Successful Budget Planning: Improve Financial Management by Connecting Facilities, Capital Projects, and Operations

Hello, everyone. My name is Steven Blackburn from University Business, and welcome to our Ed Talk here today, which is entitled successful budget planning, improve financial management by connecting facilities, capital projects, and operations. And all of this is brought to you by the generous support of our sponsor with us here today, Brightly, a Siemens company. Now for some very quick housekeeping items, and we'll get right to the Ed Talk today. At the end of our main presentation, there will be a live q and a with our panelists here. You can submit your questions below. You can do that via the red ask question box. It's the one with the, question mark in the chat bubble, so you can do that anytime during the event. After the live q and a, a post event survey will also launch on your screen. So please stay on till the very end so you can take part. That said, if you do need to jump off early, you can click the survey button at the bottom of your screen. Again, it's the, pink box there. We'd love to hear from you. You can also safely download some resources, that are related to today's event, including a guide on asset management risks, an asset life life cycle management guide, and a blog on budgeting with confidence. And, you can do that via the blue box there with the paper clip also at the bottom of your screen. And lastly, you'll be pleased to know that everyone who's here today and all of you who registered, all of you will receive an email tomorrow from us at UB. And that email, it will include a link to the slides as well as the on demand video. So look out for that in your inboxes. And now it is my pleasure to pass things off to today's first speaker and moderator who will take over from over from here and introduce today's special guest. And our, moderator is, Katie Gramajo, who is senior industry marketing manager for education at Brightly. Katie, you may now begin. Thank you, Steven. I'm gonna jump into what we're gonna talk about, and then we'll introduce ourselves. So today, we are going to talk about asset life cycle management, which is a fancy way of saying how to make sure you're running your facilities to the best of your ability, both efficiently and financially. I'm Katie Girmajau. As Steven said, I used to be the director of operations at the Windward School in New York. And prior to that, I was director of sustainability, scheduling operations, you name it. Schools have interesting titles at Campbell Hall School, which was in Los Angeles. And I'm joined by Jonathan Thomas, who I'll let him introduce himself. Hello. My name is Jonathan Thomas, president and founder of Building Maintenance Optimization Consultants or BMOC. And we are a facilities asset management consultant, who, wants to help our clients get the most value out of their software and their other resources. Thank you, Katie. No problem. So all of us are in educational facilities on the daily, and we know the state of the facilities is not great. I will not read this entire chart to you, but I have a lot of links and data here if you're a data minded person, which I'm assuming you are being here. But what we know is there's a combined maintenance and upgrade backlog of over a hundred and ninety seven billion dollars. That's when you add those two numbers up across k twelve and higher ed. We've got significant staffing challenges. We have vacancies in both higher ed and k twelve staff without skilled labor coming into the workforce. And as we all know, facilities conditions do affect academic performance as well as enrollment decisions. So both of our sectors, both k twelve and higher ed, really need to focus on centralized map maintenance and asset data so that you can prioritize your budget efficiently. And that is exactly what we're here to teach you how to do. So where do we start? What are asset management fundamentals? Well, I've been to many conferences and spoken to many of you, and there's often confusion when it comes to what assets we are specifically talking about. We are not talking about the small scale assets like laptops and furniture and things that you could easily track with a barcode and quantify. We're also not talking about a full land parcel building real estate portfolio. Sometimes schools see that as not their responsibility because it may be managed by government or a larger enterprise. So we're not talking about that. We're talking about the middle ground facilities assets, which is what's often overlooked, but is the most necessary and functionality in your school. It's your HVAC, your roofing, your electrical systems, your infrastructure. And someone once said if it was expensive to replace and would take a long time to fix, then that's something that you would consider one of these middle ground facilities assets. So now I'm gonna let the master of the assets tell you a little bit more about it. Sure. And, I would say one of the reasons why the, thank you, Katie, by the way. I would say one of the reasons why those middle ground assets are overlooked is because, you know, in in facilities, it takes a lot of time to gather that information. I mean, we're talking about every piece of equipment that needs to be maintained and that equipment is getting changed out all the time, switched out, replaced. And the bigger your portfolio is, the more out of date your asset registry can become. And facilities generally doesn't have the staff to keep up