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Part 1: Facility Condition Index, Other Metrics, Improve Asset Management at National Park Service
By Douglas W. Kincaid
September 2013 -
If there's a word that describes the portfolio of the National Park Service (NPS), a bureau of the Department of the Interior, that word is "diverse." The portfolio includes national parks, national monuments, battlefields, military parks, historical parks, historic sites, lakeshores, seashores, recreation areas, scenic rivers, trails — plus the White House. The NPS portfolio includes more than 70,000 facilities with a current replacement value (CRV) of more than $150 billion. Another way to get a sense of the portfolio is to say that it includes 401 areas covering more than 84 million acres across the 50 states, the District of Columbia, American Samoa, Guam, Puerto Rico, and the Virgin Islands. How the National Park Service prioritizes facility management and operations provides a guide for other diverse portfolios.
In 2002, the NPS began in earnest to more clearly define its asset management practices and, from that effort, to develop a comprehensive capital asset management program. This program focused on these questions:
Answering those questions was far from easy with a portfolio that ranges from buildings, monuments, and fortifications, to roads and landscapes, and even to Cold War-era missile silos. Ultimately, NPS combined three analytical tools to do the job: facility condition index (FCI), asset priority index (API), and critical systems identification. The three tools have enabled NPS to set funding priorities more effectively.
FCI is defined as current maintenance, repair, and replacement deficiencies of the facility divided by current replacement value of the facility. The lower the number, the better.
An FCI alone did not provide the clarity of direction NPS needed to optimize management of a portfolio of this size and diversity. It was a challenge for NPS to determine homogeneous facility types to enable valid comparison of condition. The condition of NPS facilities reflected a potentially overwhelming resource requirement for current deficiencies, and the requirements were widely distributed among diverse asset types. Moreover, condition alone did not provide enough insight into how the portfolio could be managed with limited resources and how strategic decisions could be supported.
To see why the FCI alone is an imperfect measure of the true condition of an asset, consider the needs of a building and a utility system. The FCI of a building might be higher than the FCI for a utility system; however, the utility system may be more at risk of failure because of the condition of a lower cost component that is critical to its operation. The FCI cannot account for the condition of its critical components and, therefore, on its own, fails to capture this important distinction.
The facility condition index (FCI) was developed to provide a benchmark to compare the relative condition of a group of homogeneous facilities. This index is primarily used to support asset management initiatives of federal, state, and local government facilities organizations, but universities, housing and transportation authorities, and primary and secondary school systems also use the index. FCI is defined as follows:
Facility Condition Index
Current Maintenance, Repair, and Replacement Deficiencies of Facility
Current Replacement Value of the Facility
To calculate an FCI, a facility manager needs to quantify the cost of current maintenance, repair, and replacement deficiencies of a facility. This cost is typically the outcome of a facility's condition assessment. The CRV is defined as the monetary value the organization places on the facility.
The FCI is a relative indicator of condition and should be tracked over time to maximize its benefit. It is advantageous to define condition ratings based on ranges of the FCI. The book, Managing the Facilities Portfolio, published in 1991 by the National Association of College and University Business Officers, where the FCI metric was first published, provided a set of ratings — good (under 0.05), fair (0.5 to 0.10), and poor (over 0.10) — based on evaluating data from various organizations at the time of the publication and reviewing what natural breakpoints might indicate a rating. Today, many organizations are determining an appropriate FCI range for these ratings based on their mission and strategic goals.
— Douglas W. Kincaid
Facility Management: Three Metrics Drive Steer Investment Decisions
Part 2: National Park Service's Asset Priority Index Helps Guide Maintenance, Operations
Part 3: Standardized Current Replacement Value Calculations Make Facility Condition Index More Effective
Part 4: Diverse National Park Service Portfolio Complicates Facility And Maintenance Decisions
Part 5: Prioritization System Helps National Park Service Manage Assets, Maintenance and Operations