Real Property Asset Management Principles and Practice

Department of General Services

Real Property Asset ManagementPrinciples and Practice

April Heinze, P.E.Director, General Services

14 September 2007


29/14/07 Real Property Asset Management

San Diego County Facts Charter County est. 1850 5 Districts & Supervisors County Administrative Officer

w/ 5 Deputies Budget $4.68 billion (FY07/08) Full-time equivalents: 17,026 Population: 3,066,820

– 2,601,267 in 18 incorporated cities

– 465,553 in unincorporated area Size: 4,261 Sq Miles

– 3,572 Sq Miles in unincorporated areas

3rd most populous CA County 4th most populous U.S.

metropolitan area



COSD Real Property Assets

Land– 35,290 acres (not including easements)– 10,321 acres leased (parks, libraries, DPW

bins, parking) Buildings & Structures

– 1,103 owned: 7.9 Million Gross Sq Ft– 115 leased: 1.35 Million Gross Sq Ft

Total Replacement Value of Improvements (not including land) estimated at $3.6 Billion



Real Property Asset Management

County Real Property Assets are vital to the accomplishment of the County’s mission

Challenges in managing real property include:– Deteriorating facilities– Increasing under-performing assets– Limited capital investment funds– Reliance on costly leasing– Unreliable data for strategic asset management– Multiple departments responsible for management

Asset Management promotes the efficient & economic use of real property through sound management principles



Linkage to COSD Strategic Plan

Required Disciplines linked to asset management– Essential Infrastructure– Fiscal Stability– Customer Satisfaction– Skilled, Competent and Diverse

Workforce



COSD Asset Management Responsibility

DGS1,724 acres115 leased facilities561 owned facilities actively maintained (Cat 1-4)657 owned & leased facilities, as needed only

DPW4,192 acres1,928 miles of roads206 bridges8 airports9,866 street lights159 traffic signals

HHSA347 acres1 skilled nursing facility

Parks39,047 acres42 parks3 community centers90 facilities



Real Property Asset Management Principles

1. Support mission & strategic goals2. Use benchmarks & best practices3. Employ life-cycle cost benefit analysis4. Promote full & appropriate utilization5. Dispose of unneeded assets6. Provide appropriate levels of investment7. Accurately inventory & describe assets8. Employ balanced performance measures9. Advance customer satisfaction10.Provide for safe, secure & healthy workplaces



Advantages of Asset Management

Establishes a systematic & economical method for periodically updating asset conditions

Avoids surprise equipment or systems failure Determines critical maintenance requirements for

physical assets Optimizes operations & maintenance dollars to

maximize return on investment Develops sound, defensible budgets based on goals

& objectives rather than physical condition alone Ensures consistency of methodology among facility

manager requests Allocates maintenance & repair dollars among

competing requirements & organizations



Capital Asset ManagementFacility Life Cycle

Land AcquisitionEntitlement/Permits

DesignConstruction

Commissioning

Inventory of AssetsCondition Assessment

Operations & MaintenanceMajor Maintenance/Rehab

Capital Requirement Definition (scope, cost, time)Planning, Prioritizing & Budgeting

Feasibility Studies (lease, build, buy)Environmental Assessments

Only 15% of cost incurred before

occupancy

85% of all cost incurred after construction

Total cost of Ownership



Appropriate Levels of Investment Annual investment in maintenance

– (Basic + Major Maintenance) * 100 Replacement Value

– Target 2-4% used by IFMA• 2% for Basic Maintenance (does not include services)• 1-2% for Major Maintenance

Capital Outlay investmentFY 04/05 FY 05/06 FY 06/07 FY 07/08$8.2M $7.0M $102M $32.1M

FY04/05 FY05/06 FY06/07 FY07/08Basic Maint $18.23M $19.9M $21.94M $23.39MPlanned Major Maint $3.6M $8.6M $7.7M $12.8MWalk-in Major Maint $22.36M $17.8M $42.2M $2.8M YTD

Total Maintenance $44.1M $46.3M $71.84M $38.99MInvestment % 1.2% 1.29% 2% 1.1% YTD



Capital Asset Management

Accurate Inventory – some holes in dataCondition Assessment – underwayRequirement Standards – quantity & qualityGap Analysis based on defined goals =

Major Maintenance Requirements SystemMMRS = 5-yr forecast maintain/repair

Capital Improvement Needs AssessmentCINA = 5-yr forecast replace/rehab



Facility Condition Assessment

Standardized inspection process to produce accurate, consistent & repeatable results

Detailed inspection of facilities, infrastructure, & fixed equipment

Standardized cost data to determine repair & replacement cost

IMS to prioritize current & anticipated maintenance requirements to maximize resource utilization & ROI



Benchmarks & Best Practices

Facilities Condition Index (FCI)$ Maintenance Req’d = FCI$ Replacement Value

– Target of .05 used by Universities– No current target for County– Outcome of current condition

assessment will be used to establish 1st County goal



Facility Condition Assessment CAC completed in FY04/05 Sheriff detention completed in FY06/07 Sheriff non-detention ready to start All other facilities underway with completion scheduled

for Jan 2008 (40% complete with inspections as of 7 Sep)– Final reports will be distributed as received– Results will better define Maintenance & Capital needs– Remaining useful life of facilities & components– Recommended repairs & replacements by year– Budget estimates

