Show ROI To Secure A Bigger Budget
How can you show ROI to support your team’s needs in budget discussions?
Watch this webinar to see how the efficiencies you could gain using a computerized maintenance management system (CMMS) can save your team time and money and how the ROI from these efficiency gains and preventive maintenance may be used in staffing discussions with your upline and c-suite during budgeting for your maintenance team.
Good afternoon and welcome to the show. Roy To secure a bigger budget webinar, glad you've all joined us for this fantastic discussion. First, I have just a few housekeeping items to cover. The phone lines will be muted during today's session. Please submit your questions through the Q&A feature at the bottom right of your screen at any time during the session.
Our speaker will answer your questions at the end of the session. We also have some great related content available from the box in the upper right corner. If you don't see either of those boxes, you can open them from the icons at the very bottom of your screen. So now let's go ahead and get started. Today, we'll hear from Chris Eunice, Enterprise solutions consultant here at Brightly.
Chris has been with brightly for nine years and works extensively with our government and education clients across our different platforms. Welcome, Chris. The floor is yours.
Thank you, Tracey. And I'm going to go ahead and do a volume check. Tracey, if you could let me know in chat if you can hear me and if I sound okay.
Thank you very much. All right. It's nice to be with all of you here today. I was looking through the attendees, actually recognized a few of the different communities and organizations and joining us here today. So I'm excited to dive into this conversation with you here over the next half hour, 45 minutes or so. As Tracy mentioned, my name is Chris Tunis, one of the solution consultants here at.
Before we dive too much into the topic of ROI and different strategies for asset investment and asset management. Let's go ahead and get some baseline for where we are at today. So we'll go ahead and get started with this whole question here, with one being what is asset management? And the last option being, hey, we actually have a tool.
We're actively tracking total cost of ownership and doing cost analysis on our equipment. So I'll give you a few seconds here. Answer that and we can look at the results and move on in a few.
Oh, come on. Nobody's going to answer the question. We're not going to have any interaction going on here today. I refuse to believe that. I'll give you a break on this one, but you better believe we're certainly going to come back to some more questions as we go here. So one of the things that we want to discuss here, let's before we get into what we consider the foundation of asset management and how you can start showing an ROI on it.
Let's start by talking about some of the real world challenges that you and your team are dealing with on a daily basis. And I know this isn't groundbreaking stuff here, right? This isn't anything that you don't know. But I bring these up primarily because I have thousands of conversations over the course of years working here with greatly with people just like yourselves in the exact same roles that you're in.
These items, in these challenges come up on a regular basis. And there's really a trend that comes from this when you're losing people on a regular basis. Right? And if you look at that little arrow below the first one, we really lost a substantial amount of our workforce, especially the more veteran workforce right between the ages of 65 and 74.
Um, Federal Reserve Bank of St Louis actually did a study on this and showed that that particular group of that age group is where we lost the most amount of workers over the past few years. Right. So we call that a loss of tribal knowledge, right. The people that knew what we owned or maybe how to fix things or when the last time service was performed on our equipment and our assets, those people are walking out the door.
Right. So when you combine that with a lack of good data, right. We I call this fact over feelings, right? When we don't have good data to prove or justify the budget we're asking for, we're stuck with gut feelings. And when we just with what we just talked about. Right. The loss of tribal knowledge, those gut feelings, those are the ones that are walking out the door.
Those are the people we turn to when we needed to make decisions and didn't have the data to back it up. Right. So now we're in this position where it's tough to hire and recruit new talent. And I'm not here to even suggest that we're going to be able to hire our way out of this labor shortage that's just increasing these challenges you have to deal with.
But what I am here to suggest is that there's technology out here that can certainly help bridge the gap. It's beyond a trend, right? It's becoming the norm that we have to get more done with less. Technology is a great way to look at that right. It really does become an opportunity when we say, okay, how can we standardize and provide actual technology and tools for our new workforce that we need to recruit?
Because the guys and gals who knew everything for years, we don't have their feelings and their knowledge anymore. Right. So this leads to inefficiency. It leads to a lack of communication amongst crews. And even worse, when we have to report up to leadership. Right. All things you know, and live daily. Right. So communication, lack of efficiency. Two of the biggest conversation starters that we have when I have these conversations weekly, daily with people in your shoes.
