equipment or that provides only partial protection from the weather, such as a shed. COLLATERAL EQUIPMENT—See EQUIPMENT, INSTALLED. CONSTRUCTION—Any combination of engineering, procurement, erection, installation, assembly, or fabrication activities involved to create a new facility or to alter, add to, or rehabilitate an existing facility. It also includes the alteration and repair (including dredging, excavating, and painting) of buildings, structures, or other real property. This does not


INTRODUCTION

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involve the manufacture, production, finishing, construction, alteration, repair, processing, or assembling of items categorized as personal property. CONVERSION—A conversion is a revision of a real property facility that changes the functional purpose for which the facility was originally designed or used. A conversion results in a change to the basic real property facilities three-digit category code currently assigned to the facility. [Two elements are necessary for conversion: (a) a major structural revision and (b) a change in functional purpose.] EQUIPMENT, IN PLACE—Includes all equipment other than installed equipment, when acquired and used in a facility or a test apparatus and can be served and removed after erection or installation without substantial loss of value or damage thereto or to the premises where installed. Non-collateral equipment imparts to the facility or test apparatus its particular character at the time (e.g., furniture in an office building, equipment in a laboratory, equipment in a test stand, machine tools in a shop facility, computers in a computer facility) and is not required to make the facility useful or operable as a structure or building. EQUIPMENT, INSTALLED—Encompasses building-type equipment, built-in equipment, and large, substantially affixed equipment/property and is normally acquired and installed as part of a facility project necessary to make it a complete and usable facility. EXIGENT MINOR CONSTRUCTION—Exigent minor construction supports projects costing more than (a specified amount) and no more than (a specified amount) that demand remedy sooner than would be possible if normal construction procedures were followed. It provides the same basic coverage as the former urgent minor construction program.2 EXPANSION AND EXTENSION—See ADDITION.

2The

minimum and maximum dollar amounts are different for different agencies. Typical minimums are $100,000 and $200,000; typical maximums are $500,000 and $1,000,000.


INTRODUCTION

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FACILITY—A separate individual building, structure, utility, or other form of real property, including land. or A term used to encompass land, buildings, other structures, and other real property improvements, including utilities and collateral equipment. The term does not include operating materials, supplies, special tooling, special test equipment, noncapitalized equipment. The term facility is used in connection with land, buildings (facilities having the basic function to enclose usable space), structures (facilities having the basic function to enclose usable space), structures (facilities having the basic function of a research or operational activity), and other real property improvement. FACILITY DEFICIENCY—The quantitative difference in terms of some unit measure between a stated requirement for a facility and the adequate assets available for the satisfaction of that requirement. A facility deficiency may be satisfied in various ways by lease or purchase, by reassignment of otherwise surplus assets, by adoption of existing assets, by new construction, etc. INADEQUATE FACILITY—An inadequate facility is one that cannot be made adequate for its present use through “economically justifiable means.” An inadequate facility could, however, be adequate or substandard for a use other than its assigned category code. INSTALLATION–The aggregate of real property facilities assigned to an activity. LINE-ITEM PROJECTS—Projects that are specifically reviewed and approved by Congress. MAJOR PROJECTS—Major projects are projects selected (by upper management) for focused management attention. Criteria utilized are estimated total project cost (over some minimum amount), importance to program objectives, size and complexity, degree of control required (e.g., unusual congressionally mandated requirements), visibility and clarity, and stability of the project. Same as LINE ITEM PROJECTS.


INTRODUCTION

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MILITARY CONSTRUCTION PROGRAM (MCP)—One-year plan of family housing, military construction, and design through which military facilities are authorized and appropriated by Congress. MODERNIZATION—See RENOVATION. MODIFICATION—See CONVERSION. MULTIPLE-USE BUILDING—A building that supports more than one function and is reportable under multiple category codes. NET SQUARE FEET—See AREA, NET FLOOR. NONCOLLATERAL EQUIPMENT—See EQUIPMENT, IN PLACE. REAL PROPERTY—Land and improvements including buildings, structures, and utilities. REAL-PROPERTY INSTALLED EQUIPMENT—See EQUIPMENT, INSTALLED. REHABILITATION—The action performed in restoring a facility to normal design standards. RENOVATION—The action performed in upgrading an existing substandard facility to a functionally adequate, usable facility. REPAIR—Repair is the restoration of a facility or component thereof to such condition that it may be effectively utilized for its designated purposes by overhaul, reprocessing, or replacement of constituent parts or materials that have deteriorated by action of the elements or usage and have not been corrected through maintenance. REPLACEMENT—The construction of a facility to replace [an obsolete facility or] one destroyed or damaged [through either a catastrophe or neglect] beyond the point at which it may be economically repaired [or rehabilitated].


INTRODUCTION

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STRUCTURE—Any fixed facility that is not a building or a utility constructed on or in the land. Examples of structures include bridges, antenna towers, tanks, fixed cranes, roads, and sidewalks. or The assemblage of structural components within a completed building. SUBSTANDARD [CONDITION]—Substandard describes a facility with deficiencies that require approval and funding beyond the authority of the local managers or commander for modifications or repairs to make the facility adequate for its function. or Any deficient condition of a facility. or A substandard rating is given spaces that do not provide a suitable environment for the assigned function. These areas should be considered for modification, upgrading, or replacement at some time in the future if the planning and financial atmosphere is conducive. Such space would fail to meet two or more rating factors. URGENT MINOR REPAIRS—See EXIGENT MINOR CONSTRUCTION. USER—The entity that operates or otherwise uses a facility. UTILITY—A system, or any of its components, that generates and/or distributes (via pipelines, wires, buses, or electromagnetic waves) a commodity or service to itself and/or to other facilities.


DETERMINING CURRENT REPLACEMENT VALUES

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2 Determining Current Replacement Values

As noted previously, the BRB report, Committing to the Cost of Ownership, recommended that, in the absence of other information, M&R budgets for facilities be set at between 2 and 4 percent of the aggregate current replacement value (CRV) of the facilities (i.e., the amount in current dollars it would cost to duplicate the facilities). In order to apply this guideline, an organization must first determine the CRV of its facilities. Federal agencies currently use two different methods of determining CRV (which some agencies call the current plant value): 1. The current unit construction costs (e.g., dollars per square feet) for various types of facilities in an agency's inventory are multiplied by the total number of units (e.g., square feet) of each type of facility in the inventory.3 In making the calculation, it is essential that the units of area used are the same as the units in the assumed unit costs; major errors can be introduced, for example, if unit costs based on gross area are multiplied by net or occupiable areas. 2. The original total cost of each facility in an agency's inventory is multiplied by an escalation factor (based, for example, on the Engineering News Record's building cost index) to determine the cost of the facility in

3If

a building is used for a variety of purposes and the cost of different types of space varies significantly, some agencies calculate the cost of different areas of the building separately, using different unit cost factors for each area.


