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Published: Jun 25 2015

The Importance of a Facilities Condition Index

An organization’s facilities portfolio is typically one of the largest items on the balance sheet, second only to employee salaries and benefits.

When it comes to making a large investment, it is critical for organizations to build capital budgets that ensure facilities projects not only address time-critical needs, but also support the organization’s overall business goals.

How to prioritize capital projects.

The approach often used by large organizations to prioritize facilities capital projects simply is not up to today’s challenges. It involves juggling facilities data in spreadsheets or multiple systems, and pulling together stakeholders for ad-hoc meetings. This approach is time consuming, highly subjective and difficult to scale for a large number of projects.

To meet today’s challenges, organizations must establish an objective, repeatable process for identifying, prioritizing and defending facilities capital projects. Here is where the Facilities Condition Index (FCI) comes in handy. An FCI is the ratio of deferred maintenance dollars to replacement dollars, which provides a clear comparison of an organization’s key facility assets. With an FCI, facilities managers are able to assess and compare their buildings and depict that data in a way that showed upper management what needed to be done to optimally maintain their facilities with their given budget.

An FCI can be calculated as such:


An FCI of 0.1 signifies a 10 percent deficiency, which is generally considered good, and an FCI of 0.7 means that a building needs extensive repairs or replacement. The lower the FCI, the lower the need for remedial or renewal funding relative to the facility’s value.

Crafting capital targets.

Facility teams and management can agree on target and minimum condition standards for various asset classes. Certain types of buildings—such as data centers—are crucial to the organizational mission and call for an improved target FCI. FCI analysis can project the impact of various investment decisions.

For example, the facilities management department at the University of Texas at Austin faced a challenge. When it gathered assessment information, they realized that 65 percent of all buildings had HVAC systems that were over 25 years old. If they continued on with same funding source, that number would be increased to 85 percent within 15 years.

By showing management the risk involved in not investing more into replacing old HVACs, the facilities department was able to request more money and receive it. They are now on track to reducing the number of HVACs over 25 years of age from 65 percent to 50 percent – a 30 percent difference of where it would have been, had they not shown the possible repercussions and gotten more funding.

To learn more about how an FCI boosted the facilities department’s credibility and capital budget at the University of Texas, contact us today.

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