Right. So let's do a little psychological experiment here. I told you there's going to be more participation. Don't worry. I'm not asking you to say anything out loud, but I'm going to give you a five options here. I would like everybody to go ahead and pick five different squares. There's 25 total. Right. So let's say these are 25 different assets or pieces of equipment that we're responsible for.
We only have the money to replace five. All right. Now picture yourself sitting in a room with different elected officials, decision makers, boards, upper management in some cases, right. We need to pick on we need to pick and decide upon five of these replacements. Now, I picked five. Hopefully you did. I'm going to look at the Q&A and see if you picked the same five as me.
I'd love for you to say something and throw a message in there so we can get you some sort of reward. Right. Because the odds of you picking the same five as me, not very good. There's over 3 million different options that we could all here come up with based off of the number of choices that we have.
All right. Let that sink in, because those are the decisions that you're having to make. And as we just described in those challenges, the people who did have that tribal knowledge, who you did have some common ground with and understood what was going on, they're leaving. So now we have to figure out a way amongst all of these different options, agendas, biases to make decisions that are going to help where we're at within our organization.
Right. So we have to have a different way of doing things. And what we propose here is a term you've seen, I'm sure, plenty throughout, but we call it Strategic Asset management. You'll also see asset investment planning, enterprise asset management. But the way we look at this and I've had this conversation again, I can see the attendees here in attendance.
We've had discussion. We look at this from a strategic asset management standpoint, right? How can we move beyond that run to fail type of model? How can we look at the long term? And I know this is tough. We have elected officials in 4 to 5 year terms, right? We have elections, all of the time. That could potentially change our outlook in the agenda.
But what we're suggesting here is a more strategic approach. Why can't we look out to 100 years when we're planning our asset replacements and not just replacement, but what treatment options should we be considering along the way? Right. How do we move beyond just conditioning cost? So this is going to be the foundation of the discussion over the next few minutes.
I have some slides to lay out some concepts for you. I have some strategies and suggestions that have helped inform, helped be formed by our clients in our different user conferences. But before we dive into that, I'm going to lay out the three pillars that we consider really the Foundation for Strategic Asset Management. We're going to start today in the asset register.
That's central collar. All right. We're going to talk about what you own. When you know what you own, then you can move to the left, right, Then you can start actually looking and saying, all right, what sort of preventative maintenance programs do we have in place? Do we even have any in place for our most critical assets? Are we tracking our reactive work that we're doing to these assets so that we can look at our annual maintenance cost?
Right. But you can't do any of that if you don't know what you're. And then finally, we'll move to the right side of things because that same asset register that your time, your day to day preventative maintenance and reactive work to that same asset register can be used for lifecycle modeling beyond just repair versus replace. What treatment should we be looking at?
Are there minor or major rehabilitations along the way that if we budget for we can have a larger return on investment out of this piece of equipment? And in the grand scheme of things, we're trying to change and shift the discussion that we have with elected officials and leadership because they don't live in your world every day, right?
And you probably don't want them to. So you need a very good way, a concise way to tell the story about what your teams are doing and then ultimately using lifecycle modeling to show the impact that the dollars spent are going to have on the community. All right. So what's your own? It sounds boring, right? This is the first step in being able to actually track and show ROI or being able to show the impact.
And there's a lot of different ways that this could be tracked right now. This is why we asked the question at the very beginning, you know, the ones that nobody wanted to answer, but this is why we asked the question of where you are in that asset management journey. I talked to people day in, day out, and this is where we start.
What do you own? Do you know what you are right? So when you think about this question, what do you want? How many of you this is the first place your mind? What? Mark? I see you did not pick the same. I appreciate your interaction. Let's keep going. All right. So again, when we talk asset register, what do you own?
And it's most simplified terms. This is what most people have access to. They have a spreadsheet, maybe a different spreadsheet per location, maybe a different spreadsheet for parks versus facilities versus roads. Right? So we call these silos very common for different silos of data to be floating around out there for what you own. And quite frankly, it's a good starting point.
If you're tracking this and you do have spreadsheets, this is the type of thing you want to start getting centralized and getting access to. Right? How do we go from taking a basic spreadsheet like this with something like, Hey, here's the replacement cost? When we think based off of manufacturers suggestions it should be replaced, we want to move beyond this great starting point.
