- Construction Operations Building Information Exchange (COBIE)
- Deferred Maintenance - The Use of Parametrics for Estimating Maintenance Costs
- Facility Performance Evaluation (FPE)
- Life-Cycle Cost Analysis (LCCA)
- Predictive Testing & Inspection (PT&I) Can Prevent Operational Interruptions
- Reliability-Centered Maintenance (RCM)
- Sustainable Laboratory Design
- Sustainable O&M Practices
Real Property... Inventory (RPI) and Asset Management (RPAM)
Last updated: 11-10-2011
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Introduction to Real Property Inventory and Asset Management
What do we own, where is it, what is it worth, how fast are we using it up, and what should we do?
Typically, real property includes land and anything permanently affixed to it, such as buildings including their installed systems and building equipment, and is some cases, other installed equipment, roads and parking facilities, fences, utility systems, structures, etc. Real Property Inventory (RPI) is a record of an organization's assets/real property. Real Property Asset Management (RPAM) is a program for collecting and maintaining a real property inventory. RPAM provides data to manage those assets and meet asset record and reporting requirements. RPAM provides the information necessary to formulate facility budgets, make decisions on facility replacement, identify repair costs, identify penalty costs, and improve the management of investments in Real Property assets, throughout the organization. The information provided by the RPAM program will help in the planning, programming, and budgeting processes.
Federal Real Property Asset Management places specific requirements on owners of Federal Real Property to identify and categorize all real property owned, leased, or other-wise managed by the agency. Executive Order 13327, signed in 2004 underscores the importance of RPAM to the overall success of any organization with a portfolio of Real Property. In the past, real property records were maintained for ready reference within folders in file cabinets and consisted of a list of assets, their value and limited other information. Since requirements to manage the Total Cost of Ownership (TCO) within an organization have become more critical with rising costs and shrinking budgets, the demand for factual data about real property has increased. RPAM managers must support ever increasing requests for information about the Real Property in their portfolio, especially since information requests are not limited to building data as in the past. Information demands include Infrastructure, Building Systems, Utilities, Energy Consumption, Space Utilization, Code Compliance, and Environmental Sustainability.
The advent of computers and their powerful databases have changed the role of Facility Managers to that of Facility Asset Managers. They assist corporate decision makers with factual data and auditable Key Performance Indicators (KPI's) about the real property and the components that support the mission or activities of the facility or infrastructure asset. While the implementation of RPAM may be separate from the creation and management of RPI records or a Computer Aided Facility Management (CAFM) system, they should be integrated or linked to avoid duplication of effort to both create and maintain data for corporate use. Linking Computerized Maintenance Management Systems (CMMS) databases to both the RPI and the RPAM databases can create a dynamic process that collects valuable corporate data one time at its least cost of acquisition, and uses it over and over again. The expanded use of real property inventories (RPIs) have become an important part of an organization's asset management.
Integrated Decision Making
Integrated Decision Making (IDM) is the process of considering the impact of each department's strategic plans on the strategic plans of every other department in an organization. For example, data collected during an energy audit could also provide data to update a CMMS. A RPAM software program typically converts facility historical, as-built information and condition assessment data into usable management information. The RPAM program is most repeatable and auditable if based on the emerging Engineered Management System (EMS) process but may be generated by a Knowledge Based Process (KBP). (The EMS process converts objective data about real property into auditable KPI metrics based on actuarial tables and engineered deterioration curves.) KBP systems rely on the judgment or knowledge of the data collector to provide the KPI Metrics.
The importance of collecting reliable data cannot be overstated. The acceptance of reports generated by a RPAM is directly tied to how auditable is its data. In implementing a RPAM, facility managers gather facility historical, as-built information and assessed condition of all systems and components in a given facility or infrastructure asset. Much of the required data may be electronically extracted from existing facility-related management applications such as a CAFM system, CMMS, and/or an existing RPI database. Today, Data Collection Devices (DCDs) are in general use, and automate the various aspects of collecting and summarizing information. Software typically inherent to DCDs usually provides a process that ensures the quality, consistency, timeliness, and easy transfer of the data into a database, file or summary report. This data is then used to develop various KPI metrics such as Remaining Service Life (RSL), Current Replacement Value (CRV), and Condition Index (CI) for system components. This data compilation is used to produce a System Condition Index (SCI). The SCI is used to produce a Facility Condition Index (FCI). Further, FCIs can be used to produce a Site/installation/campus Condition Index.
