APWA International Public Works Congress, Philadelphia, Sep NRCC/CPWA/IPWEA Seminar Series Innovations in Urban Infrastructure

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1 TOWARD EFFECTIVE DECISION MAKING FOR BUILDING MANAGEMENT Abstract by B.R. KYLE 1 Real Property Services Branch, AES, Technology, Public Works and Government Services Canada Place du Portage III, 8B1, Hull, CANADA K1A 0S5 Building asset managers have the formidable task of fulfilling client and tenant accommodation needs as well as striving to retain building integrity while meeting specific financial goals. This undertaking must not be at the expense of various environmental and policy driven requirements. This paper addresses the data, information and knowledge requirements for effective management of a portfolio of buildings as well as discussing available techniques and tools to meet these needs. It provides an overview of tools that are currently available. Keywords: Asset management, buildings, condition assessment, maintenance management, service life prediction 1 Introduction Buildings are intricate facilities with numerous systems intended to provide predefined functionality and responses to legislated and environmental demands; potentially accommodating several tenants with varying demands upon the building systems, fit-up and space usage requirements. Building systems and components have typical service life ranges, which rarely coincide with one another, yet these systems are expected to perform satisfactorily throughout the anticipated service life of the facility. These service life issues and the associated management tasks required are further compounded when handling a network of facilities. Regardless of the asset type or complexity of the portfolio, certain basic elements, data, information and a governing knowledge or rules-base are required for their management. Data should be an unbiased reflection of the asset's situation at any point in time. Storage of current This paper and others are from the Asset Management Super-sized Session held at the APWA Annual Congress and Exposition held in Philadelphia Sep., Electronic copies are located at 1 Mr. Brian Kyle is a Facility Life-cycle Management Specialist with Public Works and Government Services Canada. He conducts applied research in the areas of durability, system performance and reliability of built assets. He investigates innovative solutions that respond to real property management concerns, specifically in the areas of sustainability, service life prediction, life-cycle asset management, economic assessment, and construction information management technologies. He can be reached at brian.kyle@pwgsc.gc.ca or at (819)

2 and historical data on physical performance and financial records is a must if successes and errors of the past are to be, respectively, repeated or avoided. The sorting or filtering of data into usable and categorized information is crucial. Not all data is of the same importance and not all important data is significant to all participants in the process. Underlying rules such as financial discounting practices, long-term investment and asset plans as well as various regulatory and policy-driven requirements often control asset managers' actions. 1.1 Key parameters The collection of data, sorting into information bins and application of relevant knowledge is all geared toward an enhanced understanding of the interaction between Time, Money and asset Quality. It is generally acknowledged that the quality, or reliability of performance, will decrease with time and that the imposed loads and the level of maintenance affect the rate of decline. Neither the true value of an asset nor the variations of that value with time are readily defined. Buildings may be considered to have value if they can generate revenue. Revenue generating potential is usually a reflection of a facility's capability to meet the ongoing functional requirements of clients. The extent to which a building is capable of providing for those needs is related directly to quality. The relationship between money and time is the primary concern of economists and financial analysts. Application of financial discounting principles permits, with adequate information, the assessment of the timeliness of investment and reinvestment scenarios. 1.2 Objectives The primary objectives of asset management are: the provision of functional requirements; and the maximization of economic benefit. Asset managers attempt to meet the functional needs of tenants and clients while considering the buildings' design and as-built conditions, operations and maintenance procedures, environmental performance requirements, as well as the renovation/modification histories. Economic benefit of any given building is relative to all incurred costs and anticipated revenue throughout service life of the asset. Primary focus tends to be upon reducing costs. Effective building management, while trying to minimize costs, will also drive to maximize asset performance as well as considering the significance of the building within the portfolio and the larger picture. Heightened asset performance must be achieved while balancing, functionality, political, legal and environmental requirements, and the need to retain intrinsic value, as well as system and building reliability. This paper explores the data, information and knowledge management requirements for effective management of a portfolio of buildings as well as discussing available techniques and tools to meet these needs. 52