But when I talk about an asset register, this is an example of what we offer within our tool. Some of you here are using it. Asset Essentials. Some of you are probably using a different work order or an asset management tool, but the concept remains the same. If we can go from beyond the spreadsheet and start centralizing our different divisions or different departments asset list in one place, it's going to open up a lot of different avenues for you to start reporting from a more cost analysis standpoint, right?
Our ROI and showing the ROI of a PPM program on a boiler, that's a far cry off If you don't have a centralized list and you're tracking the labor and materials that go into that work. Now, I know there's probably a few of you out there that are thinking, okay, we have this spreadsheet. Maybe you've even started to invest in software and started trying to centralize How do I get this built out?
This is one of the most common questions we get on our webcast when we're having these discussions and we start getting into the benefits of showing ROI and cost analysis. People love it, but they want to know how to get there. So I pulled this next slide actually from a presentation I did at our user conference earlier this year based off of feedback from our existing clients.
Here's three different strategies for how to potentially go about getting the asset register centralized and built out, right? So first off, you need to find out where does that asset list live. Different divisions are going to have different answers for this question, but we need to get it centralized. I'm going to use Asset Essentials, our work Order and asset management tool as an example, obviously.
But the point remains, whether you're using our tool or someone else's, right, we need to get this list centralized. If that means getting those spreadsheets and importing them in, that's a great first step. At least you have it centralized and in a place that you can now start reporting on as you add the correct data points. The second option I'm bringing up here is directly from one of our clients who shared this story with us during the user conference that we had.
They have utilized the mobile app in our software in order to have the staff build out the asset register themselves. Right? They looked at it and said, Hey, leadership's not going to give us funds to have somebody come do this. We need to come up with an approach. So what they did is they had largely a location based preventative maintenance program going on.
The team would go to different buildings or facilities. They knew what pieces of equipment needed to be inspected or looked at, but it wasn't tied back to the piece of equipment. So at the end of the day, leadership really couldn't do any analysis outside of location based. They couldn't go all the way down to the piece of equipment.
So that was their goal. So what they did is on those PM schedules, they built them into the mobile app. And the last step on that task list add the asset to the register. So literally on the spot, the team, after completing their inspection, was able to pull up the app, check off their list, and then literally create an asset, take a picture of it and add the basic nameplate information into the system on the spot.
Just one more step on the PM. They only have to do it once. Once we have the equipment in the system now the PM is going to be tied to the asset instead of just the location. Right. We know what we own. We need to start tying that work to it. Third option here, have a third party. Do it right.
It sounds easy. That's because it is. It's a resource discussion, guys. Just like life time versus money. You need to get this information centralized. If you don't have the resources to go out and capture it yourself, then there are options available for you to have something like a data collection service or a facility condition assessment. Write a full on facility condition assessment should really contain the following items.
You can look at the numbers, right? Those are the systems that are being captured in any good facility. Condition assessment. But look up above that in the italics, italicized words. Obviously they're going to get nameplate data and condition and value. It's these next ones here get a facility condition assessment that has a catalog of the industry standard preventative or planned maintenance that you should be doing.
I've seen success both ways, guys. When we think back to this slide here, I've seen our clients have success through all of these ways. This turnkey approach built into your asset management tool is going to give you a leg up on being able to report. You have to ask yourself, Do you want your team building the system or do you want the team using the system to get those reports that you need?
All right. So that's the asset register, right? Our central column there. Excuse me one second. Now let's move to the left. We know what we own, right? In our most basic terms. We know what we have. We've been talking about why that matters, right? So from an operations side, being able to tie the PMS in the work orders that we're doing back to the asset register, the whole concept here and this I hear this day in, day out, we need to be more proactive where to reactive, right?
If I could have you raise your hands like you do in Zoom right now, I'd have you do. So how many times have you heard that? Or you're the one who's saying it. We need to be more proactive, right? PMIs are the first thing to fall off the side. Emergencies pop up, fires come up. We got to put them out.
Things happen. Those routine PM tasks are the first to go. There's actually a term for this, right? By no means are you the only organization that lets these fall off to the side. This is called normalization of deviance. All right. Gradual process. Do things a little differently because it's easier. There's an entire realm of psychology called human factors that dives into this.
