5 Best Practices for Capital Planning: Taking Notes From Education Sector

By Nick Mirisis

capital planningFor all schools systems, capital planning is a complicated process. While some still cling to paper systems many have embraced the digital age with spreadsheets and pie charts. Still, trying to forecast the future needs of the school or school system with an array of tools that were not necessarily designed for that specific purpose can quickly get out of hand as updating and sharing challenges create plenty of room for error. Effective capital planning and capital management requires tracking both immediate expenditures as well as forecasting future costs. Often, there is a disconnect between planning for the day-to-day needs of the school versus planning for capital projects that are sometimes two, five, or 10 years down the road.

Many breakdowns can occur in updating facilities and equipment data. If work orders are not entered in a timely fashion then the data is almost obsolete and lacks the ability to be used to successfully forecast future expenditures. Many schools have addressed this by implementing a computerized maintenance management system solution, or CMMS, that can integrate day-to-day operations with capital forecasting and planning. And while good capital forecasting software provides valuable insight and support, it requires adherence to essential best practices.

1. Prepare inputs carefully. We all know that data generates more data, and the quality of what goes in affects the quality of what comes out. The first step is to create a list (or ensure an accurate list) of a facility’s equipment, assets, and building components. The next step is to assess the state of the equipment and audit the equipment with serial numbers and installation dates. Finally, an assessment of the current condition of the facility is necessary. Often times this process can be completed by the custodial team as part of its preventive maintenance activities. All of these data points will be used to keep the system up-to-date, to inform the capital forecasting plans, and to help in making budget requests and justifying those requests with more detailed data.

2. Integrate the data. Integrating day-to-day and work order data into the master plan is key. Ideally, all of the maintenance staff should stay on top of work orders and preventive maintenance, and keep the CMMS system as up-to-date as possible. A master plan also adds in another valuable asset to the process — credibility from widely accepted architectural and engineering practices. Cost data from construction projects from all across the country also can be integrated into the plan, thereby adding objective third-party validation from experts in the field.

3. Preventive maintenance. As the old adage goes, an ounce of prevention is worth a pound of cure; so it goes with preventive maintenance. A strong preventive maintenance program can save schools upwards of 50-60% in emergency maintenance work, which can be more costly than regular maintenance. Schools must assess and update equipment status as well as make note of deteriorations. In essence, they must track the life cycles of their equipment and perform timely preventive maintenance, which, in the long run, will save the school district money.

4. Reinvest to prevent a backlog. Industry standards advise reinvesting 2% of the current replacement value of an item annually to keep from having a backlog of work orders. It has been shown that with a sustained preventive maintenance program, catastrophic failures drop 55-60%. Failures can be expensive, shutting down schools and wasting resources — think about the cooling element for a cafeteria refrigeration system and the $60k worth of food it stores, or the impact of a failing HVAC system in the middle of a cold New England winter. And, if preventive maintenance efforts can extend the life cycle of a roof by three to five years, then that’s money that could be used elsewhere.

5. Engage stakeholders. In creating a capital plan, it is imperative that the community be engaged early and often. In the case of schools, this generally means engaging the Board of Education or Trustees but also the school staff and school community at large. It is best to garner the best thinking from a variety of viewpoints, as this helps to ensure a feeling of equality across a school district. In the end, when people are asked for their opinions, they are more likely to support the implementation of a plan.

capital planningThe information gained from adopting these best practices can be used to create a more impactful presence at School Board meetings. When speakers only get about 15 minutes once a quarter to present information to the Board of Education they need to make the argument for their budget allocation quickly and effectively.

Mirisis is senior director of marketing for SchoolDude, a provider of operations management solutions for K-12 and higher education institutions.