DETERMINING CURRENT REPLACEMENT VALUES

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current dollars. If the facility was enlarged or improved after it was first occupied, the present value of the added investment must be determined by the same process, and the amount must be added to the present value of the original structure. However, money spent on the facility merely to maintain it or restore it is not considered added value. Either method will give current replacement values that are sufficiently accurate for M&R budgeting purposes. However, the committee believes that in most cases the first approach is easier to use. Furthermore, for those facilities for which parametric estimating data have been developed, the first approach can give very accurate current replacement values. Regardless of which approach is used, the exercise will take time and will cost money. But in most cases it will be much cheaper than performing a detailed condition assessment, and, once done, the updating process is relatively easy. It is not necessary to calculate the CRV of a particular facility with great accuracy because (a) agencies ordinarily combine the CRVs for many facilities to determine the M&R budget for the entire agency or a major division; consequently, errors in the CRVs for individual facilities tend to cancel one another; and (b) small cumulative errors become negligible when the overall CRV is multiplied by 2 to 4 percent to set the overall M&R budget. Nevertheless, agencies cannot treat the calculation of CRVs too cavalierly since facility managers will be tempted to inflate CRVs in order to increase their M&R budgets.


ITEMS APPROPRIATELY INCLUDED IN FEDERAL MAINTENANCE AND REPAIR BUDGETS FOR FACILITIES

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3 Items Appropriately Included In Federal Maintenance And Repair Budgets For Facilities While the concept of an M&R budget being based on a percentage of the current replacement value of an agency's facilities inventory seems straightforward, it is not an easy concept to apply. The problem is that there are overlaps and gray areas between M&R work and operations activities and alteration projects. Equipment operators, for example, often do routine maintenance as they check on the equipment for which they are responsible; similarly, alteration projects frequently include some work that could be considered repairs. Agencies must decide if any portion of the operations or the alterations contract amount will be included in the M&R budget. The questions are not trivial since M&R activities would be underfunded if M&R money were unknowingly used for operations or alterations work; conversely, M&R activities would be overfunded if M&R work were unknowingly performed under operations and alterations budgets. To help agencies deal with these questions, the committee members compared notes on what they would and would not include in an M&R budget. This chapter presents the committee's view on what items are appropriately included in an M&R budget (and thus are subject to the 2 to 4 percent guideline) versus a total operations and maintenance budget, of which M&R is but a subset of the total. The committee's view on what items are not appropriately included in M&R budgets is presented in the next chapter.



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ITEMS APPROPRIATELY INCLUDED IN M&R BUDGETS FOR FACILITIES Listed below—with definitions—are items that virtually all committee members would include in an M&R budget for facilities. Preventive maintenance. Preventive maintenance is the planned, scheduled periodic inspection, adjustment, cleaning, lubrication, parts replacement, and minor repair of equipment and systems for which a specific operator is not assigned. Preventive maintenance consists of many check point activities on items that, if disabled, would interfere with an essential installation operation, endanger life or property, or involve high cost or long lead time for replacement. Preventive maintenance is the cornerstone of any good maintenance program. A weak or nonexistent preventive maintenance program could result in much more emergency work and costly repairs. Programmed major maintenance. Programmed major maintenance includes those maintenance tasks whose cycle exceeds one year. Examples of programmed major maintenance are painting, roof maintenance (e.g., (floodcoating), road and parking lot maintenance (overlays and seal coating), utility system maintenance (pigging of constricted lines), and similar functions. Predictive testing and inspection. Predictive testing and inspection refers to testing and inspection activities that involve the use of sophisticated means to identify maintenance requirements. For example, specialized tests are used to locate thinning of pipe walls and fractures (e.g., eddy current testing, radiographic inspections, ultrasonic testing, television cameras, or aural leak detectors); to detect roof weaknesses or wet insulation areas (e.g., infrared thermographic viewers or nuclear density devices); to identify large equipment wear problems (e.g., vibration and balance analyzers, oil analysis for wear metals and lubricant properties); and to locate charge or heat buildup in electric equipment (e.g., staticscopes or infrared thermography).



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Routine repairs.4 Routine repairs are actions taken to restore a system or piece of equipment to its original capacity, efficiency, or capability. Routine repairs—in contrast to capitalized repairs discussed in the next chapter—are not intended to increase significantly the capacity of the item involved. Thus, for example, the replacement of a failed boiler with a new unit of similar capacity would be a routine repair project. However, if the capacity of the new unit were double the capacity of the original unit, the cost of the extra capacity would have to be capitalized and would not be considered routine repair work and would not be paid for with M&R funds. Service calls.5 Service calls are requests for system or equipment repairs that—unlike preventive maintenance work—are unscheduled and unanticipated. Service calls generally are received when a system or component has failed. If the problem has created a hazard or involves an essential service, an emergency response might be necessary. Conversely, if the problem is not critical, a routine response is adequate. Replacement of obsolete items. Replacement of obsolete items refers to work undertaken to bring a component or system into compliance with new codes or safety regulations or to replace an item that is unacceptable, inefficient, or for which spare parts can no longer be obtained. Such work is considered M&R work if it is required for the continued operation of the facility. UNRESOLVED ISSUES The committee found an unexpectedly high level of agreement among the agencies represented on what items should be included in an M&R budget. Significant uncertainty was encountered with regard to just two items: how to treat backlogs of M&R work and how to account for M&R work performed by military personnel.

4Also

referred to as “maintenance repair” or “corrective maintenance.”

5Also

referred to as “trouble calls.”



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Backlog of M&R work. Because of underfunding of M&R work in the past, many agencies have built up a backlog of work, which cannot be reduced with M&R budgets based on the BRB 2 to 4 percent guideline since that guideline covers only current M&R requirements. Agencies have not reached consensus on how to deal with the problem. One approach is to merely increase the M&R budget based on the BRB guideline by some arbitrary percentage to provide for the extra work needed to reduce the backlog. Another approach is to treat the backlog as a separate issue for which a separate M&R budget is needed. Accounting for M&R work performed by military personnel. At some military facilities, M&R work is sometimes performed by uniformed personnel whose pay comes from a military personnel budget rather than an M&R budget. Thus, any budget based on the BRB guideline ought to be adjusted to reflect work done by military personnel. However, agencies have not developed methods for calculating the value of the contribution of such personnel or for determining the impact of such contributions on an M&R budget.


