Facilities management has become increasingly challenging over the years as facilities expand and the cost of construction increases–all while available funds continue to remain volatile. Deferred maintenance is a mounting problem that is insurmountable in some cases. Why is this the case and how did we get here?
The single greatest asset value of most public entities is their land holdings and facilities. Most would consider it to be unforgivable for any leader to overlook the needs of their greatest asset, yet it happens. Deferred maintenance is a mounting problem that has become insurmountable in some cases. Why is this the case and how did we get here?
Deferred maintenance has been a snowball growing ever larger since WWII, and still there are too many public facilities owners who do not have the means (both budgetary and process) to efficiently and effectively manage their facilities’ needs. The high cost of failure ranges from the increased cost of repairs to the increased liability due to injury. Further impact includes shortening of the intended useful life of the building.
For example, on the national level it was estimated that our infrastructure (roads, rails, waterworks, and bridges) had a shortfall of $1.6 trillion as of 2007. Then, additional information in 2008-9, indicated our nation’s public school facilities alone required $127 billion just to raise them to a level of “good condition,” and $542 billion if alterations and scheduled renewals of existing facilities were included. These costs are staggering; however, when deferred, they rise exponentially and at the same time increase the potential for liability as the facilities continue to deteriorate.
Although unbelievable, this lack of attention to facilities is more common than not. It can be argued that it is not always an intentional deferral due to the lack of funds. In fact, in many cases, deferral can be attributed to the lack of a structured facilities program, or even the lack of a true understanding of the facilities’ needs.
This research will address the following questions:
- Why is deferred maintenance allowed to occur?
- How has deferred maintenance become a “standard practice” given the developing insurmountable backlog, higher costs of maintenance, greater risk and liability, and the reduced useful life of the facility?
- Is there hope for redirecting an asset portfolio that has a failing facilities management plan and is heading toward crisis?
Author: Rebecca Smith
Cite as: Smith, R. (2017). Public facilities management: Moving toward crisis. Muma Business Review, 1(14). 171-188. https://doi.org/10.28945/3867
Hello – I appreciated your paper “Public Facilities Management: Moving Toward Crisis” (Smith, R. (2017). Public facilities management: Moving toward crisis. Muma Business Review, 1(14). 171-188).
I am interested in your thoughts on moving from a decentralized model to a centralized on in a public sector organization. The services are operations and maintenance of all buildings – a central group with 150 buildings moving to over 1500 buildings along with associated lands, people and budgets for operating and sustainment.
1. The thinking is to setup a separate deferred maintenance group that will help prioritize enhancements. The need is for a thorough building assessment model and an objective annual report card on O&M costs, performance and improvements completed. Eliminate all chargebacks except for special orders.
2. Establish a 2% index to all new capital projects to be added to the O&M budget.
3. Establish a .5% to 1% index to upgrades to be added to the O&M budget.
4. Set a target of 1% divestiture on an annual basis of total market value as a measure of workplace efficiency and apply the amount directly against the deferred maintenance amount.
These are concepts at this time and by no means thorough or complete however I thought you might have some ideas given your research and analysis you presented in your paper.
The intent is to protect a centralized budget, pay down the deferred maintenance and deliver ‘fit for purpose’ O&M services ultimately helping front line business to focus on their core services.
Anything you would be prepared to suggest would be welcome.