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Facility Condition Index (FCI)
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key performance indicator (KPI)  which is used to objectively quantify and evaluate the current condition (ie., physical health) of a facility and to make two types of benchmark comparisons on the relative condition of that one facility with:
  • Other facilities within the same portfolio [see scatter plot or distribution table]
  • Against the same facility at a some time in the past. [see: FCI trending]
The FCI provides a measure of the "catch-up" costs of a facility (freehold property) and is typically derived from a Facility Condition Assessment (FCA) carried out by an experienced consulting team. In the case of a leasehold interest, the catch-up is quantified by the principle of permissive wasting.

It is important to note that FCI is a measure of condition relative to the reproduction cost of the building. FCI is not an absolute statement of the size of the backlog of catch-up work. A large and complex facility, with a high reproduction cost, requires a larger backlog of deferred maintenance to raise the FCI than a smaller/simpler building.




Purpose of the FCI
The principal value of an FCI rating, particularly for the owners and operators of a single facility or a portfolio of facilities, can be identified as:
  • To assist in making resource allocation decisions amongst the buildings in a portfolio, particularly with limited budgets that are not adequate to address the deferred maintenance in all the facilities. It is therefore a means of identifying priorities.
  • To determine the annual reinvestment rates to prevent further accumulation of deferred maintenance. 
  • To calculate catch-up costs.
  • To provide a KPI for resource allocation decisions.
  • To help track the extent of condition drift over time
    The FCI serves as the index of measure along the horizontal (x) axis of the following three multivariate analysis:
    Some of the secondary values of an FCI rating for the facilities, are as follows:
    • A mechanism to monitor changing conditions over time.
    • A means to demonstrate the level of effort, due diligence and responsible stewardship to various stakeholders.


    The FCI Condition Scale
    In accordance with the original formula developed in 1990, the relative measure of the condition of the facility (or facilities) is usually organized into a four-tiered condition scale, as follows:
    • "Good" Condition     - 0-5% of CRN
    • "Fair" Condition        - 5-10% of CRN
    • "Poor" Condition      - 10-30% of CRN
    • Critical Condition     - 30%+ of CRN
    The terms ("good" etc) are the linguistic scale that is underpiined by the numerical scale (0-5%, etc)

    Unfortunately these thesholds and their KPIs have been misinterpreted and misrepresented over the last few decades as a result of adjustments to the formula by different software vendors and engineering firms.


    FCI Formula
    The formula contains a numerator that is divided into a denominator to return a percentage KPI. [See formula on the right of the screen].

    The FCI formula can be summarized as the ratio of all the deferred maintenance (the numerator) divided into the Current Replacement Cost of the entire facility (the denominator).
    • The numerator of the formula - this contemplates the catch-up costs and this includes deficiencies and deferred maintenance.
    • The denominator of the formula - is based on the current reproduction cost of the facility.
    There are three general classes of reinvestment that are pertinent to an understanding of the value of a Facility Condition Index. The three classes are listed below.
    Since the introduction of the FCI formula in 1990 there are two alternative methods that have been developed for determining the size of the backlog in the numerator of the formula:
    • Top-Down Backlog Calculation - This method is popular with software vendors who utilize algorithtms to establish levels of deferred maintenance based on chronological age of the assets.
    • Bottom-Up Backlog Calculation - This method is employed principally be engineering firms to generate itemized lists of empirical conditions observed in the field.
    In addition to the two methods of deriving costs, there are some differences of option as to the scope (type) of costs that shouild be included in the numerator of the formula. This has been bastardized over the decades by different consulants and software vendors. The original formula contemplated only "deficiencies", but some companies have started to included future lifecycle renewal costs.

    These other classes of reinvestment should more appropriate be considered in other measures, such as the Extended Facility Condition Index (EFCI).

    There are alternative methods for establishing the denominator of the formula.



    Variations on the FCI Methodology
    In order to accommodate regional differences, budget constraints, portfolio attributes and methodological alternatives, there are some variations on the standard FCI, including the following:



    FCI Correlations
    Since FCI is a snapshot of the current extent of catch-up, it is necessary to extend the analysis to include other variables, such as facility priority ranking and facility age. There are three common types of correlations utilized in the industry.

