Many organizations have had to reduce maintenance expenses due to financial pressures. It isn’t uncommon at this time of the year to receive requests from the Finance Department asking for budget reductions when in fact the opposite should happen. How can Facility Managers prepare for this and ‘make their case’ for adequate funding? Here are a few easy steps that will help in obtaining the funding you need.
Develop Key Maintenance Performance Measurements.
If you have developed a FCI (Facility Condition Index) use it in your budget development.
The Facilities Condition Index (FCI) is a comparative indicator of the relative condition of facilities. The FCI is expressed as a ratio of the cost of remedying maintenance deficiencies listed in the deferred maintenance backlog to the current replacement value. The FCI. provides the facilities professional a method of measurement to determine the relative condition index of a single building, group of buildings, or the total facility (physical plant). This calculation also provides the facility professional a corresponding rule of thumb for the annual reinvestment rate (funding percentage) to prevent expansion of the deferred maintenance backlog.
The median facility condition index for companies in the first quartile for operating costs is under 5.
If you haven’t developed a FCI for your facilities prepare an estimate using the following questions
Now just divide Deferred Maintenance / CRV and you have an estimated FCI. Not the best approach but at least you have something to show the finance group. What are some relative examples??
- Well maintained facilities show FCI values less than 5
- Poorly maintained facilities show FCI values greater than 20
What Works:
- Many of our best performing organizations have established FCI targets of 10 or lower based on a strategic plan covering multiple years. Using FCI assessments takes much of the subjective discussion out of the Finance group and forces the budget decisions into an objective process.
- Communicate with senior management about the condition based assessment process.
Step 3—Using This Information
You should review your current FCI values to see how they compare with these metrics. After completing your review, establish standards and set goals for your organization that are realistic but challenging.
Metrics from the Facility Managers Round Table (FMRT)
In 2007 there were 90 unique sites in the FMRT with a median size of about 1,400,000 million square feet.