And there's a lot of different reasons for it. But at the end of the day, humans are predictably fallible, right? And one of the easiest ways for us to cut corners is to make it task easier or just not do it. If something else is higher priority. So keep this in mind. We've got a few examples of normalization of deviance.
These next examples I will admit overly dramatic and a severe extreme case, but we'll look at a smaller one too here. But one of the biggest examples of normalization of deviance actually comes from one of my favorite government organizations. If I were to say January 1986, does anybody know where we're going with this? What example I'm about to pull up, feel free to throw it in the questions.
If you do Space shuttle Challenger. Right. This is one of the most dramatic failures the organizations certainly ever have. And there's a lot of reasons there's been report guns on what caused this. But what should have been a wakeup call for this prestigious organization, Right. Within American government? You know, they didn't learn a lot from it. There was a report, there was a lot of money spent.
But what led to this particular issue right. O-rings, cold temperature burn through that led to something that should have never happened in the first place was largely attributed to launch fever. People's inability to notice that minor things that have been done wrong previously that worked out could potentially cause problems in the future. A lot of bold statements were made.
It's never going to happen again. What happened 17 years later, right? Shuttle Columbia, This one is dramatically worse as far as the normalization of deviation. And it's actually appalling when you go back and look, what caused this accident was a piece of foam breaking off the shuttle and hitting the wing. This had happened dozens of times before this incident.
This had actually been going on before the shuttle Challenger, the initial accident, but it didn't ever matter. No one ever foresaw that these pieces of foam hitting the wing could cause a hole like you see on the right side there. Until it did, they went back and looked at film of all launches and literally found dozens of times.
It did. It occurred. It never caused a serious problem. They never thought it mattered. Right. Two dramatic examples tied to one agency in this case. But this happens day to day for us. We do this day in, day out. I can grab an example from my far right. I've got an apple farm here up in the mountains right behind me.
I've got to mow the pasture on a regular basis. Huge tractor, big mower behind it every once in a while, the wheel gets stuck. Anyone familiar with tractors knows you start pulling one of those behind you with the wheel that's not rolling. You're going to cause trenches in your land. So what do we do? We usually go hit it with a hammer, get it straightened out.
That's not what we're supposed to do. It's supposed to undo the ball, realign the axle, make sure everything's good to go. The hammer works. It's like quick tractor until the wheel breaks. Because I wasn't setting it back. How is it supposed to now? It's $1,000 expense and multiple days that we can't do work. That is a is an example pretty reasonable to what happens with you guys that normalization of deviance that I fell into no big deal right.
Until it was a big deal that leads to what you see on the slide here, what we call a run to fail approach. Very linear, very linear. Right? One step isn't necessarily informing another as much as we're just moving down the path to run to failure. You've all felt this feeling before, especially when we're looking at that spreadsheet we talked about earlier, right?
You can hop back to it. We're running everything to failure. All we have is this spreadsheet. We know what it's supposed to cost, but now we have unexpected occurrences that are popping up from our normalization of deviance. So we're not even getting the manufacturer's suggested life out of this. Okay, So let's go back to our core pillars here.
The asset register, what we own the CMBS side of things. We've talked about tying preventative maintenance programs back to the asset. But what's the point? Right? We like to look at the CMC side here in a few core components. Step one is what most people here are probably doing already, right? Reactive maintenance. You're tracking the basic work order.
What's the status of it? Maybe we're tracking how long it was open for right? What we really want to do is move beyond that into step two here by having the asset register and tying our preventative maintenance back to it. We're talking about a few data points. Everyone, we're talking about labor, right? How long did it take to do the work?
We can convert labor hours to labor cost with just wage information. So if we can track labor and materials on the PMS that we're doing and step two and tie them back to the asset, all of the sudden that opens up cost tracking for us. Now we can start getting into cost analysis and actually looking at things like total cost of ownership, repair versus replace decisions.
Are we extending life cycle on this? PM Tied back to an asset because if so, we should show the return on investment for that we want to talk much about step four. That's kind of the missing piece when it comes to a lot of organizations, but the inventory control, the materials, starting with labor, definitely the foundation. But if you can add materials into that over time, it's going to make your reporting even more valuable and accurate.
I'm going to grab a drink here, look at some of our questions, see what we have on top of it. I like it. So run. That's a that's a good question for everybody. I'm looking at some of the questions that we've had come in here. We're just going to do it live. Best place to store treatment information for an asset.
