4 FM quick reads on
1. Trust Contractor To Be The Expert
Today's tip is to transfer all risk and control to the contractor in outsourcing situations. If you've done your due diligence, the vendor you've hired is the expert in the situation — not you.
"An expert has no technical risk," says Dean Kashiwagi, PhD, PE, professor and director of the Performance Based Studies Research Group at Arizona State University. "His only risk is others coming in to try to control him."
The ideal project scenario involves facility managers explaining what they want and the vendor letting them know what they can get, Kashiwagi says. The key is working with a contractor selected for their expertise and the value they can deliver, not the cost savings a facility manager can wring out of the contract.
In the first phase of the selection process, you assume all vendors are experts and take their performance claims at face value. Then you ask questions and verify all claims that were made, Kashiwagi says.
"Ask the vendor how they know they can do it," he says. "They'll know deviation in cost. They'll know deviation in performance. They will have self-evaluated." The vendor needs to measure their own people and operations, not the customer.
Once you have winnowed the choices down, let the contractor do what they need to do. This includes making them write the contract — pushing the risk back to them, because their lawyers won't promise something they can't deliver on.
Cost does come into the equation, but it shouldn't be the primary deciding factor. "We're not looking to pay more, but if we're paying more we want hard evidence that it's due to valid factors," Kashiwagi says.
Remember that risk drives up cost. One strategy to use in pursuing value-based instead of price-based decision making is to talk with a desirable vendor who might be too expensive and find out what risk factors influenced their bid. Mitigate the ones you can and have them rebid.
University’s Planning Yields More Funds For Replacement
Today's tip comes from the University of Texas at Austin, one of the largest public universities in the United States. The school needed an efficient, objective, and repeatable method of prioritizing facilities projects, as well as creating its annual budget and 10-year plan.
After an initial facility condition assessment of the entire campus in 2002, the university completed a second assessment in 2005 and a third in 2010. Recently, the facilities team wanted to find the best method to maintain the integrity of the data, while implementing a schedule of detailed condition assessments each year for 20 percent of the approximately 19 million square feet of facilities.
The university has a large maintenance and facilities staff, making self-assessments a feasible solution to complement the five-year professional assessment cycle. Using a Web-based guided self-assessment tool from VFA Inc., the staff can gather current data for critical buildings.
One benefit of gathering accurate facility data is that the true condition provides a metric to analyze the effect of investing in facility improvements. Industry-wide, this benchmark is known as the facility condition index (FCI).
When gathered in a software database, as UT-Austin did, FCI provides a complete view of the necessary and recommended maintenance items and their cost for the selected portfolio, as well as the expected replacements for the major building systems. It can then serve as the basis of strategic facilities plans.
By using the software to evaluate the condition of its buildings, UT Austin's capital planning program has helped to demonstrate a need for more funding to support renovation and renewal projects, resulting in annual budget increases. The old spending trend of 80 percent funding for repair work and only 20 percent for system replacement and renewal has been inverted to 15 percent funding for repair and 85 percent for system renewal.
ESCO, Energy Audit Can Raise Efficiency
Today's tip is to consider an audit by an energy service company to reduce energy costs through retrofits. For managers to make the most of the opportunities ESCOs provide, they must understand the savings they can achieve by undertaking all suitable projects for their facilities.
One of the most important steps is identifying the program's goals. Common issues include:
- Are rising energy costs putting a squeeze on the energy budget?
- Have billing changes occurred that will result in significant increases in energy costs, even though energy use might remain constant?
- Has energy use risen to the point that costly upgrades are required as a result of limits on capacity?
- Does the facility need to replace HVAC components due to equipment age and simply be sure that replacement equipment is the highest efficiency possible?
Each of these goals requires a different approach. For example, if the goal is to reduce electrical demand, the program should focus on such tasks as peak-load reductions and load-time shifting. Improving the operating efficiency of HVAC units in this case might reduce energy use but might not have a significant impact on electrical demand.
To identify the most cost-effective way to meet goals, work closely with the ESCO on an energy audit. An energy audit is a detailed survey of the facility that determines where the potential exists for energy savings. Typical audits have four targets: lighting systems, HVAC systems, building controls, and building envelopes.
When looking to improve the operating efficiency of HVAC systems, managers must evaluate a range of options, such as replacing existing components with higher- efficiency units, closely matching system capacities to needs, performing neglected maintenance, or balancing air and water systems so they provide optimal levels of heating and cooling.
Audits should also consider other issues, such as the energy and cost benefits of on-site generation of electricity from conventional or renewable sources, particularly for facilities looking to reduce their peak electrical demand.