Recurring inspections recommended every 3-5 years depending on facility type

Cost approximately $0.20-$0.24/SF



MMIP DEVELOPMENT MODELProject Identification and Review

FacilityPlanning

BoardReview

Routine & Preventive Maintenance /Operations

County Departments

Dept. MM/Requests

MMRSDeveloped

By DGS

Annual Inspection Summary /MM

ProjectRequests

ApprovalRecommendation

for Major Maintenance

made to the GM’s

EMERGENT REQUIREMENT $$ REQUEST

Dept. MM Work Orders

Dept of GeneralServices

(Facilities & PM)

START



DGS preparesSpending Plans for

EachApprovedproject

Group General ManagersReview & Approve MMIP

ApprovalRecommendation

for Major Maintenance

made to the GM’s

START

MMIP DEVELOPMENT MODELFunding approval and Implementation

Op PlanInstructions

IncludeApprovedprojects

DGSDevelops

MMIPdocument

DGS/CDM reportQuarterly on

Status of projects

DGSExecutes

MajorMaintenance

Program

Upon receiptOf approved

Spending plan,Encumber funds

Central Projects & Acct’g Section

(CPAS) facilitates

Spending planapproval

MMIP



CINA DEVELOPMENT MODEL

FacilityPlanning

Board Reviews,prioritizes, andRecommendsProjects and

Funding source

GM’s Review, Prioritize

and Authorize Projects for Step II

Action

County Depts. Prepare Required Forms to Include

Justification and Prioritization forms

DGS Prepares the“Call For Projects”

Responses for Review

Call for ProjectsIssued By

the Chief Financial Officer

DGS Capital Planning Assists in Preparation of Necessary

Forms & Associated Operating & Maintenance

Cost Estimates

Commence Step II

Step I Process Initiated



FacilitiesPlanning

Board Reviews & Recommends

Adoption

County Depts. CompleteRequired Step II Forms to

Include Funding Sources & Construction Cost Estimates

DGS Prepares theCINA

$$$WorkAuthorizations

Group Review & Action

DGS Capital Planning Assists in Preparation of Necessary

Forms & Associated Construction Cost Estimates

GM’s Review, Prioritize

and Approve the CINA

Commence Step II

$$$ SpendingPlans

GM’s s Approve and the CINA to the BOS

for approval

DGS Executes CIP

Op PlanInstructions

IncludeApprovedprojects

DGS/CPAS reportQuarterly on

Status of projects

CINA DEVELOPMENT MODEL

CINA



CINA Project Score SheetWeighted

Value

SCORE Line Score

Prioritization Ranking

CRITERIA 3 2 1 05 Strategic Plan

LinkageProject clearly supports a County Strategic Initiative

There is a CAO approved goal that includes the project

There is a department approved goal or plan that includes the project

There is no plan linkage

3 15

5 Critical Need: Life, Safety, Emergency

Project needed to correct an existing deficiency

Project needed to correct a potential deficiency

Project promotes or maintains health/safety

No health or safety impacts

3 15

5 Quality of Life Project provides a measurable benefit to the Quality of Life for all county residents

Project provides a measurable benefit to the Quality of Life for a majority of county residents

Project provides a minimal benefit to the Quality of Life for all county residents or a measurable benefit to a smaller population.

No measurable Quality of Life Benefits

2 10

4 State/Federal Mandate-Legal Binding Commitment

Projects with enforceable sanctions or with a legal binding commitment to complete work, with State or Federal funding.

Projects with enforceable sanctions or with a legal binding commitment to complete work, without State or Federal funding.

Projects that have an agreement by the Board of Supervisors to complete work.

No mandate or commitment

1 4

3 Operating Budget Impacts

Project results in quantifiable reduced operating costs

Project has minimal or no new operating costs

Project has minor added operating costs

Project requires significant added operating costs

1 3

3 Maintenance Budget Impacts

Project results in quantifiable reduced maintenance costs

Project has minimal or no new maintenance costs

Project has minor added maintenance costs

Project requires significant added maintenance costs

2 6

3 Customer Service Benefits

Customer service level is significantly increased

Customer service level is moderately increased

Customer service level is maintained

Customer service level is decreased

3 9

Prioritization Ranking Score 62



CINA Timeline Aug-DGS prepares instructions, CFO issues call for projects,

departments prepare draft forms identifying capital requirements

24 Sep-Departments submit draft forms for new or changed projects

Oct-DGS prepares or updates preliminary estimates & submits budget proposals to FBP

Nov-FPB reviews current submissions & existing CINA, funding requirements, establishes priorities & prepares recommendations for GMs

Jan/Feb-CINA requirements submitted to CFO for consideration as part of annual budget allocation

Mar/Apr-FPB revises program allocations based on the established budget, CINA is modified and published

May-CINA approved as part of budget Jun-Departments submit program requirements to DGS to

initiate design for approved projects

Documents

Real Property Asset Management Principles and Practice