3 2 The "six whats" Vanier (2001) proposed six questions, the responses to which were considered to be key to success in cost-efficient asset management. This section attempts to provide some guidance on how building managers can prepare to respond to these queries. Various tools and methodologies exist to collect, manage, display and process the required data/information. Many of these tools respond to multiple questions amongst the "six whats". Section 3 of this paper categorizes these tools relative to their functionality. 2.1 What are the buildings in our portfolio? The definition or categorization of a "building" is more than just semantics. It is essential that all players in an organization have a consistent idea and understanding of what constitutes a building. Building owners should consider what uniquely separates one building from another. While this distinction is straight-forward for physically dislocated facilities it may be considerably less evident when examining building "complexes"; where buildings or building towers may have common foundations and lobby or commercial areas, integrated structural elements, shared heating ventilation and air-conditioning (HVAC) systems, and power distribution networks. A uniform definition permits a standardized approach to data gathering and performance assessment. For purposes of this examination, a building is defined as follows: "A building is a fixed structure designed to protect an interior space from the exterior elements. A building is defined based on its conception, design and construction, and can be redefined when these change." (PWGSC, 2001) For effective inventory management a clear categorization of the building usage, its location and significance (historic or otherwise), as well as design, construction, fit-up, operational and maintenance records are needed. The systems and functionality of the building must be adequately described to assist in matching the tenants' requirements to the capabilities of the building stock. 2.2 What is the buildings' value? Traditional methods of determining a building's value include consideration of the historical price (either as a replacement value or as a depreciated / discounted price), the capital replacement cost, the current market value, and a "performance in-use" value (Lemer, 1998). As well, some suggest the use of "deprival cost"; defined as the cost avoided by having control of an asset (ANAO, 1996\). Ideally the value of a building should be a measure of remaining performance; determined relative to its current ability to provide tenant functional requirements, the current market value and the building condition/performance rating in comparison to that of a new building. Regardless of the valuation process, it is significant that the assessed building value(s) within a given portfolio be determined with a standardized procedure in order to assure a common starting point for future re-investment decisions. 53

4 2.2.1 Canadian government policy Treasury Board Canada Secretariat recently issued a standard practice document addressing the valuation of on-hand capital assets (TBCS, 2001). Section 14 of the Accounting Standard on Capital Assets recommends that the preferable method to value existing capital assets "is using historical costs, adjusted for the proportion of the useful life of the asset that has already been consumed through the establishment of a provision for accumulated amortization" (TBSC, 2001). If this is not practical, then the secondary recommendation is to use an appraisal or other method of current value and extrapolate that cost to an estimated historical cost. The use of a replacement cost is only to be considered if it is the lowest of the alternatives. If a building is over 40 years of age and has not undergone significant restorative work it "should be carried at zero cost"(tbsc, 2001). 2.3 What hasn't been done? Asset managers must have succinct records on the projects, repairs and maintenance actions that have been postponed, phased or neglected. Possessing accurate figures on the maintenance backlog provides a quick indication of problematic assets and provides a focus for expenditures. Deferred maintenance can become more significance down the road. The costs to effect a repair or maintenance activity can reasonably be expected to climb both as a result of accelerated rates of deterioration rates as well as heightened labor and material costs. DeSitter in his "Law of Fives" (De Sitter, 1984) concluded that if maintenance is deferred, then repairs equaling five times the maintenance costs may be expected. If, in turn, those repairs are postponed, the renewal expenses can reach five times the repair costs. Deferred work on assets must not adversely affect the facility's ability to provide base functional and safety requirements. While this is not too likely to occur when items are initially deferred, the compounding effect of an extended lack of attention must be recognized relative to all health and life safety issues. Similarly, asset managers must acknowledge the potential longterm reduction in performance that will result due to deferring maintenance. 2.4 What shape are the buildings in? By evaluating the building's standing in comparison to others within the portfolio, the asset manager should get a firm idea of its current condition in relative terms to the entire portfolio. This information should provide the basis for projections of remaining building service life and assist in planning maintenance actions and re-investment decisions. Dependent upon what is being examined, the frequency of data collection may vary from a continuous real-time flow to more formalized, cyclic, surveys or inspections and sampling. The building's capability to satisfy all environmental requirements as well as health, life safety concerns, and other legal requirements should be routinely monitored. Continuous and periodic surveys of client satisfaction with the building will also prove invaluable and can avoid surprises. Financial performance indicators are routinely used to evaluate asset well-being. They provide a reflection of the changes in required maintenance over the life of the buildings and permit an evaluation of the effectiveness of those actions. Physical changes to the building conditions must be monitored in a continuous fashion. Data on the components and systems requiring intensive maintenance and repair activities can realistically be tracked by using information captured as part of the routine technical- 54

