Provided for the Federal Facilities Council’s Forum October 31, 2006 Engineering, Construction, and Facilities Asset Management: A Cultural Revolution October 31, 2006 Page 1 of 7 FACILITY ASSET MANAGEMENT DOCTRINE A Strategy for Making Better Decisions at Lower Risk and Costs By Commander James J. Dempsey PE, USCG [email protected] Facility asset management (FAM) is a field of management that umbrellas all decisions related to facility investments to specifically include acquisition, construction, operations, maintenance, renewal and disposal. Facilities typically represent a major, if not the largest, component of an organization’s book value. As such, they consume a significant and inescapable portion of the organization’s cash flow. Where traditional facilities management seeks to ensure the proper working order of a facility portfolio, FAM fully embraces this field and further incorporates economics; financial, capital and resource management; and the direct application of many decision and information management practices. The objective of the FAM doctrine is to better achieve the organization’s desired mission outcomes by lowering risks and costs associated with facility ownership. In simple form, the doctrine states that for an organization to maximize its desired mission outcomes it must strategically coordinate facility decision-making with operational, resource, capital, financial, and other strategic objectives. The decision-making strategy presented is based on extensive observations and lessons learned from the US Coast Guard’s Shore Facility Capital Asset Management initiative.1 The views presented here are those of the author’s and not necessarily those of the Coast Guard or any other entity. The organizing principle behind all FAM decision-making is the organization’s desired mission outcomes. In order to employ this doctrine, the following prerequisites must be observed: • Organizational missions and strategic goals and objectives must be clearly stated and documented. • The facility inventory must be well defined and accurate. • Mission outcomes and facilities must be linked using metrics or other quantitative or qualitative methods. • Facility performance and needs must be logically defined in discrete, auditable terms. The decision-making strategy outlined observes these prerequisites and is organized as follows: first, important decision-making perspectives will be introduced, followed by an overview of decision-making and performance monitoring processes. Lastly, the paper will conclude by highlighting two critical practices that enable better decision-making; intelligent, object-oriented facility inventories and activity-based costing methods. Important Facility Asset Management Perspectives: There are three important perspectives to FAM decision-making; facility-mission alignment, facility performance, and financial performance. The first two articulate the organization’s mission and facility needs respectively. The third, financial performance provides a well established structure to evaluate competing priorities in a resource constrained environment. In coordination, these perspectives focus decision-making and methodically evaluate all risks in order to maximize facility performance and achieve desired organizational mission outcomes. Facility-Mission Alignment: The facility-mission alignment perspective focuses on the relationship facilities have to achieving the organization’s desired mission outcomes. These outcomes can be defined in many different ways (e.g., profit making, capital accumulation, providing products or services to include education and learning and even the Coast Guard’s life saving and national security missions). Mission alignment can be organized into two categories; strategic and tactical. The Coast Guard has developed and is using a metric summarizing each of these mission alignment indicators; the relative mission importance index and the mission dependency index (MDI). The relative mission importance index is strategic and considers the relative importance of each of the Coast Guard’s eleven legal authorities applied to certain facilities within operational areas organized by the Coast Guard’s chain of command. For instance, the Commandant’s input would apply to all Coast Guard facilities. The Pacific and Atlantic Area Commanders’ and their subordinate District Commanders’ input would apply to facilities under their areas of responsibility. This input is used to score individual assets by virtue of their geographical location and relationship to legal authorities using operational facility codes to define different types of units and their missions,Provided for the Federal Facilities Council’s Forum October 31, 2006 Engineering, Construction, and Facilities Asset Management: A Cultural Revolution October 31, 2006 Page 2 of 7 and facility use codes to describe different types of assets. This method leverages structured data to assign a relative mission importance index to most of the Coast Guard’s 24,000+ individual buildings and structures. To date, this index has been prototyped across the Coast Guard’s Pacific Area, and plans exist to complete its development and deploy it Coast Guard-wide by the end of fiscal year 2008. This strategy will be further advanced with the presence of other structured data and an accurate, object-oriented inventory that can rapidly, and eventually automatically, associate input from senior Coast Guard Commanders to individual facilities after conducting an hour long interview with each Commander each year. The mission dependency index was co-developed by the Naval Facility Engineering Service Center in Port Hueneme, CA and the Coast Guard’s Office of Civil Engineering, Washington DC from 2000 to 2003. The MDI, or variations of it, are in use by the Coast Guard, Navy, NASA and the Army Corps. The MDI is a tactical metric that instead of determining the relative importance of individual missions, it is used to determine a facility’s readiness to perform multiple missions in support of the operational needs of individual units, such as the Coast Guard’s ability to receive a call and get a search and rescue boat underway. The MDI accomplishes this by applying operational risk management terminology of probability and severity to facilities in terms of interruptability, relocateability, and
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