Building Assets

Decision support software helps Missouri forecast annual statewide facility costs.

by News Staff / January 13, 2006

Missouri has an estimated real estate property portfolio of 30 million to 40 million square feet, but that's only a guess.

Those who need to know where properties are or how many square feet they contain, don't, according to David Mosby, director of the Division of Facilities Management, Design and Construction within the Office of Administration.

Mosby's division is in charge of monitoring the condition of, and forecasting a budget for, the state's entire real-estate property portfolio -- and knowing every last square foot proved to be a challenge without a centralized means to manage state facility statistics.

To get a handle on the condition of state facilities, Mosby's division turned to VFA, a company that provides facility-condition-assessment services, software and consulting.

With classroom training from VFA under their belts, Mosby's seven-member assessment team recently set out to evaluate every building owned by Missouri. He predicts the project will be completed by summer 2006. The team will input assessment data into the Web-based VFA.facility software, which provides a centralized decision support system capable of performing necessary calculations for cost-effective resource allocation.

Finding No Man's Land
Missouri's former facility management system -- Landing and Building Systems, or LABS -- lacked vital information, according to Mosby, because nothing had been updated in the past three or four years.

The assessment process is producing surprises, Mosby said.

"Every day I get reports like, 'We discovered we don't have as much space as we thought we did because buildings have been torn down,' or, 'This building is not even in the old system.'"

Accurate, up-to-date property portfolio data is imperative in making good decisions about property management and predicting funding needs.

"In the past, we divvied up the money for repairing facilities based on historical data, or how much each agency received in the previous years, which was determined by how many square feet they had," Mosby explained, adding that each agency would set the maintenance and repair priorities, listing necessary action items and ranking them in order of importance.

This left the maintenance and repair decision-making process up to those who weren't adequately equipped with the tools they needed, and buildings were allowed to deteriorate because they dropped off the state's radar.

"With VFA, we'll assist them by providing expert assessment information and work with them in setting priorities," Mosby said. He explained that the assessment data generated by the software will be given to each of the state's 16 executive departments, such as mental health or corrections, which will then have 30 days to evaluate the data and establish priorities based on the information they have on hand.

"Together we'll be making decisions based on the condition of the facilities -- getting limited dollars to the highest priorities at the facilities that need it most."

For What It's Worth
The software provides a central repository for all assessment data and calculations, such as cost forecasting and "what if?" scenario analysis that helps predict future resource needs.

The software can calculate industry standard benchmarks, such as the Facility Condition Index (FCI). To calculate FCI, the total cost of existing facility deficiencies in need of repair is divided by the current facility replacement value (or the cost to replace the facility and all of its systems). A good FCI value is zero percent to five percent.

"If a building has an FCI of 50 [percent] or 60 percent, it's in really bad shape," Mosby said. "Do I really want to put money into it when it might not make any sense? I would just be pouring money down the drain."

As part of the FCI calculation, building replacement values help determine whether to repair or replace. Formerly, to establish these values, economists at the University of Missouri would estimate construction costs per square feet and Mosby's division would multiply that by the total square feet of each building -- not a very accurate way to calculate replacement values, Mosby said.

"The VFA method is much more sophisticated and easier because the software does it all for us," Mosby said, adding that the software makes regional adjustments to accommodate replacement values in various areas of the state.

Maintaining a Positive Asset
Mosby's division is responsible for determining annual statewide facility operation costs, including utilities, housekeeping, and maintenance and repair, which have been estimated at $300 million to $500 million.

Another important task for Mosby is making sure state property remains an asset, not a liability. Detecting problems early through regular, proactive maintenance is key because well-maintained buildings help reduce overall facility costs, he explained. Although maintenance costs may increase, timely repairs can reduce other costs, such as those associated with the long-term effects -- an unfixed problem like a leaky roof that causes mold and mildew can lead to structural erosion.

Preventive maintenance and proactive repairs can also decrease utility costs, an important goal for Missouri.

"We're embarking on a very aggressive mission to reduce our overall energy consumption by 15 percent," Mosby said, adding that without facility information, most specifically square footage, it's impossible to do this. "You can't benchmark [when] you don't know how much space you have. You don't know what your costs are. So how can you establish a goal of making a 15 percent change in something when you have no idea what you're working with?"

Adequate funding is vital to improving the process; one of the largest advantages of the VFA solution, will be demonstrated at the General Assembly when Mosby testifies on behalf of the portion of the governor's budget that includes his estimated facilities cost forecast.

"Now I have a matrix, performance measures, a facility condition index -- and I can say, 'This is why we chose these priorities, and here's a big picture of it so you can see.'"