5 administrative procedures of most organizations. Less accessible building systems should be inspected on a routine basis for signs of deterioration. Dependent upon the system under consideration, these investigations may involve visual examination, non-destructive testing and possibly intrusive inspection and sampling. The frequency of inspections, and the level investigation, should be driven by the importance of the system in question, relative to the building's operational and functional requirements. 2.5 How much longer will the building(s) last? Consistent and repeatable physical service life and performance prediction methodologies are essential to the decision-making processes of asset management. Building asset managers need to be able to determine the remaining physical service lives of their assets with some certainty. It is important, however, to recognize that buildings are not always taken out of service due to inadequate physical performance. Buildings are considered to be at the end of their useful lives when they are no longer capable of fulfilling functional requirements, either client driven, legislated or regulatory. Often client expectations will shift drastically, necessitating a building refit, or a move to more suitable accommodation, in order to meet the revised needs. Similarly, a poor financial assessment will often lead to the decision to retire a building. Without a clear idea of the remaining physical service that a particular component or system will provide, the asset manager is without an identifiable reference point for economic evaluations and can not properly assess the efficiency of proposed repair, restoration or recapitalization options. The sophistication of the predictions can vary from experienced based rules-of-thumb through to mathematically rigorous techniques employing statistical sampling and modeling procedures. As the complexity and significance of the system being evaluated increases, so to should the refinement of the applied predictive technique. 2.6 What should be done and when? The planning process that places priorities upon maintenance and repair or reinvestment scenarios must weigh the importance of the building systems under consideration relative to the building in which they are installed. As well, these plans should value the significance of the various buildings and their roles within the portfolio. The plans must recognize that the importance of a building may be as a result of an intrinsic value, such as an aesthetic, historic or heritage aspects, or due to operational significance. Plans must respond to political and policy driven requirements while maintaining building functionality, reliability and performance. Numerous alternatives are typically assessed, namely: do nothing, maintain, repair, renew or replace an asset. In addition, after the decisions have been made on individual projects, a prioritization must take place to rank the various competing, yet deserving, projects (Lounis et al, 1998). 3 Available tools toward effective building management This section describes various tools that are available for building asset managers. These tools are categorized based on their functionality to assist with the collection, management, display and processing of the required data/information. Many of these tools respond to multiple 55