with the asset database. They have technicians who understand how to fix equipment, but they're not necessarily, you can't depend on them, on a to consistently across the organization understand databases, the importance of having the information in the system, and or also how to do that because they don't teach that in trade school. And facility condition assessment service providers, a lot of organizations will think that they can handle it, but they're focused on that high level, large scale assets, the buildings. Facility condition assessment reports, their primary value is to tell you the relative condition of an entire building, versus other buildings in the portfolio portfolio. They're not necessarily there to, give you an asset database from which you can develop your, do your preventive maintenance program and your optimization and all of this. So that's one of the reasons why it's underserved is because it just gets lost in the shuffle. And today we're going to talk about how to solve some of these issues. First, to understand what asset management is, I like to if you have haven't heard of it, there's a standard called ISO fifty five thousand. And this is essentially a very simple standard. I mean, there's a lot of policies that come with it, but it can be very simply understood. And this is in the in a manufacturing environment. Let's let's say hypothetically, an organization is going to purchase a piece of manufacturing equipment. And when they do that, they're gonna know precisely the value that that's going the payback, if you will, that precisely the value that that's going the payback, if you will, that that, that that equipment is going to be, serving them along the way. They're gonna know the initial cost. They're gonna know the maintenance cost, and they're gonna know the salvage value. They're gonna know the life cycle. They're going to have a cash flow diagram for this equipment. Now that's that's the basic understanding of it. You always wanna have assets that are going to be profitable for your organization. Now in institutional facilities management, it's it's not as cut and dry as that because facilities is there to maintain the buildings. They're not necessarily pick keep saying, okay. We are going to get this building because it's going to yield this positive cash flow for us over the life cycle of the asset. Because, typically, that decision is made by the organization, and then facilities has to react to it. So what I wanna call for in this meeting today is that facilities should be doing that cash flow diagram. Sure. It may not drive the decision, but they should be keeping that, that cash flow diagram ongoing basis for each of the assets in that building and using software to do so. And so asset management is a life cycle proposition. There's a conception. This is the planning and design piece. This is, how is it acquired and then, and then the planning for its installation. Then there's the cradle, which is the asset investiture piece. That's when you're bringing it in. You're realizing that in your asset management program. And in some cases, it needs to be worked into your preventive maintenance program and your capital plan. So these are air handling units, boilers, chillers, package units, pumps, all of these, smaller assets that comprise a building. And then over the life, you're going to operate and maintain that asset. And that's an important part of the life. And a lot of organizations take that for granted that it's just going to run until it fails. And they're going to maintain it, of course, but they're going to run until it fails. But in reality, you really need to be capturing what the cost of that asset is. Because if you have a major repair event come up on it, that's gonna cost you a significant amount of money, you wanna compare the replacement cost versus the remaining useful life of that asset. You may it may be more economical just to replace it at that time. And then finally, there's the grave component, and this is very related to facility condition assessment. This is where you're trying to project when that asset should be retired or salvaged, if you will. And, and I recommend having this data available at facilities fingertips through their software at any given point. So now we'll talk a little bit about software. So you may have heard some of these terms. There's CMMS, which is the classically understood work order management system, computerized maintenance management, system. I I really don't like how we're using a term computerized here in twenty twenty five. I mean, that's not even a Very true. But but but the industry uses it, it. And it's something early in my career, I tried to stop using it, but I couldn't do it. I had to yield because that's what, the industry generally understood. Now that some CMMS can be turned into asset management software. However, not all of them will support asset management. Some of them are just a reactive work order management system, and they need to be replaced, in my opinion. Next, there's enterprise resource planning systems. Everybody's familiar with this, like an Oracle or an SAP. They typically will have a plant maintenance or similar module in within their system. They're usually fairly clunky and old school, as I know them. Then there's enterprise asset management systems, EAMS, and they do a good job of asset management. It's in their name. The intent is for them to track the value of assets throughout their life cycle. And then there's the IWMS, which is integrated