ITEMS NOT NORMALLY INCLUDED IN THE 2 TO 4 PERCENT GUIDELINE FOR FEDERAL MAINTENANCE AND REPAIR BUDGETS FOR FACILITIES

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4 Items Not Normally Included In The 2 to 4 Percent Guideline For Federal Maintenance And Repair Budgets For Facilities To use the BRB's 2 to 4 percent guideline properly, it is as important to determine what items to leave out of an M&R budget as it is to determine what items to include. The committee, therefore, compared notes on the policies of their agencies on the subject. GENERAL POLICY The committee found that the agencies generally are in agreement that M&R budgets should not include funds for any activities that are primarily operational or for any construction work that expands or changes the function of a facility or lengthens its life beyond its original design life. However, as noted previously, there are gray areas associated with the implementation of this general policy. OPERATIONAL ACTIVITIES Most activities associated with the operation of facilities do not include any significant amount of maintenance or repair work and thus clearly are not appropriate in an M&R budget. Among the activities in this category are:


ITEMS NOT NORMALLY INCLUDED IN THE 2 TO 4 PERCENT GUIDELINE FOR FEDERAL MAINTENANCE AND REPAIR BUDGETS FOR FACILITIES

• • • • • • • •

17

Custodial work (i.e., services, cleaning) Snow removal Pest control Refuse collection and disposal Grounds care, landscaping Environmental operations, recordkeeping, etc. Security services Fire protection services

Other operational activities may involve some routine maintenance or minor repair work on facilities but not enough to qualify for inclusion in an M&R budget, specifically: Central utility plant operations. Many government facilities include a central utility plant for the generation of electricity and/or the production of steam or hot water and chilled water for use in heating and cooling buildings and also central water and sewage treatment plants. Such plants usually are staffed 24 hours a day, and the staff ordinarily perform routine maintenance as part of their duties. While such work rightfully should be paid for with M&R funds, it is almost impossible to segregate time spent on operations from time spent on maintenance. Since maintenance work is usually incidental to operations work, most agencies have concluded that all of the time of plant operators should be classified as operations work. However, nonroutine maintenance performed on such plants by either government personnel or under contract is rightfully covered by M&R budgets. Grounds care. Grounds care is the maintenance of lawns, shrubs, trees, sprinklers, rights-of-way and open fields, drainage ditches, other similar improvements to land, and pest control when performed outside buildings. Maintenance tasks include mowing, spreading fertilizer, trimming hedges and shrubs, clearing ditches, snow removal, and related work.

About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. ITEMS NOT NORMALLY INCLUDED IN THE 2 TO 4 PERCENT GUIDELINE FOR FEDERAL MAINTENANCE AND REPAIR BUDGETS FOR FACILITIES

• • • • Alterations (minor) Service requests (non-M&R requests or services) Support for special events or activities (non-M&R) Standby services by mechanics required by “mission” activities

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NONMAINTENANCE ACTIVITIES

The following activities are not part of the 2 to 4 percent guideline for facilities maintenance and should not be added to the total operations and maintenance budget:


MINIMIZING FACILITIES MAINTENANCE AND REPAIR COSTS THROUGH STRUCTURED MANAGEMENT TECHNIQUES AND ADVANCED DECISION SUPPORT AND DIAGNOSTIC TOOLS

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5 Minimizing Facilities Maintenance and Repair Costs Through Structured Management Techniques And Advanced Decision Support And Diagnostic Tools Maintenance and repair (M&R) spending is a normal and expected cost of facility ownership. However, the cost can be minimized through an aggressive facility management program and the use of applicable diagnostic tools. The key to success is for managers to become proactive and embark on a realistic, long-range M&R program. Timely, well-planned M&R is cost effective. Lack of an effective M&R program results in reactionary (crisis) management as breakdown repair becomes the normal business activity. A reactionary approach results in high penalty costs that take ever-increasing amounts of the M&R and operating budgets. Consequently, more M&R is deferred, which in turn leads to accelerated deterioration and facility system and component failure. FACILITY MANAGEMENT PROGRAM A facility management program exists in every public works organization. In simple terms it is nothing more than the decision-making process. However, the decision-making methodology chosen will, in large part, determine success or failure. Ad hoc approaches tend to be reactionary and often lead to M&R programs that are costly on a per-unit basis. On the other hand, a structured facility management process can result in lower per-unit costs because the decision-making process is guided



20

by certain principles. These are discussed in this chapter, together with the two distinct management-level phases: network/facility and project. NETWORK/FACILITY-LEVEL MANAGEMENT Network/facility-level management encompasses many broad-based decisions. These decisions generally apply to entire networks or portions of networks (e.g., pavements, railroad tracks, pipelines) or facilities (e.g., buildings, piers, underground storage tanks). Network/facility-level management is performed on an ongoing basis and focuses on answering what, where, when, and budgeting questions. There are several aspects associated with management at this level. These include establishing programs for preventive maintenance, programmed maintenance, and planned (long-and short-range) specific M&R, all based on realistic budget projections. These are discussed in more detail later in this chapter. PROJECT-LEVEL MANAGEMENT Project-level management addresses the how best aspects of facility management. The purpose is to address the causes of distress associated with a given project, formulate feasible M&R alternatives, and choose the best one (or ones) for the project. Determining and correcting the cause instead of simply treating symptoms can reduce the rate of deterioration and stretch the time interval between corrective repairs. Other key project-level management activities are the identification of all feasible M&R alternatives and the selection of the best one. Again, the nature and cost of the project will determine the level of effort associated with these activities. An economic analysis will help decide the lowest lifecycle cost alternative, although factors other than cost will sometimes govern the selection. Project-level management is associated with short-range work plans. Only rarely will project-level management be accomplished for long-range projects. Continued deterioration and many other factors may negate the effort expended on project-level details if performed too early in the total management cycle.



21

COMPUTERIZED MAINTENANCE MANAGEMENT SYSTEMS (CMMS) Effective facilities maintenance management requires the use and control of large amounts of information. This includes tracking incoming requests for facilities maintenance work, scheduling preventive maintenance, preparing budget estimates, projecting facilities maintenance requirements, and determining resource allocations. The input, storage, retrieval, manipulation, and display of this information is best accomplished by computers. The past two decades saw the application of computer technology to facilities maintenance management expand as systems became more powerful, less costly, and easier to use. Automation products and processes evolved from pure record keeping and processing of accounting data to task automation and decision support. Sharing information interactively with other systems and direct system access by end users are realities. Many commercial software products are available for use in facilities maintenance management. These systems are available for the full spectrum of computers to networked and stand-alone microcomputer systems. However, it is outside the scope of this committee's work to suggest specific hardware or software systems for use. PREVENTIVE MAINTENANCE Preventive maintenance is the cornerstone of a solid cost-effective M&R program. Nominally, preventive maintenance is accomplished on a fixed schedule or frequency and consists of many check-point activities on items, most typically equipment. Examples include filter replacement, lubrication, and mechanical adjustments. Preventive maintenance reduces the risk of system or component failure, which if it occurs, would interfere with essential operations, endanger life or property, involve a high cost, or require a long lead time for replacement. Not all facility systems or components should be included in a preventive maintenance program. These programs can be costly, so a preventive maintenance program should be reserved for those critical systems or components where the risk of failure must be reduced or where a preventive maintenance program can be shown to be cost effective on a life-cycle basis.



