maintenance, facilities & asset management€¦ · maintenance management • maintenance...

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MAINTENANCE, FACILITIES & ASSET MANAGEMENT

My Experiences..

John Wilson

April 2008

TopicsTopics

Remarks

Maintenance Management

Facilities Management

Asset Management

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MAINTENANCE MAINTENANCE –– not just machinesnot just machines

• Woman raped – Government Living Quarters door locks not repaired

• Ceiling tile falls on Clerk - insurance refused to pay, court rules company liable as no proof of maintenance records

• Putrajaya – ceilings collapse

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““SMITHSONIAN REPAIR COSTS COULD TOP US $ 1.5 BILLIONSMITHSONIAN REPAIR COSTS COULD TOP US $ 1.5 BILLION””(Washington Post (Washington Post -- 27 July 2001)27 July 2001)

• Team of experts estimate US $1.5 billion - for repairs

• NAPA concludes “that long standing management problems at this museum complex contributed to the mounting backlog”

• NAPA said “The lack of preventive maintenance allowed further deterioration, boosting the eventual cost of repairs.”

• The study criticised the Smithsonian for developing reactive instead of proactive plan for many repairs. It said the Smithsonian should increase its budget for preventive maintenance from US $1.9M to US $10 - 15M each year.

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Maintenance Management LawsMaintenance Management Laws

• You cannot maintain a poorly designed and poorly constructed facility

• The maintenance budget will never be enough to do the work that is needed

• Computerised Maintenance Management Systems (CMMS) will neverresult in better maintenance

• A CMMS will rarely be used for anything other than job tracking

• You can defer maintenance for long periods with minimal result – but it will catch up (7 years is my estimate)

• You can never achieve a pure Planned/Preventive Maintenance (vs.Breakdown) program - maybe 60-40 is best practice

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The Maintenance Guru The Maintenance Guru -- Mr. Oscar ZerkMr. Oscar Zerk

Mr. Zerk made his fortune by helping save money in maintenance.

Zerk's most important invention -- one that made him the most money -- was a tiny grease fitting, a lubrication system which became the basis for those used on nearly every car, truck, plane and other mechanized vehicle.

At the time of his death in 1968, it was estimated that 20 billion of the fittings had been manufactured.

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The OilerThe Oiler

..lubricate and clean pumps, engines, blowers, compressors, motors, gears, ejectors and other equipment………..

Salary……$30.49 per hour

New York 2004……..

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Maintenance ManagementMaintenance Management

• Maintenance should be 1.5-6% of the ERV – on average.

• Always try to separate out the real cost of maintenance from theoperations budget (security, cleaning, landscaping, waste, pest control are not maintenance!)

• Maintenance Managers must know the design intent, system capabilities, materials and usage

• Train and motivate staff

• Avoid short-term fixes – they bite

• Calculate the base PM workload; prioritise activities (“Do Nothing” is a strategy)

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PAGES FROM WHITESTONEPAGES FROM WHITESTONE

Historical DataM&R budgets should be between 1-6% of ERV

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Future Maintenance Management DriversFuture Maintenance Management Drivers

• Legislation (eg OHS, accountability)

• Life Cycle Costing

• Insurance industry Risk Assessments

• Productivity Increases/Waste Reduction

– Cost savings!

• Better Materials/Tools

• Demand for Quality

• Better Appreciation of Maintenance Needs (a long wait)

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Facilities Management Facilities Management ……....

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INTEGRATED FACILITIES MANAGEMENTINTEGRATED FACILITIES MANAGEMENT

•Caring for the facilities in the interests of the Owner and the Users

•Provision of Services

“Facilities management is the integration of processes within an organisation to maintain and develop the agreed services which support and improve the effectiveness of its primary activities”.

British and CEN Standards

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FM ORIGINSFM ORIGINS• In US – Construction Contractors/Complex Systems

• UK – Large scale outsourcing (Military/Health/Transport)

• “Core Business” Focus in ’70’s - ’90’s

• Downturn in Construction Industry – gap filler

• Diversification of Specialists (Cleaners, BAS Controls)

• PFI/PPP BOOT Contracts – big growth opportunities

Higher Levels of Service/Expectations

Long-term Performance

Contractual Obligations - KPI’s

Equity

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FACILITIES MANAGEMENT

Repairs and Maintenance Environment

PlanningContractors

Property

Decisions Energy Conservative

Budget

Facility Services

Space PlanningOperations

Suppliers

Tena

nts

UtilitiesBilling

Life Cycle Analysis

Aut

horit

ies

Communications

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FM ELEMENTSFM ELEMENTS……..