workplace management system. And this will do some other things such as space management. So it's asset management, space management, work order, staff management, etcetera. And then there's another one, which is a ticketing system. I don't know if any of you ever heard of, ServiceNow, but it's typically an IT ticketing system, which will in smaller institutions, I'll see it used, as a work order management system, but it's only gonna get to the level of a CMMS. What I wanna try to get my clients thinking of is turning their system into an asset management system regardless of what their even their developer calls it. I've seen systems call the CMMS that we can turn into an asset management system. So, that's another thing to keep in mind. Alright. So let's ask everyone a quick poll question. If you could quickly check this out and submit your answer, are you currently actively looking to replace your asset management software? Yes. And I have one already chosen. Yes. But I don't know where to start. No. Not now. And I'll just add on while everyone's answering this poll that I agree with you, Jonathan. A lot of people use ticketing systems, but primarily those were originally focused for IT departments. And there are a lot that I even used in one of my past lives. So they don't specifically help you with the facilities management other than to respond to work orders, which is useful. It's better than just getting a million emails and phone calls, but it's just a place to start. Well yeah. And they're usually custom built. They're they're usually a system that we we very quickly tell our clients to start moving away from because it's not intentional, and it's usually a custom built system that may or may not get the support it needs. There's plenty of systems out there that are economical that are intentionally built. Exactly. Alright. It looks like we have about fifty percent submitted. Okay. Great. So it looks like most of you are not currently looking, and maybe you have one or you're not sure. So we'll tell you a little bit about what it might look like if you were in the future. Excellent. So, turning a CMMS into an asset management system, the functions the basic functions would be work order management, personnel tracking, service requests, also parts management. Systems do that to a varying degree of success, but that is a part of our normal CMMS functionality. The achievable functions that turn the system into an asset management system are, adding attributes to assets, that enable energy audits, that enable replacement cost development, life cycle information. And then they also enable continuous capital planning. So a date basis, a life cycle, that's hopefully localized, and then a replacement cost. And then one where you can get performance reporting on demand for both your organization, your buildings, and your assets. So or for all of those things. So, across industry, this is based on some statistics I scraped off the Internet and put them together. Approximately forty six percent of asset management software features are typically utilized. That means that if you're paying a hundred thousand dollars a year for your software, facilities is only getting forty six thousand dollars of value out of that software because the system hasn't been, it could be an implementation issue, but it can also be another issue, which we'll talk about in a minute. Because of that, you have the next four items. The asset management software should be making the organization more effective. This means that organizations that no matter their their relative staffing level should be able to successfully manage the assets in the portfolio through a preventive maintenance program, and through, tracking maintenance against work order or tracking work orders against assets. Having data available through the asset management software is a way to help reduce travel time. And then usage of mobile applications is another thing that helps reduce travel time again. The last one is pretty interesting as well. And for those of you who already have a system selected, don't take that implementation for granted. Seventy percent of asset management software implementations fail, and that's usually for one of the reasons we'll talk about in a minute. So what I have seen in my career, I founded the company because I observed all sorts of distrust in the reporting at the management level, very little confidence, in the effectiveness of technical staff. I would go in and I'd say, okay. How many about how many hours of effective time are you think you're getting out of a full time employee? And I'd get numbers like six hundred hours a year, which is incredibly low. It should be it should be from eleven hundred to fourteen hundred. So what I think I was hearing was some emotion in his, response to me rather than a data driven response. So basically, they didn't have the reporting to really know what kind of effective time they were getting out of their staff. We've observed data without strategic direction. I mean, you really need to have an asset management system in place before you engage with your asset management software. And an asset management system, and it's defined in ISO fifty five thousand, exist on a higher level than the asset. Or let me say this, the asset management software is only a part of the asset management system rather than the asset management software being the asset management system. And that's an important distinction for you to understand for those of you who are about to