22

Systems or components not included in a preventive maintenance program are candidates for “run-to-failure” repair (unplanned), programmed maintenance (planned), or planned M&R based on condition and need. Typically, components included in a “run-to-failure” M&R strategy are small noncritical components that can be repaired or replaced on a service call. Other planned M&R strategies are described next. PREDICTIVE TESTING AND INSPECTION (PT&I) Predictive testing can reduce facilities maintenance costs and improve availability by enabling just-in-time maintenance of facilities systems and related equipment. Predictive testing monitors the condition or operating parameters of facilities system components to detect trends or conditions that indicate excessive wear or impending failure. This permits initiation of timely maintenance actions. There are embedded or on-line systems for continuous readings and portable systems for periodic readings. Software is available to integrate or interface predictive testing results with CMMS. Some examples of predictive testing methods and applications are: • • • •

Oil analysis for wear metals and lubricant properties Vibration analysis of bearings Ultrasonic sound analysis for leaks Infrared thermography scans of electrical equipment for heat buildup or loss and for roof and insulation failure • Motor circuit analysis for voltage imbalance • Magnetic signature or X-ray testing for ferrous metal failure

In addition, the use of PT&I during the commissioning of new or renovated buildings can detect defective equipment installation and defective equipment that otherwise appears satisfactory. Predictive testing technology is evolving rapidly. A method to determine when to use predictive testing is to apply the Reliability Centered Maintenance approach described below.



23

RELIABILITY CENTERED MAINTENANCE (RCM) RCM is a maintenance philosophy that incorporates the most logical and cost-effective mix of breakdown maintenance, preventive maintenance, predictive testing and inspection, and proactive maintenance. Traditionally, many organizations practiced a mix of breakdown maintenance and preventive maintenance; some practiced breakdown maintenance entirely. Breakdown maintenance (also known as “run to failure”) rapidly consumed the life of equipment, which necessitated expensive replacements, and shut down operations without warning. Preventive maintenance was an improvement over breakdown maintenance and it extended the life of equipment. However, it was wasteful of resources, as the process was driven by time or operating cycles without regard to actual equipment condition. In addition, in times of constrained resources, preventive maintenance was the first area to be cut back or stopped due to the lack of any immediate significant impact or readily apparent damage. In the 1950s and 60s the aircraft industry championed “on condition” maintenance, which utilized both simple and sophisticated nondestructive and noninvasive testing that could determine the actual condition and need for maintenance of a wide range of equipment. This new method evolved into what is now generally referred to as predictive testing and inspection. PT&I allowed an organization to reduce the amount of unnecessary maintenance performed, identify impending failure before it became catastrophic in nature, and allowed the scheduling of repairs and/or maintenance at a convenient time rather than on an emergency basis. Proactive maintenance combines the principles of total quality management in order to identify the “root cause” of failures, such as defective parts, defective installation, improper operation, or unsuitable design. After the root cause is determined, actions are taken to remove or change the circumstance that caused the failure in order to gain the full expected life of other similar components. Overall, reasonable application of RCM and its underlying processes will result in attainment of the full expected equipment life, reduced maintenance costs, and reliable operation of equipment with no significant adverse impact on safety or mission accomplishment.



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PROGRAMMED MAINTENANCE Programmed maintenance is a planned M&R strategy that is viable when the proper recurrence frequency can be determined with a high degree of confidence, and it is cost effective on a life-cycle basis. Generally, the recurrence frequency is less often than that associated with preventive maintenance. Also, the risk associated with facility, systems, and/or component failure is less critical. Examples include pavement seal coats, roof drainage system cleaning from leaf accumulation, and certain painting. PLANNED SPECIFIC MAINTENANCE AND REPAIR Planned specific M&R consists of two phases: long range and short range. Long-range work planning is a network/facility-level management function and spans the entire multiyear planning horizon (typically 5 years). A long-range M&R plan should be updated periodically, at least annually. It is developed, in large part, from a condition survey inspection and condition assessment program, a prediction of future M&R needs, and a prioritization of total requirements. Short-range work plans cover the present up to 1 year (typically called an annual work plan). The short-range plan is that portion of the overall plan that has “come due” and generally encompasses project-level management activities. CONDITION SURVEY INSPECTIONS AND CONDITION ASSESSMENTS Many facilities, systems, and components do not lend themselves to preventive maintenance, programmed maintenance, or a strategy of “run-tofailure.” These facilities, systems, and components should receive periodic condition survey inspections. The primary purpose of a condition survey is to collect just enough information to ascertain condition and provide a reasonable estimate of deficiencies. Long-range work plans are based on this information. The condition surveys need not be very detailed or performed very often. Sampling may be feasible for certain facilities. Anything more will increase the cost of inspection but only provide limited additional value. This is because survey information becomes “stale” due to the continuing deterioration process. Visual inspection techniques are



25

most often employed, and they may be supplemented with hand tools, meters, and sensors. Condition survey frequency is a function of facility type and use; system, component, and material type; current condition; and rate of deterioration. Depending on those variables, reinspection should occur every 1 to 5 years. The condition survey inspection information must be translated into an assessment of condition. Generally, this involves the use of a condition rating. The rating should be objective, repeatable, sensitive enough to reflect condition changes, and correlate to budget requirements. Objectivity and repeatability are critical criteria for ensuring consistent ratings. Also, sensitivity is needed to accurately measure deterioration rates. The correlation to budgets will help to establish funding needs. An example of a condition rating procedure is the American Society of Testing and Materials (ASTM) standard for pavement evaluation: the Pavement Condition Index employs a 0 to 100 index scale. Different index values relate to specific M&R requirements and costs. PREDICTIVE MODELING Fiscal realities require that M&R budgets be prepared many years ahead of actual M&R accomplishment. However, condition survey inspection and condition assessment programs only result in a listing of current requirements. Although some inspection findings will be deferred for future accomplishment, an accurate prediction of total future M&R needs is necessary to produce meaningful budgets. Condition prediction allows managers to find out what, where, and when facilities, systems, and components will need M&R. Models exist or are under development for predicting performance (or failure) or a future condition rating (or index) based on certain key variables. Research has shown that as condition degrades the M&R cost for restoring the condition to an acceptable level increases curvilinearly. This implies that there is a “best” time to schedule M&R that results in the best condition at the lowest possible cost. Deviating from that “best” time results in a “penalty cost.” Robust predictive models can determine and list candidate facilities, systems, or components by year based on the predicted “best” time for M&R. Using cost versus condition correlations, an estimate of how much money is needed each year can be made.