6 questions amongst the "six whats" as described in Section 2 of this paper. This listing is not meant to be exhaustive or all-inclusive. Inclusion or omission of items from this text should not be construed as recommendation or dismissal of any particular product. 3.1 Data collection Regardless of the size or complexity of the portfolio basic information is needed on all buildings. Typically all design data, change orders, contract correspondence, maintenance records, repair data, and renewal information are required to give asset managers a complete picture of the extent of the existing portfolio. This means that building asset managers should be using a complete, up-to-date, set of digital data reflecting the current state of their buildings. The use of computer assisted design and drafting (CADD) tools is close to common place. When coupled with database technologies the inventory potential is extremely practical. CADD master files and drawings of newly-built or modified facilities should be included in these inventories, as a matter of process. At times, it may also be beneficial to archive or to warehouse snapshots of asset data to record the state of the asset (Vanier, 2001) Computerized maintenance management systems Computerized maintenance management systems (CMMS) provide the capability to schedule, monitor and track all resource information required for maintenance activities as well as to generate up-to-date condition information. There is a large selection of commercial CMMSs. Many are relational database applications designed for the needs of asset managers; managing work orders, trouble calls, equipment cribs, stores inventory and preventive maintenance schedules. Most of the available packages include features such as time recording, inventory control and invoicing. The ease of input of base building data and prescribed maintenance procedures is essential to the successful application of these systems (Vanier 2001). The emerging generation of CMMS packages are including, via add-on modules, the capability to assess performance data toward predicting long-term system readiness, likelihood of failure and remaining service life (Peregrine, 2001; MRO, 2001; Archibus, 2001) Asset inventory management packages Various user specific asset inventory systems exist and all attempt to collect building data relevant to the prime developers' interests. These systems will require typical tombstone building data such as location, age, building usage, category, and value. Dependent upon the developers concerns these systems may also capture information on the asset condition, risk of being out of service as well as a rating on the heritage or historic significance of the buildings. Typically these programs also attempt to make budget projects over a pre-specified timeframe. Figure 1 presents the tombstone sheet of one such system prepared for a PWGSC client. 56

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8 Fig. 1: Tombstone asset inventory datasheet - AIMS Occupant satisfaction surveys It is important to assess the perceived, as well as real, suitability of the buildings within a portfolio. If clients or tenants disliked or considered their current accommodation to be inadequate, they are not likely to want to remain in that facility. In such cases it is important to be able to evaluate the discrepancies between the perceptions that the occupants have of the building performance and the actual physical condition. Assuming that the clients' needs were properly assessed and fulfilled with their current space assignment, an unfavorable assessment by the tenants will usually indicate a slide or recent change in the physical performance of the building. Post-occupancy surveys should be performed on a regular basis to help avert any long-term client dissatisfaction with the buildings. The surveys should examine tenant judgement of the suitability of their accommodation. Particular areas that should be evaluated are: thermal comfort; air quality; office noise control; spatial comfort; privacy; lighting; and building noise control (PWC, 1987). There are various general-purpose web-enabled and user-modifiable, survey packages currently available (MessageMedia, 2001; Perseus, 2001). The major advantages of these tools over conventional paper survey techniques is the automated statistical analysis, sorting and reporting capabilities. 58

9 3.1.4 Space measurement and usage surveys The space available for different purposes within a building should be measured in conformance with accepted practice. For inventory, planning and potential re-distribution purposes, the space utilization must be recorded against the tenants agree upon allocations. 3.2 Knowledge, assessment and rule-bases If data or information are processed as part of the building management procedures, either by automated techniques or as a result of the applying a given set of "rules of practice", it is important that all implemented methods be documented. Today's rules may not apply tomorrow yet the basis for having modifying data must be known; data should be recoverable Standardized policy and process The organization must have definitive policies on space management and allocation, environmental screening, capital renewal and valuation, as well as the rules governing the collection and treatment of financial data. Changes to all such procedures should be tracked and the modifications archived for potential future reference Service life prediction techniques There are several predictive method available to building managers and they may potentially have a role in the assessment of the remaining lives of some building components and systems. The factorial method (Arseth and Hovde, 1999) suggests that the service life of building components can be estimated by assuming a standard life for a component and adjusting the prediction by applying of factors that account for the use, location and workmanship. Various other deterministic statements about the expected lives of building systems exist but should be applied only with adequate evidence to support their use. An empirical or heuristic service life prediction method is proposed as part of the engineered management system (EMS) approach implemented by BUILDER (refer to Section 3.2.4). A family of performance deterioration curves above and below the so-called "normal deterioration curve" is proposed. A probabilistic use of whole life data on building systems may be possible with adequate processed data from CMMS packages; most having the capability to generate mean-time-tofailure information, calculation of system reliability and performance deterioration curves. Markov chain modeling, employing actual service life data collected from field observations, has been used in specific domains, such as roofing systems service life prediction, to simulate performance deterioration and has great promise with most building systems. Case-based reasoning is yet another way to calculate the remaining service life, basing the service life prediction on cases similar to the asset in question Condition assessment surveys Condition assessment surveys (CAS) record the deficiencies in building system and 59