go into this endeavor. If the facilities organization doesn't have an asset management system with policies and an understanding of what they're gonna call assets, what information are they gonna gather on the assets, what taxonomy they're gonna use, the hierarchies, then that then the new system that's getting deployed might be one of those seventy percent that fails. We've seen stalled out and incomplete asset inventories because it takes a lot of work, a lot of time. Organizations that try to do them in house almost always stall out. Almost always. And then we've seen, when the in larger organizations where the software is managed by IT, we've and there's multiple stakeholders in there. We've observed adversarial relationships there, so those silos need to be broken down. And then lastly, we've seen over reliance on the asset management software developer for guidance on the asset management system and the management of the data moving forward. So okay. Pretty bleak. How do we improve? And and there's pretty simple formula. So whether your facilities management organization is in their asset management software for the foreseeable future, or if you're about to implement a new system or actively implementing a new system or you're evaluating your current system, you really need to, focus on three different things. And I would argue you need to focus on them in a particular order. And I don't have them in that order here, so I apologize for that. So number one, it is organization I'm gonna go from the bottom to the top. How about that? Organizational readiness. And I'm going to give a very svelte definition of organizational readiness. Facilities needs to be committed to closing out work orders with labor, materials and assets appended. That's all work orders, preventive maintenance and corrective. Preventive maintenance, if they have a PM program, is good. Usually those assets are appended proactively. It's the corrective maintenance work where it's it can be difficult to get that asset appended. And if your organization is fully reactive, this means almost no work orders are having the assets appended to them. And that happens a lot. Leadership in facilities needs to be, openly, overtly, and intentionally using data to make decisions. They need to be relying on it. If the technicians and the middle management sees that they're relying on this information and can't make decisions without it, that will motivate them to keep the data updated because the technicians is where the rubber meets the road, and they've gotta be keeping that data updated. No matter their technical proficiency, Whether they're good with computers or not, they still need to get those work orders closed out appropriately. Next. So that's the organizational maturity piece. Next, there's the data. Data is very tricky. There's no school that teaches technicians or anyone else for that matter. How facilities data should be arranged. There's some industry standards out there. We recommend UNIFORMAT two as a taxonomy that that I've been working with for decades, and I have not broken it. I've used it verbatim. It's a pretty pretty good standard in my opinion. And then also, having naming conventions and having processes in place where you're able to not only identify the types of assets we're seeing today, but the types of assets we saw forty years ago and the types of assets we're gonna see in the future, which we're seeing a lot of energy recovery systems, a lot of different computer and air conditioning unit systems, a lot of, different humidification systems and air handling unit combinations, and they have different maintenance requirements. And to to rely on transcribing preventive maintenance procedures from o and m manuals is is a failed activity in my career. OEMs are not as good as anybody thinks as putting PMs together in their o and m manual. So the data is very important, and that has to be part of the asset management system. And then there's the software piece. If these first two items are are down pat, the software, all it should do is conform to the organization's needs. And then it it should be pretty easy because the software typically implement and, support their system satisfactorily. And, John, I think that leads perfectly to what you're talking about, which is we have this fancy road map, asset life cycle management road map, but all it means is exactly what you're talking about. You need to start with the foundation. You just start with your asset registry. You need to have your evaluations, your condition assessments, your reporting just to begin and then put that into a software system. So it sounds very simple to do on your own, but it's not. And the experts like Jonathan, will help you do that. So I'm gonna let him tell you a little bit about that process while we go through. Yeah. And a quick anecdote. We just had a client. Before we got on board with them, they had made the decision to move away from a system that they had just had installed and that they and they were implementing another system that was pretty much a lateral move, in my opinion, at best. And they're gonna be kicking this system to curve. They're already they're already not happy with it, and it's because the software wasn't the problem. The problem was their organizational readiness. The data is becoming not a problem because we're working with them on that, but they still have an organizational issue. Okay. So asset management and and initialization, and this is based on some pitfalls that I've seen. So you