Quite frankly, it depends on the scope of your question. And this is something I'd love to speak more with you about later. If you're talking about a treatment that was performed on an asset that you have in AA, I would create that as a work order or maybe even a larger project documenting the details of that treatment. Now, ultimately, you're asking a larger question that gets into lifecycle modeling, the right pillar on that side that we pulled up.
So we'll talk more about that treatment information as we go here. And again, we can certainly circle up after as well. So let's look at a basic example here. This is tied to PMS, right? This is that return on investment philosophy that we've touched on a few times here. This is an example everyone knows and it's been beaten to death and you've seen playing time.
So give you a second to read up on that basic scenario. Right? We buy a car, in one case we do oil changes and in other case we don't. A lot of times this is reported out simply just as the additional expense. Right. If you look at the bottom here, ten year total, 2500, 20,500 versus 40,000. What's missing here, when we look at this from almost a standard example standpoint, we're not looking at the average maintenance cost, your annual maintenance costs that you're doing, and that can come in the form of preventative maintenance.
Yes, in this example, but also the reactive work, those big ticket repairs that you have to do or major rehabilitations that you may not be taking into account. And what I would like to suggest here, and I don't want to offend anyone, obviously, but leadership does not respond to these scenarios anymore. It goes back to what we talked about, the beginning, the loss of tribal knowledge, the true understanding of why you're doing a preventative maintenance program here.
It extends life cycle. That's great. Yep. That's a goal we should have. What I would like to suggest is that by tracking the annual preventative maintenance and annual reactive maintenance cost, you can actually start reporting that out in a language that they understand, especially as we're seeing different makeups with our elected boards and upper management. We want to be able to show what the ROI of our PPM program is.
We need to change the mentality around this. It can't be something that gets pushed off to the backburner as more and more of our elected officials or business leaders and coming from environments outside of public works and utilities, facilities management and so forth, we need to speak their language. This is why I've been harping on PMS and tying costs back to assets, because if you can provide facts, not feelings on what the ROI is on a PM tied to a big ticket chiller Right.
Or a rooftop unit. Now you're speaking their language. When you start tying your work orders back to your assets and document things like cost and materials, it opens up numerous avenues in different types of trends. You can start looking at. I know some of you here with us today are existing clients already for using Asset Essentials. These are different trends that our dashboard did our dashboards look at for asset health.
Right? Again, moving beyond the standard conversation of just looking at how many work orders do we do, here's some different trends that are tied to it that our tool will take into account. Write non PM versus PPM. Again, I'd love to see in the comments of the the Q&A how many people here are actually tracking the ratio of reactive work to preventative work that their organization does?
Right? If you start tracking that and tie back to the asset, we can show direct correlation with the number of PMS you're doing, decreasing the number of reactive work orders that you're doing. But if you're not tying it down to the asset level in the register what you own, then it's impossible. These trends, you can't measure what you're not tracking, right?
So the caveat I'll throw up here, if these trends are if this is getting your attention and these are things you want to start tracking some suggestions in the upper right there, you'll see the criteria. Obviously, the asset needs to be active. It needs to be in use. You want to look at at least 12 months of work order data right?
You're not looking for short term blips. You're looking for long term trends that can better inform that repair versus replace discussion. We like to have at least ten work orders in the time frame. And that may sound like a lot, but if you think about it, you're building your PMS. In most cases it's a monthly or weekly PM.
You're tying it to the assets or ten work orders in a 12 month time frame. That's not really that much when you start breaking it down. And again, guys, I know it can seem overwhelming, but the whole idea here is we're trying to arm you with information to start changing the discussion, the conversations that we've been having with leadership to get budget.
Let's just call a spade a spade. They haven't been working because most of the communities and organizations I talked to are still under budget, right? They're not they're not able to hit the numbers of what they're being asked to, largely because they have no good record of what they've done years previous to inform that budget discussion. So I'm going to share out an example with you here.
Actually, in I'll admit we're using a new webcast tool here for this for the first time. So hopefully this works out. I may nominate Tracey to hop back in. I'm going to share out my screen and hopefully you guys are going to be able to see that with me. Tracy, are you able to see the dashboard that I just pulled up or Sam Anyone.
