Real Property Inventory (RPI)
Last updated: 06-05-2008
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Introduction
Know Your Assets and What They Cost!
A system to maintain an inventory of an organization's assets/real property is required not only to know what assets the organization has that must be maintained but also to manage those assets and meet asset record and reporting requirements placed on an organization. At one time inventory records were maintained only in paper files with a list of assets, their value and limited other information maintained for ready reference. With the dawn of the Computer age things have changed. Inventory records for ready reference have become easier to prepare and maintain as they are recorded in a computer database. These ready reference records have grown to include more information on each asset. As the inventory database/records have grown their use has expanded because the information can be more easily included in manage reports and other management documents and can be made available for use in other databases such as an operations and maintenance organization's Computerized Maintenance Management Systems (CMMS). Because of the expanded use of real property inventories (RPIs) they have become an important part of an organizations asset management. In fact in the federal government all agencies are required by Executive Order 13327, Federal Real Property Asset Management, to identify and categorize all real property owned, leased, or other-wise managed by the agency.
Description
In today's business environment RPIs are or should be 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 of course 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 company/university/ government 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) requirements and other requirements the organization may have.
The RPI paper files and database should start with the acquisition of the asset whether by construction, purchase, lease, donation or any other source. 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 means the RPI should start with the owners assuming O&M responsibility for the asset. The decision to enter an asset or improvement to an asset in the RPI is determined by the value set by law, government regulation or the organization and the organizations definition of real property. In most cases real property includes land and anything permanently affixed to it, such as buildings including their installed systems and building equipment and in some cases other installed equipment, roads and parking facilities, fences, utility systems, structures, etc. The RPI for assets meeting the definition and value requirements imposed on the organization should then be maintained for the life of the asset whether in the private sector or in the government.
A. RPI Content
The RPI of an organization should include the detail paper files identifying the asset and its cost including its initial acquisition and improvements. The RPI database should include the asset's name (usually a descriptive title), its facility number or address, its book value, type of facility (may be a classification code or simply included in its descriptive title), its capacity and its unit of measure (UOM). Other asset data in the database will depend on the organization and its management. Some other data that may be included is its location, book value, its current replacement value, asset's use (may be a code) and status, listing of improvements and their costs, previous years O&M costs, and in the case of government agencies General Services Administration (GSA) Usage Codes.
B. Book Value (Cost)
The initial entry in the RPI includes the book value with asset improvements that meet an organizations 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 finical management rules and government regulations in the government organizations. An example of government requirements is that capitalized value (book cost) of a facility includes all costs incurred to bring the facility to a form and location suitable for its intended use. The cost may include the following, as appropriate for the type of facility to be capitalized and included as the book value of a new asset or in the case of an asset improvement added to the facility's book value:
- 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.
C. Capital Improvements
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 are capitalized and increase the book value of the 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 the costs exceeds a costs 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.
D. Maintaining the RPI
The organization responsible for the RPI should develop and sponsor the establishment of guidance and procedures as required for the organization to ensure compliance with applicable laws, regulations, and organization policy. The guidance and procedures must include the assignment of responsibilities and establish controls necessary to ensure that the RPI records are kept current including the database, that periodic physical inventory are performed and that the records are reconciled based on the inventories.
Application
An RPI should be maintained by all organizations responsible for maintaining asset records. The records should include detailed paper records and a database containing the asset information needed by the organization to meet reporting requirements and recurring request for information. By having the data in a database reports and request 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.
Emerging Issues
The security of the data in a database is an issue that most organizations have already faced with their computer systems but it is a continuing problem that must be faced in the computer world.
Relevant Codes and Standards
In the private sector the federal and state tax codes establish requirements for asset records (RPIs) that must be maintained. Database files in the public sector will be based on the organizations' requirements.
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)
Major Resources
- Army Real Property web site
- GSA Office of Government Wide Policy, Customer Guide to Reporting Real Property Inventory Information (DOC 368 KB)
- Office of the Deputy Under the Secretary of Defense - Installations and Environement Real Property Inventory Requirements
- NASA's Real Estate Management Program Implementation Manual
- U.S. Department of Energy Real Property Asset Management (PDF 188 KB)