can't just think of a a asset management software as something that was freshly installed and is, you know, got everything nice and, and and neat. Think about these systems that have been around for decades. I mean, I've seen gangly preventive maintenance procedures libraries in the in the in the five figures before. And and it's just full of redundancies and quasi PMs and and all sorts of weird stuff in it. We've seen systems with asset classifications in the in the hundreds. Four hundred and seventy five was the worst we've seen when only forty four are needed. This is basic information. I'm gonna pick the classification for an asset, and I have to sift through four hundred and seventy five asset classifications. There's so many different redundancies, and it's caused by there being no asset management system or policy in place where one person's sitting in the seat, they they leave, and another person comes and sits in the seat and says, I don't know what they were doing. I'm gonna do it my way. And they just put their way on top of another person's way, which is put on the top of another person's way. And, you know, it's just, madness. We've seen asset in assets inventory but not labeled. This is a poor practice because you could you you have to have a label on that asset with unique identifier. Assets can look very ambiguous in certain buildings. We've seen assets where we couldn't tell what was what. Asset strategy deficiencies we've seen in there where, the organization doesn't really know what they're considering an asset. You have to consider operational value, not just book value. You have to consider preventive maintenance requirements, renewal requirements, and then also corrective repair requirements. We've seen incoherent asset descriptions where we'll have two identical assets and they're not calling the same thing. We'll see one technician approach the building in a very detailed manner, another technician approach the building in a very high or high level manner. So, anyway, all sorts of problems here. So I talked a bit about uniform at two. I'm going to go on through this. It's basically a way to this taxonomy is a way to sort you produce a report with your assets and then you can sort them by uniform at two. And then you get all of your assets that are part of the same system together. It's a way of organizing your data and, your reporting. Your cost and strategy reporting can be updated with it. And then there's hierarchies to consider. This is the forty four, asset groupings I was talking about. I'm gonna move on through this as well. This is for your future reference. And then finally, I'm gonna go into the organizational readiness. Recognize that asset management is necessary. It's everybody's doing it. It's a question of whether they're doing it formally or not. And we recommend that it be done formally because then it'll persist through turnover. And turnover is a huge problem in facilities. So we recommend establishing an asset manager in your organization, square feet. And they're obviously in charge about ongoing asset database improvements and adjustments, work order, quality assurance, because, again, that's the most important part of asset management, planning and scheduling, facility condition assessment and capital planning and integrating that information into the asset management software, there's no reason to have a condition assessment done and then not bring that data into the assets in your asset management software. That way you have a single, source of truth, single asset database that supports multiple functions. Work order closeout, I already mentioned this. And then I, I wanna also mention mobile device adoption. That's something not to be taken for granted and, organizations, if, if some technicians don't take on to it, then there needs to be someone in the organization that's gonna support them. I'm gonna move on through because we're running low on time. And a lot of these slides are here, for your future reference. And, of course, Katie and I are here to talk about them. And next thing I wanna talk about is, and this is really my last main topic, is new construction asset investiture. This is a huge problem in the industry. Again, one of the reasons why I found in our company, I've been working in new construction asset in investiture since two thousand and two. So twenty three years now. In fact, our our business processes are based on new construction even though we work in existing buildings. So, we are a contractor who will come in and be like a maintenance commissioning agent because currently on the design and construction team, this knowledge does not exist. There's no general contractor or commissioning agent who understands the maintenance requirements and, naming conventions and what else you're doing on your portfolio. So this is needed. And, also, if you have a if you have multiple construction projects on your in your portfolio, you have one design and construction team, and they may do your process as well if you happen to have an asset divestiture process. But then there's no guarantee you're gonna get the same group again. So you have to basically, it's like Groundhog Day, and you have to retrain them on everything. The construction industry has developed a standard, taxonomy for their, for acquisition and installation of assets, which is called master format, but it does not translate well to maintenance. And that's been a huge problem with BIM and rapid data transfer issues, over the course of the last