•Repairs & Maintenance

•Cleaning

•Security

•Space Planning

•Waste Management

•Pest Control

•Landscaping

•User Guidance

•Utilities Management

•BAS/IT Operation

•Sub-Contract Mgt

•Tech. Library Mgt

•Traffic/Parking

•Temporary Staff/Reception

•Mail/Courier Services

•Furniture

•Communications

•etc

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Management

Energy

PM Maintenance

Cleaning

Rates & Taxes

Other operating Cost

Insurance

Maintenance 1.0 %Cleaning 1.5 %Energy 1.1 %Insurance 0.5 %Rates and Taxes 4.0 %Management 0.6 %Other Operating Costs 0.5 %

9.2 %

***

FACILITY OWNERSHIP COSTSFACILITY OWNERSHIP COSTSRepresent ~ 40% of recurring costs*

* Directly related to D & C quality

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FM BUDGETING FM BUDGETING -- OVERVIEWOVERVIEW

Life Cycle Cost

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

1 6 11 16 21 26 31 36

YEAR

CO

ST

Acquisition

Operations & Maintenance Salvage/Handover

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FM IN ACTIONFM IN ACTION……

• Professional/Technical competence – Asset Knowledge

• Guidance for Users

• Regular inspections & reporting

• Budgets – (Preserving the “sinking fund” - renewal funding)

• Evaluating new technologies

• Audits – design vs usage/effectiveness/compliance

• Documented Procedures and records (you can’t manage what you can’t measure)

• FM IT Systems? (e.g. CMMS CAFM ERP)

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FM IN DESIGNFM IN DESIGN……• Design out maintenance

• Design for maintenance

• Design for reliability

• Design for energy efficiency

• Design for accessibility

• Design for changing technology

• Design for Code/compliance change

• Design for skills availability

• Realistic KPIs

• Space for the Facilities Management Team

BEST PRACTICE IN FM?BEST PRACTICE IN FM?

• UNICCO of the USAHand-held technology

Performance contracts

Integrated IT systems

95% Repeat business

Constant growth

Savings to customers

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Asset Management Asset Management ……....

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Asset Management

Facilities Management

Property Management

Maintenance Management

ASSET MANAGEMENTASSET MANAGEMENT

OBJECTIVE OF ASSET MANAGEMENTOBJECTIVE OF ASSET MANAGEMENT

To provide the desired level of service (functionality and presentation)

in

the most cost effective manner

for

present and future customers

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WHAT DO WE MEAN BY WHAT DO WE MEAN BY ““LEVELS OF SERVICELEVELS OF SERVICE””??

VISION

SERVICE

Infrastructure

What are the outcomes to be achieved?

What services (including their performance levels) are required to meet the vision?

What infrastructure is required to support the service?

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““LEVELS OF SERVICELEVELS OF SERVICE”” EXAMPLEEXAMPLEFunction:

•Sanitary disposal

•strategically located

•Accessible/safety

•Catchment size/useage

•Open plan discouraging unsociable behaviour

•Sufficient facilities to provide for a majority of the community needs (drug users?)

Presentation:•Level of cleanliness & maintenance

•Timing of inspections

•Responsiveness to customer complaints etc

•Quality & type perishables

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AM PrinciplesAM Principles

Policy Strategy Plans Operations

Wisdom Knowledge Information Data

Planning Steps

Knowledge StepsWPS

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AM DEFINITIONS

Maintenance/Operations: Regular ongoing day-to-day work necessary to keep asset operating eg road patching

Renewal/Refurbishment: Restores, rehabilitates, replaces existing asset to its original capacity eg gravel resheets

Upgrade/Improvements: Enhances existing asset to provide higher LoS eg widen seal

New: Creation of an new asset to meet additional service level requirements eg new building

What is Life Cycle AM Planning?What is Life Cycle AM Planning?MANAGEMENT

REVIEWS

ASSET AUDIT ASSET PLANNING STRATEGIES

ASSET DISPOSAL / RATIONALISATION

ASSET CREATION/ ACQUISITION

ASSET REPLACEMENT ASSET ACCOUNTING & ECONOMICS

ASSET REHABILITATION /

RENEWALASSET OPERATIONS

ASSET CONDITION & PERFORMANCE

MONITORINGASSET MAINTENANCE

STARTING POINT

Stewardshipand

ContinuousImprovement

Requires organisation to understand &

document condition and useful life of

assets over time

What are the whole of life costs

of assets?

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Asset Condition Degradation Curve with Time0

1

2

3

4

5

6

7

8

9

100.0 10.0 20.0 30.0 40.0 50.0 60.0

Asset Life in Years

Poo

r

-

A

sset

Con

ditio

n

-

G

ood

AA

AM AM –– KNOW YOUR ASSETSKNOW YOUR ASSETS

• Renewal Intervention – Condition Based

•Financial Depreciation vs Technical Depreciation

AM IN PRACTICEAM IN PRACTICE

• Actively adopted in NZ and Australia - referred to as “sustainability modelling” in US.