26

PRIORITIZING MAINTENANCE AND REPAIR Ideally, multiyear budgets could be prepared and funded based on the sum of the preventive maintenance, programmed maintenance, and specific longand short-range M&R needs. A contingency amount could be added to account for “run-to-failure” and emergencies. Realistically, there are two major fallacies to this approach. One is that such a program would result in wide budget variations from year to year. The second is that the limited availability of public funds will not allow full funding of M&R programs every year. Budget constraints mandate that the various elements of an M&R program be prioritized in a methodical manner. In the committee's experience, ad hoc “squeaky wheel” approaches often result in poor allocation of resources. M&R program elements, including specific projects, can be ranked each year, based on cost (including penalty cost), mission needs, safety, environmental concerns, mandates, and/or any other important factors. Weighted guidelines models exist for setting these priorities. Operations research modeling tools, such as linear and dynamic programming, can also be used to optimally select a mix of M&R needs based on a set of constraints. Projects not selected for accomplishment in a given year are carried over into the next year, where they compete with new M&R requirements. DIAGNOSTIC TOOLS Often, the inspection process (condition survey or detailed inspection) relies heavily on the experience and observation skills of the inspector. However, many facility deficiencies defy visual detection until they become severe, if then. Fortunately, diagnostic tools exist to aid in both the condition survey (network/facility-level management) and detailed (project—level management) inspections. Network/facility-level management condition surveys are used primarily to develop long-range work plans. Since these surveys do not need to be detailed, certain diagnostic tools can provide meaningful data quickly and cost effectively. Examples include infrared scans to detect wet insulation, pipe crawler cameras to detect buried pipe deterioration, and automated railroad track geometry measurements. On the “low-tech” side, the use of pen-based notebook computers has improved the gathering and



27

transfer of visually obtained data. On the “high-tech” side, video/photographic imaging and an array of built-in sensors are being developed to collect data in “real time” for automatic processing. Sometimes, determining the cause of distress (project level) requires specialized diagnostic testing. Generally, determining the cause will involve an enhanced level of inspection detail not accomplished as part of the routine condition survey. The nature and cost of a project need to be weighed against the cost of the diagnosis and level of risk associated with no diagnosis or a misdiagnosis. At a minimum, except for the smallest of projects, an inspection is needed to clarify scope and establish project quantities. Many tools used for condition surveys are also useful for project-level diagnostics. Often, however, the project level-diagnostic tools need to be more sophisticated to help determine the cause and quantities of distress. Laboratory testing and loadcarrying capacity analysis through nondestructive deflection testing are examples. In addition, results from ongoing, well-planned preventive maintenance and predictive testing and inspection programs can be utilized to a high degree in a condition assessment process or update, particularly if the data are contained in a state-of-the-art computerized maintenance management system. CONCURRENT ENGINEERING Concurrent engineering is a concept to track, identify, investigate, and design out or purchase alternative products/equipment that is a better “fit” for a designated application. Misapplication or poor design can cause repeated and expensive failures that adversely affect the M&R program. New facilities must be designed not only for intended use but also for a low-cost maintenance program. Existing facilities need to be “reengineered” at the time of system or component repair/replacement or during rehabilitation to ensure that low-cost maintenance alternatives are considered. Close coordination with system/ equipment operators and maintenance professionals is an important part of this process.


SUMMARY

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6 Summary

The Operations and Maintenance Committee of the Federal Facilities Council initiated this study to evaluate the impact of a budget guideline in the BRB report Committing to the Cost of Ownership-Maintenance and Repair of Public Buildings (i.e., 2 to 4 percent of the aggregate current replacement value of the facilities in an agency's inventory). In the course of its work, the committee identified four impediments to widespread use and understanding of the guideline. Two such impediments were (1) lack of agreement across agencies in determining which items should and should not be included in an M&R budget and (2) lack of a consistent approach across agencies on a method for determining current replacement value. This report contains useful guidance on how to make estimates for the coming year's needs for facilities maintenance and repair. It points out what items are and what items are not normally included in a facilities maintenance budget. It also establishes a method of determining current replacement value. The report also identifies structured management techniques and advanced decision support and diagnostic tools that can be used to help minimize facilities maintenance and repair costs. The issue of how to effectively maintain and operate federal facilities, will continue to be a significant concern for federal facilities managers, especially as resources become more limited and facilities age. In 1996 the Federal Facilities Council will sponsor a new study that will continue and build upon the work of the BRB's Committee on Advanced Maintenance Concepts for Buildings and this committee. The new study will review alternative management approaches for developing maintenance and repair budgets, such as avoiding replacement costs, achieving performance benchmarks, and improving facility reliability. The new study will also


SUMMARY

29

evaluate examples of condition assessment programs currently in use and explore the role and availability of technology to automate the condition assessment process and the feasibility of applying these technologies. Federal facilities represent a significant investment of tax dollars. Ensuring that maintenance and repair of such facilities is implemented efficiently and effectively is an important element in protecting that investment. Although not always recognized, effective maintenance and repair are also important in supporting the missions of federal agencies. Lack of an effective M&R program results in the disruption of services when break downs occur and in high penalty costs when minor problems escalate into major repairs as a result of deferred maintenance. The committee hopes that this report will contribute to the development of realistic, long-range M&R programs across federal agencies and facilities that will help protect the investment in and long-term effectiveness of federal facilities.


APPENDIX A

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Appendix A Findings and Recommendations From Committing to the Cost of Ownership6 The nation's public buildings—government administration buildings, health care facilities, schools, correctional facilities, and a variety of other elements of public infrastructure—are assets acquired through the investment of tax dollars over the years and are critical to the nation's high quality of life and productive environment. Public officials—the stewards of these assets—must bear responsibility for their effective maintenance. Widespread underfunding of maintenance of public facilities, caused by many factors, can affect public health and safety, reduce the productivity of public employees, and cause longterm financial losses when buildings must be prematurely renewed or replaced. This document is the report of a committee asked by the Building Research Board to undertake a broad review of maintenance and repair activities of government agencies and to recommend how these activities might be improved. Based on its own review of available information, consideration of reports by agency personnel and other professionals, and the experience of its members, the committee is troubled. The procedures and allocations of resources for managing the public's built assets—influenced by a variety of financial and political pressures as well as technical requirements—are failing to protect these assets, and the

6By

the Committee on Advanced Maintenance Concepts for Buildings, Building Research Board, National Research Council, 1990, National Academy Press, Washington, DC.


APPENDIX A

31

potential costs of correcting past neglect are measured in billions of dollars. These procedures and allocations must be changed to recognize the full costs of ownership of these assets and to support appropriate maintenance activities. The committee hopes that its findings and recommendations will help to bring about these changes: 1.

