7 Steps to Better Capital Planning: Analyze Benchmarks
By Lora Mays, Product Marketing Manager
This is the third blog post in our series that shares the seven steps to better capital planning. In case you missed it, check out our previous two blog posts:
As we discussed in last week’s blog post, collecting accurate facility data serves as paramount in order to define and develop an accurate capital plan. In addition to that, with detailed data, you can set benchmarks to gauge the effectiveness of your investments in your facility improvements.
Industry associations have teamed up to develop a standard benchmark for facility capital planning, known as the facility condition index or FCI. The FCI represents the ratio of deferred maintenance dollars to replacement dollars, providing a straightforward comparison of an organization’s key facility assets.
To calculate the FCI for a building, you divide the total estimated cost to complete the deferred maintenance projects for the building by the estimated replacement value of the current systems. The lower the FCI, the lower the need for capital projects funding related to the facility’s value.
For instance, if you calculate that the building’s FCI is 0.1, it means that there is a 10 percent deficiency. This is considered quite low within the industry. On the other hand, a calculated FCI of .7, or 70 percent deficiency, indicates that a building needs extensive repairs or even replacement.
Leveraging the FCI serves as a way to compare the buildings within your portfolio to each other. For large teams, it provides insight into why certain buildings may require more care from the facilities teams than others. As a result, you can prioritize your capital planning funding into buildings that require more TLC than others, based on the objective FCI.
In addition, it also gives you a way to establish target condition ratings. By having a target, you can set goals for what you wish to achieve with the investments you are making in the facility improvements.
When you leverage a capital planning software solution, you can enter the FCI information into the database. This will give you a comprehensive view of the necessary and recommended maintenance items and their associated costs across the facility portfolio. As a result, you can analyze expected replacement dates and costs for the major building systems, which will serve as the basis of an effective and strategic facilities capital plan for your organization.
Interested in learning more? Contact us or stop by next week for the next post in this series, which covers step four – how to prioritize your capital projects.