Life Cycle Analysis
The Importance of Life Cycle Analysis—a RPAM software program based on EMS will analyze and model the data collected against its database of actuarial and deterioration curves. In support of LCA, the analysis provides statistical performance evaluations to measure the present condition of each component as to its remaining economic life. The knowledge based process uses a system of parameters developed by the data collector to determine the present condition or will use a ratio such as the estimated cost to repair over the estimated cost to replace to generate a Facility Condition Index (FCI). The RPAM database can be updated through a link or integration with existing work-management procedures such as a CMMS or CAFM application and the RPI databases as repairs, replacements, or additional acquisitions occur. This integration will produce a dynamic perspective of the total inventory and the current status of any infrastructure or facility/component.
Importance of Costing—a RPAM identifies the costs of repair and replacement options by modeling current as-built plans and conditions against a mature costing database or through links to commercial costing databases. Because these costs serve as the basis for the optimization program and "what-if" analysis the reliability of the cost estimates become critically important. Actual costs are then tracked through the CMMS and RPAM updates its costing database to reflect changing costs for developing new cost estimates.
Integrated Decision Making through Optimization of Funding Options
RPAM will determine the impact on inventory and potential ROI for various scenarios. It can play "what-if" and identify the return on each investment option in terms of the impact on the targeted KPI. The use of Analytical Hierarchical Process (AHP), which is a structured technique for helping people deal with complex decisions, allows for the modeling of various priorities and the impact each variable would produce. This is the key to enterprise-wide optimization of limited funds to produce the desired strategic outcomes. This makes the implementation of a RPAM program a requirement if an organization is to provide true stewardship of the invested dollar and produce a sustainable environment.
A RPAM software program typically produces the following reports:
- Projections of remaining serviceability (infrastructure/facility/system/component)
- Capital and maintenance budget requirements
- Cost estimates to correct current deficiencies
- Replacement cost estimates
- Current cost of asset depletion
- Depletion rate of assets
- Long-range budget forecasts
- Prioritized near-term budgets based on corporate strategies for KPI's
- Cost impact of deferring treatments (Business case)
- Inventory of physical conditions
- Prioritized work orders based on condition and/or expected service life
A RPAM program will help analyze how funds in the corporate budget should be distributed to each real property asset based on corporate strategies and given variables. It both projects these budgets based on both long and short-term needs and properly allocates them to various funding "buckets" as appropriate for organizational needs.
Business Case For Implementing Real Property Asset Management Process
The need exists for applied financial management of corporate facility assets and a tracking system that measures the depletion of those assets. Therefore owners, architects, engineers, and builders need to become more aware of the financial significance of RPAM. Facility assets should be managed to operate at the lowest cost and at the lowest risk to the facility or infrastructure mission. Investment opportunities occur at several points in the life cycle of building systems. Those strategic investments should be made, and the return on those investments measured if maximum reduction in cost of ownership is to occur.
Most organizations are surprised to learn the magnitude of funds they have at risk in their facilities. By calculating replacement cost (including the cost of capital) and then dividing that cost by the system's actuarially determined life; one can produce an annualized replacement value. That value is used to demonstrate to the organization the benefit of increasing the life of a building system by a single year through strategic repair of existing defects. This cost/benefit analysis elevates budget requests to budget requirements complete with penalty costs of underfunding those requirements.
Introduction to Real Property Inventory (RPI) Databases
In today's business environment, RPIs are best maintained in computer databases with detailed inventory records maintained in paper files. The records should contain details of transactions that affect the organization's assets and should be maintained as permanent records for the life of each asset. The computer RPI size depends on the number of facilities and how the organization chooses to maintain the database. The database may be located at a site/complex/campus or at a central location where the assets of the owning agency are maintained in total. The inventory data on an asset will include information as determined by laws, government regulations and/or an organization's management. It will depend on the use of the data and what requirements have been placed on the organization, such as information to meet tax requirements, government regulations, management reports, operations and maintenance (O&M) considerations and other requirements the organization may have.
The RPI documentation and database should start with the acquisition of the asset whether by construction, purchase, lease, donation or any other source of procurement. When by construction the RPI records should follow project delivery at the time the asset is turned over to the owner for O&M. When by other sources of procurement, the RPI should start with the owners assuming O&M responsibility for the asset. The decision to enter an asset or an improvement to an asset in the RPI is determined by the value set by law, government regulation or the organization and the organization's definition of real property. The RPI for assets meeting the definition and value requirements imposed on the organization should then be maintained for the life of the asset.