Underfunding is a widespread and persistent problem that undermines maintenance and repair (M&R) of public buildings. To overcome this problem, M&R budgets should be structured to identify explicitly the expenditures associated with routine M&R requirements and activities to reduce the backlog of deferred deficiencies. An appropriate budget allocation for routine M&R for a substantial inventory of facilities will typically be in the range of 2 to 4 percent of the aggregate current replacement value of those facilities (excluding land and major associated infrastructure). In the absence of specific information upon which to base an M&R budget, this funding level should be used as an absolute minimum value. Where neglect of maintenance has caused a backlog of needed repairs to accumulate, spending must exceed this minimum level until the backlog has been eliminated. 2. Periodic condition assessment is an essential step in effective facilities management. Formal condition assessment programs should be implemented by agencies responsible for M&R budgets. These programs will initially serve as the basis for establishing appropriate levels of funding required to reduce and eventually eliminate backlogs. Once a backlog is eliminated and a steady-state performance is achieved, the condition assessment becomes a management tool for monitoring the effectiveness of M&R activities. Condition assessment programs require trained technicians and managers and should be standardized to control their cost and to ensure consistency of results. Federal agencies and other owners and users of large inventories of buildings should undertake to establish guidelines for such programs. 3. While adequate M&R funding based on recognition of the full costs of ownership is a prerequisite for protection of the public's assets, effective maintenance management is also required to realize the full benefit of the funds made available. Agencies should make specific assignments of responsibility for M&R to qualified and trained staff and managers. Activities such as minor alterations and improvements that may be disguised as M&R should be clearly identified and not permitted to divert resources

About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. APPENDIX A 32

from legitimate M&R functions. Education, training, and recognition of staff members responsible for M&R are needed, along with a firm commitment to effective management of our built assets.


APPENDIX B

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Appendix B Responses to the Committee's Questionnaire on Budgeting for the Maintenance and Repair of Federal Facilities In 1990 the Building Research Board (BRB) published a report entitled Committing to the Cost of Ownership—Maintenance and Repair of Public Buildings. The report has been widely distributed, and one finding and recommendation in particular has been quoted often: “An appropriate budget allocation for routine M&R [maintenance and repair] for a substantial inventory of facilities will typically be in the range of two to four percent of the aggregate current replacement value of those facilities (excluding land and major associated infrastructure). In the absence of specific information upon which to base the M&R budget, this funding level should be used as an absolute minimum value. Where neglect of maintenance has caused a backlog of needed repairs to accumulate, spending must exceed this minimum level until the backlog has been eliminated.”

Because maintenance and repair budgets typically include numerous small projects for which it is uneconomical to develop detailed justification, federal agencies—like most facility owners—often are in the situation mentioned earlier by the committee of lacking “specific information upon which to base an M&R budget.” And since most federal agencies have experienced difficulties from time to time in obtaining funds to do needed work, the budget guideline proposed in the BRB report of 2 to 4


APPENDIX B

34

percent of the aggregate current replacement value (CRV) of the facilities in an agency's inventory was endorsed by many managers of federal facilities. Indeed, at the time the report was published, it was believed that the guideline would be widely adopted and that its use would usher in a new era of stable, adequate funding for federal facilities. However, indications are that the hopedfor benefits have not been fully realized. A survey was conducted by the FFC's Standing Committee on Operations and Maintenance to try to determine the views of federal agencies on and their experiences with the recommended guideline. To conduct the survey, the committee developed a questionnaire that was distributed to the agencies represented on the committee. Responses, which are summarized below, were received from 12 agencies: • • • • • • • • • • • •

Air Force Army Center for Public Works Department of Veterans Affairs Food and Drug Administration General Services Administration Indian Health Service International Broadcasting Bureau National Aeronautics and Space Administration Naval Facilities Engineering Command National Institutes of Health Smithsonian Institution State Department

The questionnaire included 11 questions, the first two of which were answered by all respondents. Questions 3 through 8 were answered by respondents from agencies that have used the BRB guideline. Questions 9 through 11 were answered by respondents from agencies that have not used the BRB guideline.


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QUESTION 1: Briefly explain what budget categories are used in developing budgets for facilities in your agency, the definitions of those categories, and how the budgets are structured or organized. AIR FORCE (AF) The AF budget structure for upkeep and operation of infrastructure/ facilities is called Real Property Maintenance Activities (RPMA). RPMA provides funding for the majority of utilities and facilities on an installation but excludes Military Family Housing, Military Construction (MILCON), and environmental types of projects. RPMA is divided into two general categories: Real Property Services (RPS) and Real Property Maintenance (RPM). RPS includes the production or purchase of utilities and engineering services such as fire protection, aircraft crash/rescue, snow removal, refuse collection, rents, and leases. RPM includes two categories: minor construction (additions, expansions, or major alterations to facilities and infrastructure of less than $300,000 in cost) and maintenance and repair (M&R) activities performed by inhouse or contract work forces. The AF constructs facilities projects greater than $300,000 through the P-341 Unspecified Minor Construction and Military Construction programs, which must be authorized and funded by Congress. Air Force as a part of RPM is budgeted and tracked separately. Subcategories for various commodities, such as supplies, construction materials, civilian pay, and contract costs, are also budgeted and tracked. The Department of Defense (DoD) uses a model to predict the Backlog of Maintenance and Repair (BMAR) in dollars as a result of the level of funding. The Air Force also calculates funding as a percentage of Plant Replacement Value (PRV) to evaluate the effects of funding levels.


APPENDIX B

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ARMY CENTER FOR PUBLIC WORKS (ARMY-CPW) The Army is currently using Annual Recurring Requirements and Backlog of Maintenance to adjust annual budgets for maintenance and repair. DEPARTMENT OF VETERANS AFFAIRS (DVA) Budget categories are used in developing budgets for facilities. The DVA has a fund designated for Non-Recurring Maintenance (NRM) that is distributed by four regional offices for maintenance projects beyond the budget capability of the recurring maintenance budget. Recurring maintenance is done each year on a routine basis usually by hospital engineering service staff supplemented by small contracts. NRM projects are usually designed by contract with architect/ engineer firms and bid or negotiated with small and/or minority business firms. The NRM funding varies each year; it is generally between $200M and $300M. Recurring budgets are determined locally from Medical Center Operating funds. No nationwide total is kept for maintenance funds as a category. FOOD AND DRUG ADMINISTRATION (FDA) Buildings and Facilities Budget. Budget categories used in developing budgets for facilities include Utility Budget, Contract Budget, Administration Budget, and Salaries and Expense Budget. GENERAL SERVICES ADMINISTRATION (GSA) GSA uses two categories: Operations and Maintenance (O&M) and Repairs and Alterations (R&A). O&M includes operation, maintenance, and minor repairs (up to $10,000); R&Aincludes all repairs, replacements, improvements, and alterations in excess of $10,000, with no upper limit.