    1.  FCI and Mission Criticality (Prioritization)


    The Condition-Priority Matrix plots the relationship between the relative condition and the relative priority of assets or facilities. within a portfolio. Listed below are the four quadrants in the analytic matrix.
    The horizontal ("x") axis is represented by the Facility Condition Index (FCI) and the vertical ("y") axis by the Mission Dependency Index (MDI).

    2.  FCI and Facility Age

    The Condition-Age Matrix plots the relationship between the relative condition and the relative age of facilities utilizing 5- stage facility lifecycle model as follows:
    If a facility has been undergoing all the necessary capital renewal projects, then there should be little correlation between the age and condition of a facility.

    3. FCI and Energy Efficiency

    The Condition-Energy Matrix plots the relationship between condition and energy efficiency of the facilities.
    • Energy Efficient Facilities in Good Condition
    • Energy Efficient Facilities in Poor Condition
    • Energy Inefficient Facilities in Good Condition
    • Energy Inefficient Facilities in Poor Condition
    For example, the FCI analysis can be used to make decisions on whether to allocate funds towards Energy Efficiency Measures (EEMs) or towards routine facility renewal measures.

    4. FCI and
    Facility Operatings Standards

    Different facilities are governed on different operating standards depending on their mission criticality and budget constraints.
    For example, if a facility is supposed to be operating at level 1: Showpiece (the target) but the FCI is above 10% ,then the building is actually operating at Level 4: Reactive Management. these types of disconnects between targets and actuals can be addressed by either adjusting the targets to more realistic levels or reinvestment in the facility to improve the FCI rating. 



    Analytics and KPIs
    Listed below are some of the analytics and KPIs that can returned once the FCI has been established for one or more facilities in a portfolio.


    Financial Modeling with FCI
    Reinvestment is a reconciliation of the expenditure forecasts ("How much money will we need?) and the funding level ("How much money will we have?"). Sensitivity analysis asks the following two questions:

    A. Linear Funding Models
    This method asks the question: “If the owners fund at level x, what  will be the resultant FCI each year?

    B.  Lumpy Funding Models

    This method of funding asks the question: "What should our funding be each year to ensure that the FCI remains at a certain level."


    Evaluation
    Listed below are some of the advantages and merits of the facility condition index (FC) as an asset management tool:
    • It has been tried and tested on thousands of facilities over the last 30 years.
    • There are industry accepted thresholds for "good", fair", "poor" and "critical" condition.
    Some of the primary limitations of the facility condition index (FCI )as a measure are listed below:
    • It is not an absolute measure and is often used as a snapshot in time as a comparator to similar assets or as an index which quantifies the adequacy of a funding level over a longer period of time.
    • It focuses on issues that are Behind-the-Horizon but does not include future renewal projects that are In-the-Horizon.
          Numerator Issues Numerator Plasticity
    • The standard FCI formula does not include a weighting system to prioritize the relative importance of the backlog associated with each system or each within a facility.  For example, an electrical-intensive facility such as a theatre, may place greater mission criticality on the electrical system than on some of the other systems. This problem is partially resolved when the FCI is cross-referenced against a Priority Index in a 2-dimensional matrix.  
    • The FCI does not include keep-up costs, which are derived from an extended FCI methodology.
    • The FCI does not include for any upgrades or adaptations that may be necessary to address the other forces of retirement that act upon assets, such as functional obsolescence.
    • Due to factors such as condition drift, the FCI values may become rapidly outdated. It is important to recognize that the FCI is always relative to a base year
          Denominator Issues - Denominator plasticity
    • The fluid nature of the building reproduction cost calculation which can differ dramatically each year and result in an inconsistent FCI.  

    Management principles
    Management of the data from the FCI can be administered through the following mechanisms and techniques.

