This document discusses best practices for facility renewal planning. It recommends using a facility condition assessment or mathematical model to determine appropriate spending levels and identify needed capital expenditures. A detailed engineering survey provides the most accurate information but is also the most costly. The document emphasizes that facility renewal involves replacing building subsystems and components at the end of their lifespan, rather than ongoing maintenance, to ensure facilities are properly supported over the long term.

1. Facility Renewal Planning Snapshot
QUESTIONS:
• How much should we be spending on facility renewal?
• Are we falling behind what we should be spending?
• Are there significant, Facility Renewal capital expendi-
tures that we have not planned for?
BEST PRACTICES:
The rankings (1-4 with “1” being the simplest and least costly)
show the Facility Renewal planning options available to Facili-
ty Managers:
1. 1-9 Facility Condition Assessment (Quick )
2. Mathematical Model (2% per year or other)
3. ASTM Property Condition Assessment - Used for Financial
Planning— does not include detail engineering assessment. OK
for buildings with “simple” HVAC systems.
4. Detail Survey— Engineering or Architecture study that iden-
tifies replacement cost for each subsystem (i.e. pumps, VAV
CONCEPT:
Buildings wear out over time. It’s a fact. Facility Renewal is not maintenance. Cleaning the carpet, replacing light bulbs and
replacing a $ 78.00 condenser fan motor in a HVAC unit are maintenance expenditures. Replacing the carpet, light fixtures and
HVAC units are capital expenditures because they replace building subsystems. Replacing a light switch, a component (part of a
subsystem) is a maintenance expenditure. Maintenance is an operating expense, while capital expenditures do not hit Facility
Managers operating budget, but are part of the enterprises’ capital expenditures that typically require a year’s notice. Starting
a year after the expenditure, a portion of the capital expenditure “shows up” in the Facility operating budget as depreciation
expense. Deprecation is a financial concept that translates a portion of the capital expenditure into an expense showing a por-
tion of the building being “used up” each year. Depreciation does not necessarily reflect Facility Renewal requirements.
If Facility Renewal expenditures are not planned, they often are misclassified as maintenance expenditures and greatly skew
the maintenance costs per square foot. Buildings in the Private Sector in the U.S. are designed to last 40 years while Public
Buildings typically are generally designed to last 50 years. Building and their subsystems don’t wear out at a steady rate, conse-
quently estimating a 2.5% annual Facility Renewal rate (for corporate facilities) per year over estimates expenditures in the
early years and is inadequate in later years. Each subsystem or component typically has a known Expected Useful Life (EUL)
which can be used to plan future expenditures. In years past, Facility Renewal was often called “Deferred Maintenance” and
Financial staff often refer to these capital expenditures as “Recapitalization.” Facility Managers should have a thorough under-
standing of Facility Renewal so that they can present a case for funding for Facility Renewal planning or expenditures.
Barry Lynch, CFM, SFP, IFMA Fellow, NCARB, MBA, Labarre Associates, Inc. 8385 Rushing Rd. East, Denham Springs, LA 70726
For More Information visit: www.Labarre-inc.com
STRATEGIC INSIGHTS:
• When renovation costs exceed 50% of the replacement value of the building (U.S.) the entire building must be brought up to
the current code. Also consult with your architect regarding the requirement to add sprinklers as a result of a Renewal Pro-
ject. These two items could blow your cost estimates out of the water.
• LEED EB can be use as a format for developing an office renovation master plan—even without a LEED application.
• Look at Computer room loads for all systems. Do a multi-year capital plan for the Computer Room.
• Create a Value Proposition for your Master Facility Renewal Plan— how it supports the Business Plan & Benefits.
NOTES:
Facility Condition Index : FCI = Sum of “Deferred Maintenance” or Facility Renewal divided by the Replacement Value of the
Building. This is useful in ranking buildings within a portfolio of buildings in order to determine priorities.
Functional Obsolescence : Many building subsystems may require an upgrade at the time of replacement. The most common
example is upgrading HVAC controls when the system requires replacement. Don’t forget to write off replaced subsystems!
YOUR PRESENTATION:
• Gather facts, present your best shot given available re-
sources (time and money) - Always give a range
• Are we falling behind what we should be spending?
• Are there significant expected capital expenditures that
are not in the capital budget? (Roof Replacement etc.)