APPENDIX B

37

INDIAN HEALTH SERVICE (IHS) The IHS uses the following two categories to formulate its budget for facilities: (1) Maintenance and Improvement Budget Activity and (2) Facility Support Budget Activity. (See Attachment 1 for detailed breakdown of the two categories.) INTERNATIONAL BROADCASTING BUREAU (IBB) is not budgeted by category at the IBB. It is instead budgeted on an individual project basis with funding provided at approximately 30 percent of the backlog. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) None—NASA is funded for (1) human space flight, (2) science and technology, and (3) mission support. The major programs in the agency fund field installation activities, which includes M&R. NATIONAL INSTITUTES OF HEALTH (NIH) Maintenance funds are provided by an assessment of the various institutes that make up the National Institutes of Health. This assessment covers the cost of the work done by government personnel and minor repairs made by contractors. A second source of funds is a direct appropriation from Congress as part of the Building and Facilities Budget. This money covers major repairs and improvements that are accomplished by contract. NAVAL FACILITIES ENGINEERING COMMAND (NAV) M&R funds are a portion of the Base Support Budget. The Base Support Budget is broken into special-interest (SI) items. This SI for is preventive maintenance. Activities submit budgets to their major claimants. Major claimants then submit to NAVCOMPT. For Base Support, a BS-1 Budget exhibit is submitted for every activity.


APPENDIX B

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SMITHSONIAN (SI) The Smithsonian Institution has three categories of budgets. The major projects are funded by Congress, usually require architect-engineer design effort, and are usually accomplished by a construction contractor. Routine maintenance and repair is funded via the salary and expense budget of the Office of Plant Services. Minor maintenance and repair is funded by the individual buildings' salary and expense budget for individual Building Maintenance Departments (BMDs). The last two budgets can contain funds for work and for other services as well. STATE DEPARTMENT (SD) 7901—Routine maintenance 7902—Special maintenance and repair—projects 7903—Improvement—nonmaintenance 7904—Major rehabilitation and system requirements; projects plus salaries and expenses QUESTION 2: Has your agency adopted—or does it use—the 2 to 4 percent of CRV budgeting guideline recommended by the BRB? Respondents from five agencies answered yes: GSA, IHS, NASA (qualified), NAVFAC (qualified), and NIH (however, NIH has not been funded at this level). These respondents answered Questions 3 through 8. Respondents from seven agencies answered no: AF (the AF uses DoD guidance in Renewing the Built Environment ); A-CPW, DVA, FDA, IBB, SI, and SD. These respondents answered Questions 9 through 11. QUESTION 3: How does your agency use the guideline? GSA:

Two percent is used to establish the repair and alteration (R&A) base budget for repairs/replacements/improvements/alterations less


APPENDIX B

39

than the congressional authorization (prospectus) limitation of $1.65 million, which is increased annually for inflation. IHS

IHS utilizes the guideline as a reference in justifying to the Congress the need to increase the current funding of the maintenance and improvement budget activity in the agency.

NASA

As a guideline, a metric, and a budgeting tool.

NAV

In the past, NAVFAC has expended approximately 1.85 percent CPV (current plant value) on maintenance and repair. This allows us to keep our head above water while getting BMAR (critical deficiencies needing correction within one year). We calculate that 2.3 percent CPV will hold BMAR steady and 2.5 percent CPV will allow us to reduce BMAR.

NIH

As our initial request in the budget process.

QUESTION 4: Why does your agency use the guideline? GSA

To ensure a base funding level to keep buildings operational and safe and to meet tenants' changing needs.

IHS

To justify to the Congress a methodology that will hopefully increase our current maintenance funding.

NASA

Because of a present lack of a “ground-up” budget based on discrete requirements.

NAV

(1) Determining requirements, (2) comparing claimant exemptions, and (3) defending budget requirements.

NIH

This appears to be the only guidance developed on a national basis.


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QUESTION 5: How does your agency calculate CRV? GSA

Based on the amounts and types of square footage in a building (office, special storage), a construction cost for office space is established, adjusted for other types of space using rent factors, adjusted for locality by “Means” state factors, and escalated in next operating budget year.

IHS

An architect-engineer firm conducted a detailed geographic survey for the identification of the replacement cost of all the IHS property owned and operated for direct or indirect health care. The cost estimate is escalated for inflation each year.

NASA

Original book value and capitalized improvements are individually escalated to present value using the Engineering News Record (ENR) building cost index (BCI) for the 20 cities average and then summed together.

NAV

Original cost to the government escalated to the current year plus improvement costs escalated to the current year.

NIH

This is calculated by multiplying the square feet of the specific facility categories by their associated unit costs. The units have been inflated to budget-year dollars. Soft costs (design, inspection, etc.) are not included.

QUESTION 6: In what ways has use of the guideline benefited your agency? GSA

By identifying to management a base program needed to offset deterioration and obsolescence. It becomes the first priority for funding in each budget year's budget development.

IHS

The Congress has not been made aware of the overall deficit in funding and while we have not been successful in obtaining sufficient funding from the Congress to reduce our backlog of essential maintenance and repair, Congress has provided about 50


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41

percent of the funds necessary to stabilize the growth of the backlog of essential maintenance and repair. NAV

The guideline provides a quick determination of requirements and a normalized base of comparison from year to year and claimant to claimant, etc.

NIH

This has provided an independent basis for our requests.

QUESTION 7: Have any of the benefits your agency expected to receive from use of the guideline not been realized? (Please explain.) GSA

None to date.

IHS

The benefits that IHS fully expected to receive from use of the guideline have not been realized. We have been unsuccessful in obtaining the maintenance and repair figure the guideline would establish as the required funding for the agency. However, we have been successful in receiving increases in the annual maintenance and repair budget. Our agency maintains a computerized data bank of the backlog of essential maintenance and repair tasks needed to bring the real property to acceptable industry standards. The data bank is called the Facilities Engineering Deficiency System (FEDS). A detailed survey of each installation is conducted every five years by a team of consultants. In addition, local IHS facilities staff conduct annual inspections that identify other deficiencies that are added to the data bank in between the scheduled Deep Look Surveys. Currently our backlog of essential maintenance and repairs is approximately $287 million. It is necessary that we obtain an budget activity in the amount of $44 million just to maintain zero growth in the backlog. This amounts to approximately 3 percent of the current replacement value. We feel that the data bank is a strong factor in the justification to the Congress that we must have more funding if we are to maintain the facilities in a manner that will allow us to operate them.


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NASA

No

NAV

Before FY 1994, percent CPV had been used to determine requirements. NAVFAC went with actual dollars required to hold BMAR steady for FY 94.

NIH

While we have been able to see our appropriated funds for increase by a factor of 1.7 to 2.0, we have been unable to see the increases sufficient to provide adequate funding.

QUESTION 8: What difficulties have you experienced in using the guideline and how could they be eliminated? GSA

Internally, there have been no difficulties in the congressional appropriations process. This amount has changed to meet congressionally directed needs for other projects or budget reduction.

IHS

IHS has not experienced any difficulty with the guideline.

NASA

There has been much internal discussion of what should be counted in the metric calculation and the CRV calculation method.

NAV

Some offices like to use level of effort and then “ramp” this up or down rather than a percent of CPV. They feel percent CPV is not an accurate indicator. These issues could be eliminated by doing a study to show that percent CPV is an accurate indicator/predicator.

NIH

The method for calculating replacement costs could be more specifically defined, as well as what elements are included in the overall definition of M&R.