Seeing the Analyst Hold on. Let me see if this works.
Yeah. Analytics dashboard.
Yeah, I'm still seeing it up in the corner. There you go. That looks good.
Got it? Yeah. All right, perfect. So everyone we've looked at, I like to call what we've been discussing. Go the ingredients. This is the end result. If it's a cooking show. Right. This is what we're actually making. This is not a demo account. This is a live client dashboard. We've changed the names and locations for their privacy. They've been using this tool for years.
So what I've done, if you look in the upper left with me, I've drilled down to just look at their 2022 annual report. So we're going to look at their analytics dashboard for last year. They're actually using this account for numerous divisions of public works and utilities. But because of our audience today, we can focus on facilities. And over the course of last year, these are all different ways we can start breaking out the analytics and reports from what they accomplished.
Two of the most basic reports that you can run in analytics, right, location based or category based. This is probably where a lot of you are today. You may be able to drill down on expenses from an individual location standpoint. In fact, you can see here these are the different locations that this community manages within the account. In 2022, they spent $237, $237,000 at this one facility.
So when I select that facility, you can see here it breaks out the categories of work they did. And we could shift that to cost. All the team is doing is tracking their labor. So by tying the labor back to the work order and the facility, they have a breakout on the maintenance cost for each different category of work that they performed.
We're trying to get beyond this. This is nice to know and can give you some interesting context. What I'm proposing though, by knowing our asset register and knowing what we own, by setting up our PM programs and tracking cost in the form of labor and materials, we can drill all the way down to the asset level. Right? Here's our ROI statistics that we can drill into.
But what I want to show you first and foremost is right here. By tracking the Labor on their PMS and reactive work, they're reporting out to their elected officials exactly how much they spent on different pieces of equipment over the course of the year. So in this case right here, we're looking at a detention center grease trap. Over the course of 2022, they did three PMS on this asset for a cost of just over 20 $500.
We can do that for any piece of equipment that you put in the system. But this is that figure that I mentioned. Most people are missing earlier on annual maintenance cost. What went into it? All right. So I'm going to stop sharing here if anyone has any questions. Right. On the specifics of how we can get to this or anything, please, again, feel free to throw them in the Q&A.
I'll take a second here and look at that before we get into the lifecycle modeling side and how we can move beyond just tracking PM cost and how we can get further into these. Showing the impact of dollars spent. All right. So let's think back again to our original slide here. Right? What we've been using as really the foundation of the discussion.
We've touched on the register. We've looked at some some examples of why we want to tie certain data points back to our PM programs into the register itself. Now we want to look at how that can inform future decisions, right? It's nice to be able to look at any asset and see what the service history says to have those digitized, centralized records showing us things like cost in projects.
But moving forward, we need to start making decisions on how we're going to spend our funds. What is the financial strategy that we're going to move forward with? So the same asset register really needs to be informing that same discussion that you're having at a capital planning level. In this next slide here, think about assets in the lifecycle this way.
We're not recreating the wheel. I know a lot of you out there have probably been exposed to what's called the Dsf curve, right? The probability of failure versus failure is actually going to occur. I'm going to put forth a much simpler explanation of that. You can think about the car, you can think about the mower on my tractor, you can think about the shuttle, you can think about any asset that you own or are responsible for in your professional or private life.
This is how it ages. The curve may look slightly different depending on what we're talking about, but what we're seeing here is essentially the degradation of an asset from brand new to failure. End of life. A lot of the clients that we work with that are getting into basic asset management, they're just back to our linear approach, right?
They're running to failure. They're not doing the PMS that they should. And if they are doing PMS, it's more of a cursory check or task list. It's not tied back to the asset. So as things degrade, what happens as it fails? Now we have a capital expenditure and unfortunately a lot of times we have to go into emergency funds to get this money.
Now, this is obviously not the only approach, but it's the approach because if normalization of deviance that many of us fall into, let's look at it from a different perspective. Our assets aging, right, we run it to failure. So we have our large expense. A more strategic approach allows us to be flexible and look into the different treatment options that we could take into account along.
The way instead of running it to failure. Are there major or minor rehabilitations that we could do along the way? Because if we do a rehabilitation when this age is out to a condition of see, let's call it a grade C, right? Everybody's familiar with the grading scale. So over time, halfway through its life, there may be a minor rehabilitation that we can actually accomplish here, a treatment option when that's completed, it's going to bump the asset condition back up the scale.