The RPI of an organization should include detailed documentation identifying the asset and its cost including its initial acquisition and improvements. All database information should include the asset's unique name (usually a descriptive title), unique facility number or address, book value, type of facility (may be a classification code or simply included in its descriptive title), capacity and unit of measure (UOM). Other database content will depend on the organization and its management. Data may also include asset location, current replacement value, a building prioritization code, use (may be a code) and status, listing of critical building systems condition status, and projected year of replacement, additionally building or site improvements and their costs, previous years O&M costs, and in the case of government agencies, General Services Administration (GSA) Usage Codes.
Book Value (Cost)
An example of government application of the capitalized value (book value) of a facility is that it includes all costs incurred to bring the facility to a complete and useable state. Book value costs may include the following:
- Amounts paid to vendors or contractors, including fees;
- Transportation charges to the point of initial use;
- Handling and storage charges;
- Labor and other direct or indirect production costs (for assets produced or constructed);
- Engineering, architectural, and other outside services for designs, plans, specifications, and surveys;
- Acquisition and preparation costs of buildings and other facilities;
- An appropriate share of the cost of the equipment and facilities used in construction work, including depreciation (per FMM 9091-5c.);
- Fixed equipment and related costs of installation required for activities in a building or facility;
- Direct costs of inspection, supervision, and administration of construction contracts and construction work, including civil service costs;
- Legal and recording fees and damage claims;
- Fair values of facilities and equipment donated to the Government, and
- Material amounts of interest costs paid.
These costs should be appropriate relative to the type of facility to be capitalized and should be included as the book value of a new asset or, in the case of an asset improvement, added to the facility's book value.
The initial entry in the RPI includes the book value with asset improvements that meet an organization's guidelines being added to the book value as they occur. What is included in the book value of an asset will depend on tax laws and management requirements in the private sector and financial management rules and government regulations in the government organizations.
Capital improvements are determined by a Capital Improvement Plan or Program (CIP). Capital improvements to an asset are modifications whose cost equals or exceeds a value established by the organization or by law/regulation and 1) extends its useful life by two years or more or, 2) enlarges or improves its capacity or otherwise upgrades the asset to serve needs different from, or significantly greater than, those originally intended. Capital improvements can increase the book value of a facility.
Where a replacement occurs due to a capital improvement, the book cost of the asset should be appropriately adjusted to remove the original costs of items replaced where that cost and the cost of the replacement exceeds a cost set by law, regulation or the organization. If only a portion of the property is being replaced, and that portion is not separately identifiable in the asset's records, the original value of the replaced portion should be estimated and the book value adjusted accordingly. The costs of items replaced do not include the costs of removal but only the original book costs.
Maintaining the RPI
The organization responsible for the RPI should develop guidelines and procedures necessary for the organization to ensure compliance with applicable laws, regulations, and organizational policy. These procedures must include the assignment of responsibilities and establish controls necessary to ensure that the RPI records are kept current including the database. Additionally, they must ensure that periodic physical inventory are performed and that the records are reconciled based on the inventories. For federal facilities, the Federal Real Property Council directs each agency to appoint a Senior Real Property Officer who is responsible for maintaining accurate data within the RPI.
An RPI should be maintained by all organizations responsible for maintaining asset records. By having the data in a database, reports and requests for information can be answered easily without using manpower to extract the data from paper files. This is particularly applicable where the organization is responsible for a complex or campus with numerous assets as found at large corporations, universities and government agencies.
Security of computer databases continues to be an on-going concern for organizations. Ensure data is backed up and is well protected from theft, modification and destruction.
Relevant Codes and Standards
In the private sector the federal and state tax codes establish requirements for RPI asset records that must be maintained. Database files in the public sector are based on the organizations' requirements and government mandates.
For government agencies the following regulations apply:
- 40 U.S.C. 483 and 484, Sections 202 and 203 of the Federal Property and Administrative Services Act of 1949, as amended
- 41 CFR, Chapters 101 and 102, Federal Property Management Regulations
- Executive Order 13327, Federal Real Property Asset Management (PDF 96 KB)
Operations and Maintenance
- Army Real Property Master Planning
- 2010 Guidance for Real Property Inventory Reporting (PDF 2.0 MB)
- Office of the Deputy Under the Secretary of Defense - Installations and Environment Real Property Inventory Requirements
- NASA's Real Estate Management Program Implementation Manual
- U.S. Department of Energy Real Property Asset Management (PDF 188 KB)
- New Zealand National Asset Management Steering Group
- Key Performance Indicators (KPI): are quantifiable metrics that help an organization define and measure progress toward organizational goals.
- Total Cost of Ownership (TCO): evaluates all costs, direct and indirect, incurred throughout the life cycle of an asset, including acquisition and procurement, operations and maintenance, and end of life management.