• Brings finance, technical and other stakeholders together

• Focus on “Levels of Service” and LCC rather than short-term operational budgeting

• Look-ahead 10-20 years typical

• Structured documentation (LoS, Asset Plans, links to Corporate Plans)

• Identifies “renewal” gap funding

• Uses Scorecards to chart progress

• International Infrastructure Management Manual

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AM AM –– Australia Australia -- the LGAQ Projectthe LGAQ Project

• Program now in Vic/Tasmania/West Australia/Sth Australia

• 8 Consultants teaching Councils in Queensland about AM fundamentals

• Councils adopting AM and “renew before new” philosophies

• Encouraging single “corporate” asset register

• Working to identify the “Renewal Gap” for each Council

• Whole of organisation approach

• Developing standard terminology, challenging Accounting Stds

• Govt Depts of Finance & Audits actively support the LGAQ Program

• In Victoria - $4m/year/Council under-funding

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BUDGET PARADIGM SHIFTBUDGET PARADIGM SHIFT

- Street Lighting- Valve maintenance

Non-discretionary Funding Discretionary Funding- Cleaning drains

-Reseals / Resheets -Pavement widening -Kerb and footpath replacement

-Sprinkler replacement -New community centre

- Additional WW pumping capacity- New Kerb/footpath

- Pothole patching - Parks maintenance - Buildings maintenance

- Mowing

Existing Recurrent Expenditure Existing Capital ExpenditureOperational and Maintenance Costs Renewal/Upgrade & New Programs

Operating Maintenance(Routine & Specific)

Refurbishment / Renewal

Upgrade ,New/ Expansion

- Street lighting - Pothole patching -Reseals -Pavement widening - Grass Mowing - Playground Equip -Gravel Resheets -New kerb / footpath - Cleaning drains - Wate Main Valve -Oval refurbishment - New Com building- Streetsweeping - Build (window rep) -Roof replacement - Facilities cleaning - Bridge pile mtce -Pump replacement

Non-discretionary Funding



Discretionary Funding



Recurrent Expenditure Capital Expenditure Additional Whole of Life Costs

Operational Costs Maintenance Costs Asset Management Upgrade & New Projects

-Additional or reduction

-Additional or reduction

- Waste Water additional pumps

Net Maintenance ImpactUpgrade and New/Expansion

Net Operational Impact

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• A Council builds a new $8 million swimming pool but cannot afford ongoing $350,000 mtce & operation

• A Council has 200 buildings but cannot afford to maintain essential bridges

• Council accepts “gift” of heritage building from State Gov but cannot afford to maintain & renew

• A person is injured in a substandard building that council did not know that they owned

• A council stops a street lighting program after community consultation shows ratepayers would prefer lighting in pedestrian areas

CASE STUDIESCASE STUDIES……

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34Visit : www.ctman.com.au

Management Group Pty Ltd

Facilities Lifecycle

Design & Develop

Occupy, Use & Maintain

Review Use Review Users

Refurbish, Renew, Reuse

Establish Need

Demolish Divest



Changing Paradigms – Capital Works

CommentsRenewal Upgrade New

1 20Gravel Road Resheeting - As per 5 yr program Fred 400,000$ 400,000$ -$

2 32Albert Car Park Construction Jack 375,000$ 375,000$ 2,000$

3 114Extension/refurbishment Jack Pavilion Bill 1,100,000$ 200,000$ 150,000$ 750,000$ 9,000$ ~ 1% extension cost

4 56Roof replacement Mavis Library Jill 25,000$ 25,000$ 500-$

5 24Oban Road widening & resurfacing Fred 160,000$ 70,000$ 90,000$ 1,000-$

6 59Pavement Reseals as per 5 yr program Fred 750,000$ 750,000$ -$ Ave condition same

Totals 2,810,000$ 1,445,000$ 240,000$ 1,125,000$ 9,500$

Net Additional

Mtce Cost/yr

Asset Works CategoryLine No.

Bus Case No. Project Description

Project Advocate

Total Project Cost

*Important to take into consideration Contributed Assets and long term management strategy



AM Plans “End Product”



Why Monitor Asset Condition/Performance?Triggers day-to-day maintenance & renewalsLong term $ & Operational planning - renewalUnderstand asset deterioration trendsIdentifying the optimal asset lifecycleMeasuring asset performance to target LoS

Also demonstrates sustainable stewardship



WHY PLAN LONG TERM?

Intergenerational Equity

Maintain Services & assets that deliver them

Smooth Funding Requirements

No Surprises - Community & Council

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ON THE INTERNETON THE INTERNET

Facilities Management in the UKThe current market for facilities services in the UK is around £16 billion (€26 billion / US$ 24 billion) and expected to reach £25 billion (?45 billion / US$ 37 billion) by 2006, increasing at an average rate of around 10% per annum. Source: BISRA

BIFM Award for Best Practice in a PFI/PPP Project 2006

As many worthy PFI/PPP projects have now been established and operating for some time, we are seeking to recognise facilities management involvement demonstrated through

excellence and best practice.

Contractual & Legal Issues in PPP/PFI Projects

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QUESTIONS?

THANK YOU..

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