Right? So instead of being a C now to be sure we can't get it to be brand new again. But if we make this small investment here and we pay attention to the degradation, we're doing our PMS and looking at if PMS are increasing, maybe we should actually move up. If we're having failed PMS at a regular basis, we may want to look at moving up a major or minor rehabilitation because at the end of the day what this is doing is buying us more time till that failure point.
I think back to the thought exercise. I didn't see anyone in the comments who picked the same squares as me in our grid, so no prizes today. Unfortunately. But now think about that same set of squares this way. These are the real world decisions that you're having to make. Are you going to choose the same five as somebody else who's in the room?
We have a new elected fish official who came in from the business community, right? They have no experience with HVAC systems, exterior walls, pavements that they're now responsible for. So this is a much more realistic approach to what that conversation can look like. Right. So the idea here with our tool that we call capital predictor, right? It looks at life cycle modeling.
We're not going to get into the ingredients today if we would, if you'd like to have this discussion. This is what keeps me around for is to dive into those ingredients and details with you. So we can certainly set up additional conversations around any of the three pillars that we've discussed today. But for this lifecycle modeling side of things, the context I'd like you to have is that I'm using a facility condition assessment as the foundation of data that we're going to be looking at, and we can talk more about that if you want to.
But I feel like diving into this tool is a lot more impactful than just showing slides. So we're going to do the same thing. We're going to share this out. Tracy I made nominate you again here. I'm going to hit share. And once this catches up with me. All right, I'm now sharing out predictor. Let me know when you see facilities or workspace there in the top.
All right. Looks like we're good to go.
And still seeing the slides I must see. Oh, there we go.
Let's get information. Damn. Perfect. This is why you keep a team around everyone, right? Nobody does anything on their. So again, context. The back end data that has been fed into this modeling tool is a standard facility condition assessment. Nothing overly complex. Before we look at the chart, I'm going to show you here that this particular organization, they looked at numerous different financial strategies, anything from $2.1 million here to $4.2 million a year, so on and so forth.
So what this represents from a facility planning side of the equation. Right. The first point, that's only a 1% replacement value. So they're budgeting 1% of the replacement value of that facility as the budget for the year. And then it increases to 2%. Three, once you get into three and five, it opens up additional strategies. So let's just visualize this very quickly here.
First, the most basic example they have funded or they have budgeted point $1 million as the capital plan for this facility over the next 40 years. Now, there's probably a few of you that noticed the issue with this, and I'll give you some context with what we're looking at here. If you look with me to the very first dot, that first point, right, that's showing a score of 3.98, basically a score of four.
Guys, look over here to the far right state, zero through end of life. Zero is brand new, six is end of life. If you throw those two out. When we present this to leadership, tell them to look at one through five. Is that grading scale? A through F right. Think about the curve. We looked at A through F.
So now when we go back to our initial point state for essentially that's a D, that's a D that is easy for leadership to understand. When they had their condition assessment done on their equipment within the facility. It's not in good shape. So this is a 40 year model. You can actually see the timeline across the bottom. The bars represent the dollar spend.
You can see those big dollar amounts for year over year that I'm pointing out. Right. So essentially what they're saying is if you want to target the facility to be in this shape and you want to get out of your backlog as quickly as possible, you need to find all of these dollars to spend over the next five years.
It's going to increase the condition of your facility dramatically, very quickly. But it's going to cost. Right. That's the tradeoff in life. I don't know many organizations. I haven't worked with many where this is actually a feasible approach. So even if leadership wants to improve, improve things, they need to understand the cost that's going to be associated with it.
This is not very realistic. But since we have all of this data centralized in one place, we can refer back to the records that we have within the asset register. We can provide different financial strategies and show the impact that that financial strategy will have. Right? So guys, instead of 2.1 million, let's look at 6.2. This represents a 2% increase in their annual budget, 2% if they increase it 2%.
Now look at the blue line. Notice on the front end, they no longer actually have to go find those funds because this is a realistic approach. What it's saying is, hey, if you don't have to have that dramatic climb out of your backlog, like in the first model, if you take it gradually, you can flatline your funding, you can flatline your capital planning for pretty much the next 40 years.