    • Assessment Cycle  - That is, how often should the FCI be updated. Some facility managers may deem a 5-year assessment cycle to be adequate, whereas others may consider a 3-year cycle more appropriate.
    • Assessment Match - That is, what level of assessment should be used to generate the FCI. For example, some facilities may be adequately evaluated with a top-down methodology whereas other facilities cannot be fully evaluated without a more rigorous bottom-up methodology.
    • Assessment Mix - That is, should  facilities be assessed at the different levels of detail than other facilities. (see: mixed scanning
    The FCI is a factor the quantum of deferred maintenance (in the case of a freehold) or quantum of permissive wasting (in the case of a leasehold interest).
    Facility Condition Index FCI formula
    Fig. The three formulas and key performance indicators (KPI) used to measure and evaluate the physical health of a facility.


    Examples of deferred maintenance items that are included in the numerator of the FCI formula
    Fig. Examples of deferred maintenance items that are included in the numerator of the FCI formula. These are considered reinvestment category #1: catch-up costs.

    Illustration of how the facility condition index is generated for facilities to develop comparative analysis.
    Fig. Illustration of how the Facility Condition Index (FCI) is generated for facilities to develop comparative analysis and then plotted as a Key Peformance Indicator (KPI).


    FCI compared across multiple facilities
    Fig. FCI compared across multiple facilities within a single portfolio with the objective of making resource allocation decisions in the context of limited resources.


    Average FCIs for different departments within a single portfolio.
    Fig. Average FCIs for different departments within a single portfolio.


    Portfolio Condition-Priority matrix with scatter plot distribution of a portfolio of facilities.
    Fig. A Portfolio Condition-Priority Matrix (PCPM) with scatter plot distribution of a portfolio of facilities indicating the current state of affairs.


    Backlog reduction strategy for some facilities presented on the Condition-Priority matrix.
    Fig. A  backlog reduction strategy for some facilities presented on the Condition-Priority matrix


    3D matrix to cross reference the Facility Condition Index (FCI) with the Mission-Dependency Index (MDI) and backlog quantum.
    Fig. 3D matrix to cross reference the Facility Condition Index (FCI) with the Mission-Dependency Index (MDI) and backlog quantum.


    Workflow to illustrate how the FCI is used to generate linear funding models and lumpy models as part of a sensitivity analysis.
    Fig. Workflow to illustrate how the FCI is used to generate linear funding models and lumpy models as part of a sensitivity analysis.


    Sensitivity analysis testing the Projected FCI levels on two linear funding models.
    Fig. Sensitivity analysis testing the Projected FCI levels on two linear funding models.


    Catch-up costs distributed by priority rankingCatch-up costs distributed by system
    Fig. The composition of the deferred maintenance (catch-up costs) can be analyzed in a variety of ways, including distribution by system and distribution by priority.


    Example of a five-year backlog reduction strategy across a portfolio of buildings.
    Fig. Example of a five-year backlog reduction strategy across a portfolio of buildings.


    Three alternative backlog reduction scenarios (FCI), phased over a 5-year period.
    Fig. Three alternative backlog reduction scenarios (FCI), phased over a 5-year period.


    Relationship between FCI, funding levels and facility operating standards.
    Fig. Relationship between FCI and funding levels across five facility operating standards.


    The FCI spectrum and the five operating standards.
    Fig. The FCI spectrum and the five operating standards.

    .
    Geographical (GIS) representation of the Facility condition index (FCI) across a portfolio.
    Fig. Geographical (GIS) representation of the Facility condition index (FCI) across a portfolio.


    1  1
    Fig. Backlog quantum of the FCI (left) and identification of facilities in good condition (right).


    Correlation of the Facility Condition Index (FCI) and the Extended Facility Condition Index (EFCI) to establish levels of risk and to make reinvestment decisions
    Fig. Correlation of the FCI with EFCI to determine whether to reinvestment in a facility or redevelop instead.


    Condition drift of certain facilities represented on a scatter plot.
    Fig. Condition drift of certain facilities represented on a scatter plot with the Facility Condition Index (FCI) on the horizontal axis and the Mission Dependency Index (MDI) on the vertical axis.

    See also:
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