10 components, the extent of the defects, as well as the urgency of the repair work; in some cases the estimated cost of repair (at time of inspection) is provided. The US Department of Energy has a significant program (Earl, 1997) dealing with life cycle asset management/condition assessment surveys (LCAM/CAS). The Ministry of Education of British Columbia, Canada, has done considerable work transferring a formerly paper-based CAS into a spreadsheet format (B.C.Ministry of Education, 2000). Key screens of the B.C. system, Facility Audit 2000, are displayed in Figure 2. This system, developed in MS Excel ver 7.0a, can be used for audits on up to 200 facilities and employs a 0 to 10 condition rating system. 60

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12 Fig. 2: Summary sheet, a detailed checklist and the evaluation ratings - Facility Audit 2000 Often the rating systems employed in CAS systems incorrectly link the condition ratings to the age of the component or system being evaluated; assuming that younger components are in near pristine condition and that when old they are near failure. Another common oversight in CAS systems is the inability to apply building specific weighting factors to reflect the importance of different systems; e.g. the condition of vertical transportation system is considerably more significant in a high-rise office building than it is in a one-story warehouse Engineered Management Systems The US Army Construction Engineering Research Laboratory (CERL) has pioneered the use of engineered management systems in many construction sectors. The BUILDER EMS package provides an objective, repeatable processes for evaluating the technical condition of buildings (Uzarski and. Burley 1997). Typically, EMSs are standalone database applications storing considerable condition data. They include a condition assessment survey methodology that employs visual inspection techniques to determine the number of defects, physical condition and quality of materials or workmanship. Figure 3 depicts typical BUILDER inventory and checklists. 62

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14 Fig. 3: System inventory sheet and inspection checklist -BUILDER The condition assessment leads to a condition index (CI) based on loads on the system or external agents acting on the systems. After the current CI has been determined a rudimentary calculation of remaining service life is performed by assessing the current age and likely degradation curves. BUILDER plans maintenance and repair scenarios as well as budget and cash-flow projections. 3.3 Information presentation - pre- and post-analysis Process reporting systems Numerous tracking mechanisms provide the building asset managers with indications of the facility's ability to comply with the intended financial performance or environmental and health and safety regulations Geographic information system In geographic information systems (GIS), the data about a particular building are directly related to their physical location, as part of a portfolio of buildings, on a parcel of land, on a map of the city or region. For example, the location of a specific portfolio can be viewed in the context of other groupings in the same city; and various attributes of any building, or facility group may be examined. Satellite imagery data can also be included in GIS systems. Figure 4 64

15 demonstrates the "drill-down" characteristics of GIS. Fig. 4: GIS drill-down - country, region, city, facility grouping to building CADD/CAFM and space management software It is essential to track the space allocations, actual client usage, the available and rentable space within the facilities. PWGSC performs space measurement surveys, audits and conducts space allocation planning on all of its rented and leased space. The tool considered best adapted to this task is a product called TECH2 (Microlight Graphics, 2001). Figure 5 illustrates some of the Tech2 graphic and tabular reporting capability via client, description and space usage. 65

16 Figure 5: Tech2 reports - by client, description and usage Visualizer Visualizer is a second generation prototype application that allows a user to ask the six whats discussed in Section 2 and visually presents the answers. It is implemented in Visual Basic for Applications (VBA) from Microsoft Excel and uses Microsoft s Automation for integrating data entered and generated within different applications. The program applies formulae for the probabilistic prediction of system performance, the assessment of risk and cost, and procedures for the multi-objective optimization of maintenance activities. These elements were developed within the Building Envelope Life Cycle Asset Management (BELCAM) project (Lounis et al, 1998), a joint endeavour of the National Research Council Canada and PWGSC. Following user s input regarding the geographic region, preferences, priorities, service life prediction model, etc., the program displays application-generated data, such as risk and cost, as shown in Figures 6 and 7. Further visualization of various what-if scenarios: change of inventory condition or other properties over time with varying maintenance strategies, or service life prediction model as illustrated in Figure 7. 66