You can have a predictable amount that you invest in over the next 40 years. Look at the blue dot. This is going to leave us in a better position. This facility will be in a better service state than when we surged all of that money to money to have a dramatic improvement. Now, I understand this this example with limited context that we have here today can be quite a lot to throw at you.
But the idea here is to show the return. What is the return that we're going to get for the dollars that we spend today and year over year we share that return in the form of the impact of the condition of the facility. Each of these different scenarios that we look at as a wealth of reports that are tied to it.
So again, if this is caught your attention, this type of modeling and looking at different financial strategies, these are all different report and outputs that we could explore in more depth. If we schedule a follow up meeting. Right. How many of you can accurately show leadership what your backlog actually is? What projects, treatments, major and minor rehabilitations have you actually been able to complete?
This is what Strategic Asset Management is really all about, being flexible enough to show what an increase or decrease of funds can do based off of the priorities that have been laid out for leadership and priorities for the community or organization as a whole. So we've covered a lot, right? If we want to bring back up the very beginning here, the three pillars, right?
This is your takeaway. Only you can define where you are at in this journey right now and let the answer to where you are in the journey dictate where you go from here. If you need to focus on the asset register, we have a lot of strategies, partners or techniques that can help with it if it's to see them on that side of things even better.
Right? And then obviously as it gets into the lifecycle modeling, it becomes a more advanced discussion. But the outputs and what you can show leadership are some of the most impactful that I've seen from a capital planning standpoint when it comes to this market. So again, everyone, my name's Krista Janus. Really appreciate the time here today. I know we probably have some questions.
I'm going to pop those up. We can look through those here. If you haven't asked anything or you're curious, please go ahead and put it in the box. If we don't get to it here over the next few minutes, we'll certainly follow up with you. If you have any questions or want to reach out, encourage you to do so.
I love having these conversations where I may not have to be talking to myself for a full hour. So if you'd like to interact, that would be great too. But I'll take a look at our questions and see what we have here. Yeah, good question, Mark. Tracy, I may nominate you to speak up again because we were just talking about this for future events.
Actually, we may be using this course, Mark, to do another another session similar to this through one of our partners, but it would be a very similar presentation. Tracy do we have this recorded as well?
Yeah. So this will be recorded and everybody will receive an email within 24 hours linking to this recording. Also, what you're mentioning in August, we're going to do a demo pass through Facilities Net, which I'll take this a little bit deeper into the actual screenshots that Chris was sharing a little bit more in depth, technical, and of course we'll continue to use webinars throughout the year.
Great communication and Ron Well, that's it. I see your question there, Ron, if you're still with us, the executive dashboard, I think I know what you're talking about as far as this direct export to Excel. That's something we could follow up with. We'll take a note here that you're asking about that specifically. So if Sam or anyone hasn't followed up, we may just need to take a look at some of the specifics there.
But I want you to know, I see that and I'm not we're not ignoring that question. Yeah, and this is good. A lot of you did respond with the questions. I appreciate that. It looks like some of you are tying your assets or selling work kind of at a cursory level back to the assets, but not in depth.
Looks like there's a lot of limited patience out there with your responses on what the software allows you to do. That's a common theme, right? If you think back to the beginning, we have clients again. This is a conversation I have on a daily basis, clients who are doing basic work order tracking or prospects that are doing basic work order tracking, that are trying to now go to the next level.
And a lot of times it's because leadership or new elected officials are starting to ask questions or ask for reports that their existing software does not let them get to. So if you'd like to see more about what I call the ingredients of how we can track those details on a work order tied to an asset, we could definitely have a follow up related to that.
So we'll reach out great. All right, everyone will. That brings us close to the top of the hour here. So I will hang out for a few more minutes. If there's any questions that pop into chat, I'll answer those. Otherwise, we'll follow up. We'll get that recording information. Like Tracy mentioned, genuinely Appreciate your time today that you're interested enough to come listen to this discussion.
I hope we can have future discussions in which we can interact a little more, but I'll keep an eye out here for the next few minutes. I hope everyone has a great rest of your day and an even better weekend coming up.
Thank you very much, Chris. Thank you all very much for joining us today. I'm going to go ahead and the webcast. I will be making sure you all get link to the recording and the information for the future webinars. Thanks again for joining us. Have a great day.