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43

QUESTION 9: Why has your agency not used the guideline? AF

We use the DoD “standard” instead. We selected 1 percent of plant replacement value (PRV) (calculated by estimating the budget-year cost to replace the facility with one built to current construction standards) as the basis to sustain status quo conditions at our installations. Each year commanders assess the condition of their facilities with respect to how well they support their mission execution. The basic question is “Do you have to expend extra manpower because of the facility to get your job done?” The cost to raise “degraded” and “unsatisfactory” facilities to satisfactory are added to the basic 1 percent of PRV sustainment level to establish budget goals.

ARMY

We have been depending on a more costly method of developing our annual budget. It appears that cost constraints will require a change in thinking.

FDA

Because most properties are leased under GSA's control.

IBB

(1) work for the IBB is not well defined. Because of rapidly changing broadcast technology and a constantly evolving IBB mission, many of our projects become enhancements. (2) Our work is currently derived from an existing backlog. (3) We are more constrained by our ability to obligate rather than by backlog funds.

SI

The Smithsonian uses a method focused on actual requirements. This method starts with regular in-house facility inspections and other means of defining the Backlog of Essential Maintenance and Repair (BEMAR). The budget requests are based upon the BEMAR. Often the Office of Management and Budget (OMB) dictates ceilings on our requests. On occasion, Congress has added funds in excess of the OMB ceiling.


APPENDIX B

44

QUESTION 10: What changes would need to be made to permit your agency to use the guideline? AF

We need a better statistical basis for our budgets. Variables such as facility type, location, occupancy, cost history, manpower support requirements, and churn factors are needed in addition to PRV to focus budgets on problems. We are also working to educate our installation commanders on the effect that quality facilities have on work force performance. Most commanders will now support budget requests to sustain and improve facilities because good facilities help make improvements in mission performance.

ARMY

We are considering developing new budget requirements based on the CRV. This method is currently under development and validation.

DVA

The manner in which the VA's budget is presented and approved by Congress.

FDA

FDA would like direct control so as to request funding directly from Congress.

IBB

A lack of mission stability currently impedes allocation of maintenance resources based on CRV guidelines. We are currently trying to decide the amount of resources to allocate to maintain facilities that may soon be closed down.

NIH

(1) OMB needs to adopt the guideline. (2) The budget process should automatically adjust operating funds appropriately for all new facility construction.

SI

We would need to be convinced that requesting funds at an overall average level based upon the value of our facility assets would be more effective in obtaining funds than our current system of basing our requests on actual need.


APPENDIX B

SD

45

Local currency exchanges, climates (both physical and business) cause fluctuations in costs that cannot be obtained through any formula, except on a case-by-case basis at locations where activities take place.

QUESTION 11: Has your agency benefited indirectly from the guideline? AF

Any guideline helps call attention to the importance of facilities, and the BRB guideline has helped in that respect. Other results have been minimal.

ARMY

Yes. We have pointed out that the Army budgets are much lower than the 2 to 4 percent of the CRV. Many of the budget personnel realize that the accounts are underfunded, but cannot find the money to increase the budget. We are having a hard time defining our real requirements in our downsizing Army.

DVA

Individual medical centers have used the guideline as one of the factors in analyzing their budgets.

GSA

The concept has been presented at the International Facility Management Association's national conference in Denver (Oct. 93) as an approach for program planning and budgeting. It provided recognition for GSA's efforts.

IBB

Yes. We use the guideline (and a CRV estimate) when we ask the United States Information Agency for our funding allocation. Maintenance funding requests to USIA and OMB are based on the CRV guideline.

NIH

Yes. As noted above, the guideline has served as an independent justification for our elevated budget requests.

SI

Yes. All efforts that increase the awareness of the need for funds tend to help us obtain more funds.

About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. APPENDIX B

SD Only in that use of the guideline provides a baseline for U.S. costing, not specifically for any post abroad.

46


APPENDIX B

47

ATTACHMENT 1 The Indian Health Service (IHS) uses the following two categories to formulate its budget for facilities: I.

MAINTENANCE AND IMPROVEMENT BUDGET ACTIVITY—This budget activity provides resources that the IHS uses to maintain, repair, and improve real property. This activity does not include personnel costs to perform the work. This budget activity encompasses the following categories:

A.

REAL PROPERTY MAINTENANCE—This category encompasses recurring and nonrecurring maintenance as outlined below.

(1) Recurring Maintenance—Routine requirements to maintain existing federal and tribal-owned health care facilities in good repair and to perform preventive maintenance on facilities and real-property equipment. The following tasks are included: • Procurement of recurring bench stock for real-property repairs. • Issuance of service contracts for preventive maintenance, testing, and inspection of real-property equipment. • Local facility maintenance and improvement projects (|lessthan| $25,000). • Nonrecurring Maintenance—Construction projects to accomplish needed maintenance and improvements to existing space so that the facilities will be better suited to deliver health care services. This category includes the following types of projects: • Compliance of buildings and grounds with health care accreditation requirements. • Improvements to existing facilities. • Buildings and grounds code compliance.


APPENDIX B

48

• Compliance with public laws (handicapped accessibility, energy conservation and environmental compliance). II. FACILITIES SUPPORT BUDGET ACTIVITY—This activity provides resources that the IHS uses to staff and support its permanent engineering employees as well as certain nonpersonnelrelated operating costs. The following categories are included: A. SALARIES—To staff and support headquarters, regional office, area, district, and installation, engineering activities carried out directly by permanent federal employees or, in certain cases, indirectly by tribal contractors performing the work for the government. The following categories are included: (1) Personnel who manage and implement the IHS health care facilities maintenance, repair, and improvement program. (2) Personnel who manage and implement the facilities planning program. (3) Personnel who manage and implement new and replacement facilities construction programs. (4) Personnel who manage and implement the biomedical equipment maintenance and repair program. (5) Personnel who manage the sanitation facilities construction program in Indian country. (6) Personnel who manage and implement the environmental health program. (7) Personnel who manage and implement the real-property program. B. LEASES—This encompasses leases for additional space to support the health care program. C. UTILITIES—Electricity, natural gas, propane, water, etc. D. PERSONAL PROPERTY MAINTENANCE (Non biomedical)— This includes equipment such as dishwashers, mechanical sweepers, lawn mowers, tractors, vacuum cleaners,


APPENDIX B

49

portable air conditioners, spark plugs, air filters, medical air compressors, etc. 1. Recurring bench stock for repairs. 2. Service contracts for preventive maintenance of personal property (nonbiomedical) equipment. E. PERSONAL PROPERTY MAINTENANCE (Biomedical) This includes equipment for direct and indirect patient care such as CAT scanners, X-rays, defibrilators, and centrifuges. F. OFFICE ADMINISTRATION 1. Office supplies for engineering office administration (e.g., paper, pencils, forms). 2. Service contracts for personal property used in engineering administration (e.g., computers, photocopying, CADD equipment).

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