17 Fig. 6: Visualizer showing change in condition of roof sections for a specific budget Fig. 7: Visualizer showing dialog box to link user specified service life prediction model 67

18 3.4 Summary of desirable tools The following features are recommended as desirable components of an asset management system: Complete asset inventory using GIS, CADD, and database technologies Consistent approach to life cycle economic analysis and modeling Implementation of a CMMS package Cyclic inspection and condition assessments Cyclic occupant satisfaction surveys Service life prediction models in keeping with the significance of the system under consideration Comprehensive maintenance management plans 4 Conclusions Adequate methods and tools exist to make rational and repeatable building asset management decisions that satisfy the asset management objectives. Further research and product development is needed in the field of building service life prediction. 5 References Archibus. (2001) Archibus Home Page ( (20 Aug. 2001). Arseth, L.I. and Hovde, P.J. (1999) A Stochastic Approach to the Factor Method for Estimating Service life, Proceedings of the Eighth International Conference on Durability of Building Materials and Components, Vancouver, Canada, May 30-Jun 3, National Research Council of Canada, Ottawa, Vol. 2, pp ANAO. (1996) Asset Management Handbook, Australian National Audit Office, June, Canberra, Australia, ( British Columbia Ministry of Education, (2000) "Facility Audit 2000" Spreadsheet, Capital Planning Branch, Victoria, Canada, April. De Sitter, W.R. (1984) Costs for Service Life Optimization: The Law of Fives, Durability of Concrete Structures, Workshop Report, Ed. Steen Rostam, May, Copenhagen, Denmark, pp Earl, R. (1997) The Condition Assessment Survey: A Case Study for Application to Public Sector Organizations, Proc. Infrastructure Condition Assessment: Art, Science and Practice, American Society of Civil Engineers, Boston, Aug., pp Lemer, A.C. (1998) Progress Toward Integrated Infrastructure-Assets-Management Systems: GIS and Beyond, Innovations in Urban Infrastructure Seminar of the APWA International Public Works Congress, Los Vegas, Nevada, USA, pp. 7-24, ( 68

19 Lounis Z., Vanier D.J., Lacasse M.A, and Kyle B.R. (1998) Effective Decision-Making Tools for Roofing Maintenance Management, First International Conference on New Information Technologies in Civil Engineering, Montreal, Oct., ( (3 Oct. 2000). MessageMedia (2001) ( (22 Aug. 2001). Microlight Graphics. (2001) TECH2 Home page ( (20 Aug. 2001). MRO (2001) ( (20 Aug. 2001). Peregrine. (2001) ( (20 Aug ). Perseus (2001) ( (22 Aug. 2001) PWC (1987) User Manual - Tenant Questionnaire Survey, Public Works Canada, Ottawa, November, 20 p. PWGSC (2001) Business Information Technology Taskforce, "Real Property Services Information Model", Public Works and Government Services Canada, March, 21 p. TBSC (2001) Treasury Board Accounting Standard 3.1 Capital Assets, Treasury Board Secretariat Canada, March, 11p. Uzarski D.R and. Burley L.A. (1997) Assessing Building Condition by the Use of Condition Indexes, Proc. Infrastructure Condition Assessment: Art, Science and Practice, American Society of Civil Engineers, Boston, Aug., Vanier, D.J. (2001) Why industry needs asset management tools, Special Issue on Information Technology for Life-Cycle Infrastructure Management, Journal of Computers in Civil Engineering, Jan 2001, ASCE, Washington, D.C. ( nrcc44702.pdf) 69

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