Courtesy of Gordian
Facilities executives, CFOs and other organizational leaders use a wide array of tools to measure the performance of their physical assets. And whether they are considering an entire facilities portfolio or individual assets within a facilities portfolio, one of the most powerful and most reliable measurement tools they can deploy is a Facility Condition Index (FCI). This post explains what an FCI is and how organizations across a spectrum of industries use an FCI to formulate facilities investment strategies and prioritize projects.
What Is A Facility Condition Index?
At its core, an FCI is a snapshot of the current state of a single facility, a group of facilities or even an entire facilities portfolio. Organizations generate this snapshot with a simple equation: The cost to complete all required projects divided by the cost to replace the entire facility exactly as it is. Here’s how the math works.
Let’s say it would cost $100,000 to repair a damaged roof, replace an aging HVAC unit, and address all the other identified needs in a university’s student union. To calculate the FCI, divide that total cost by the cost to replace the entire building – say, $1,000,000. 100,000/1,000,000 gives us an FCI of 10%.
Remember that we’re comparing the cost to fix all of the problems in a building with the cost to build a new, identical facility, so the lower the FCI the better. Going back to our student union example, if the total cost of addressing every need was $600,000, the FCI would calculate to 60% and university leaders would have to approach their investment decisions with greater urgency.
Why Calculate A Facility Condition Index?
Calculating FCI has tremendous value. First, it provides an objective and accepted standard to benchmark against. Imagine an organization with a large facilities portfolio like a university with multiple campuses, a healthcare system or a state government. These organizations can look at their peers’ FCI or target an aspirational FCI to set a portfolio-level standard. For the sake of the example, let’s assume the standard is 15% across the board. As a reminder, this would mean the cost to address all needs in the facilities portfolio is 15% of replacing the entire portfolio as it exists today.
Leaders can use this data to request funding to address the deficiencies of the assets that don’t meet the standard. Once funding is secured it can be routed to the areas of greatest need – again, identified by FCI.
The Facilities Condition Index is an investment compass, a single source of truth that helps decision-makers direct financial and human resources confidently and optimize their facilities to reach their goals.
Collecting Facilities Condition Data
Collecting accurate facilities condition data is the first step in calculating a current and actionable FCI. Without the right condition data, any attempt to generate a useful FCI is dead in the water. Generally, Gordian assessors evaluate the asset’s age and replacement costs. However, unlike other assessment providers, we offer an array of data collection options that leaders may use in isolation or in combination.
Lifecycle Analysis uses statistical models – not on-site assessments – to estimate the useful life and replacement costs of a facility or asset. Often, these models are used to compare high-level conditions across a facilities portfolio and/or to assess newer, simpler physical assets.
When leaders need more detailed insights into current facility or portfolio conditions, they opt for a Gordian Core Systems Assessment. Conducted by an organization’s capable in-house staff, these assessments are used to supplement or update existing facilities data and provide quick insights into potential problem areas.
More granular than a Core Systems Assessment, a Detailed Assessment sees all major component systems evaluated for age and condition by Gordian assessment professionals. The result is a data-driven understanding of system replacement timing and capital expenditure needs.
Lastly, Gordian offers our most detailed option, the Engineering Assessment. Conducted by experienced assessors, this intensive component-level assessment catalogs conditions, captures deficiencies and notes instances of noncompliance with building codes. When an organization needs a consistent and thorough accounting of needs, they turn to the Engineering Assessment.
Whichever Gordian assessments leaders choose, they’ll have a strong launch point for a reliable Facility Condition Index.
Facility Condition Index: The Industry Standard For Measuring Facilities Performance
In summary, an FCI provides an unbiased, universally-accepted performance standard. Organizations can apply this standard at the portfolio level or narrow it all the way down to the system level. No matter how they apply the Facility Condition Index, leaders and decision-makers can trust they are using reliable data to make informed investment decisions.
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