twenty years. Jonathan, can I jump to our poll quickly? I'd love to get an info before we lose too many people. Okay. Absolutely. Yep. Our last piece of our puzzle that we're going to talk to you about briefly, but like Jonathan said, you'll get the slides and we can tell you about it later if there's no time. Have you heard of asset investment planning software? So we've talked about CMMS. We've talked about the various types of CMMS that you could receive, but what is an asset investment planning software? If you could take the poll, that would be great. And while you're taking the poll quickly, I will tell you a little bit about it. So asset investment planning software is what transforms your facilities management by taking that facilities info and translating it to the finance and what comes next for your budgeting. So it actually will automate your asset tracking, give you predictive analytics, and provide strategic insights so that you can prioritize your budget and create a capital plan. So let's just see if anyone has heard of it before. Yes. About it, quickly while we have time. So once you get to the final level, you have it in your you have a CMMS. It's working well. Your assets are being tracked, and your team is actually doing what they're supposed to do to close out your tickets and update your asset info. Then your finance leader is asking you, how do I budget for the next five years for my capital plan? How do I plan what's coming down the pipeline and what I have to pay for? And that is where this piece comes in. It actually is agnostic to what other software you have if you're using a CMMS, whether it's brightly or not. You can you can use it, And then essentially takes your asset information, tracks the condition of your assets in an asset directory, and updates it based on all the work and repairs that your staff is doing, hopefully, on their mobile app. And then it also will connect the data directly there for your preventive maintenance and your work order activities. And finally, the best part about it is it takes benchmarks. So unlike a CMMS, it actually provides insights into your asset, which is industry benchmarks, future cost projections, end of life estimates, and risk scores. And then you take that information to whoever is approving your budget, and you are able to create actual data driven budget requests instead of just being told what you think you need to do based on when you think it's going to break. So in general, that's where you're leading for the future of your asset management. And in general, as you begin, your next steps, like we've talked about quite a bit, are it's a journey. You start in the beginning. You start start with your traditional building. I love this slide. And you have your paper processes, and you can move one step at a time through gathering your assets, through putting it into some sort of management software, and then finally to creating a budget plan and a capital plan using that data because data is the most important part. And I will let Jonathan give us some of his final thoughts while we're wrapping up. No. I I'm good. We'll just leave that in there for their future reference. Great. Take take it the rest of the way. Here's our info. If you need us, you can find us. We're on LinkedIn all the time. We have our emails here. We put some assets here, and I believe Steven will be sending them out as well. And please read through these slides and shoot us an email if you have any questions. We'd be happy to help. Perfect. Well, you you guys wrap this up perfectly. Yeah. That was amazing. Loved it. But, yeah, to to everyone in the audience, so we didn't have time for a live q and a, which is completely fine from now until bef you know, I have some closing slides I'm gonna go through. If you have any questions, that you would like our, partners at Brightly to answer, you can drop them in the ask question box. I'm gonna highlight that right now so you can find at the bottom of your screen. If you don't have any questions right now, that's completely fine. I'm also gonna just push to the center of your screen so you can find it easily. There's some related content, that you can safely, click on or interact with. So that is on your screen as well. And then lastly, I did mention that at the end of the presentation, a post event survey will launch on your screen, but I'm gonna push that out on your screen now so that, as I go through those slides, you can, take the time to, answer those survey questions because we'd love to hear from you. But first off, I just wanna thank you to both of our speakers, Katie and Jonathan. What a great conversation. Obviously, you guys are very passionate about this, so, loved it. And I'm sure that our audience did too. And, And, of course, I wanna give a shout out and thank you to our sponsor, Brightly, and their special, guest from, BMOC. And I'd also like to, take a moment to thank you, our audience, for joining us as well. For those of you who enjoyed our presentation, we have more Ed Talks like this one that are provided by us here at University Business. Also, if you would like to watch this again, as Katie and Jonathan were saying, we will be sending you an email tomorrow with a link to the on demand video as well as the slides. So you'll get that via email tomorrow. So with that, on behalf of UB, this is Steven Blackburn. Thanks, everyone, and thank you again to Brightly. Yeah. This was great. Yeah. Thanks, Katie. Thanks, Steven. Thanks, everybody. Thanks, Brightly. Cheers. Great.