Making The Next Generation Of Decision
Support Systems Work For
You
By William J. Faesenmeier, Director of NexDSS The
next generation of decision support systems. Sounds like a bunch of lofty buzzwords
but the term encompasses critical elements that can dramatically impact your organization's
bottom line. In brief, the term connotes your company's facility 'shell'
and supporting infrastructure - the investment which isn't being managed for a
return; the shareholders investment in your built-environment. So before
you take the plunge and make a substantial investment in a decision support system
system, know what you're buying as it will play an integral role in determining
how you inventory assets. It's critical to understand what a decision support
system can do for you. Organizations have a tendency to only focus on first-time,
up front costs for facilities. They need to take into consideration the 'life
cycle costs' that will ultimately provide a better Return on Investment (ROI).
Some key goals and objectives: Increase the value of your
facility portfolio Optimize maintenance, repair and replacement
decisions Must be objective Allow 'what if'
scenarios Be repeatable Be verifiable
Model owner's decision-making process
The system should help
you provide a new way of looking at physical assets - a management tool versus
a quick snap shot, a system that allows you to compare many funding alternatives
using "what if" scenarios so you can tailor the assumptions for your
financial plans to your organization's goals. Surprisingly, less than 10
percent of companies and institutions today have any formal decision support system
in place. In fact, a recent CFO Magazine survey indicated that 50 percent of all
chief financial officers have to occasionally write off assets because they can't
locate the equipment! This is critical for government agencies as well, because a recent Government
Accounting Standards Board (GASB) statement mandates that detailed information
be made available about the condition and maintenance of government buildings.
Your organization's physical assets usually rank right behind labor or
inventory (for manufacturers). Physical assets are central to strategic decisions
about the security of an organization's raw-materials supply, its real estate investments,
productive capacity, even its finished goods inventory. Yet many organizations
fail to adequately analyze their physical assets - they tend to go for the 'band
aid' approach that may fix a temporary situation, but will cost them more money
over the long-term. Too many of today's decision support systems merely
document the opinions of data collectors who simply define what needs to be fixed
and the estimated budget. Field personnel, for example, are usually sent to the
client's respective facility and specifically look for things that are broken
or in need of immediate repair. Secondly, many of them base their findings
on a Facility Condition Index (FCI), a ratio used to measure the relative condition
of a single building or a portfolio of buildings. FCI is supposed to analyze how
much it will cost to fix all problems in a building. These are then divided by
the facility's replacement value to come up with a percentage. The general rule
of thumb is if the percentage is between 0 and 2 percent, that's considered 'good';
between 2 and 4 percent is 'OK,' and if you exceed 10 percent, you have a serious
deferred maintenance problem. The problem with using the FCI method is
that what's broken shouldn't always be considered top priority. FCI doesn't take
into account how much benefit is derived if you fix a particular asset and what
is the expected ROI. The data is often inconsistent, becomes outdated quickly,
isn't usually integrated with other enterprise financial and FM systems, and is
difficult to benchmark. The situation is somewhat analogous to changing
the oil in your automobile. Auto manufacturers generally recommend that we change
the oil in our car about every 3,000 miles. But eventually the car loans are paid
off and each year the vehicle's value begins to decrease because of age. So if
you have a 10-year old car with over 150,000 miles and require new pistons, the
cost of that piston job may actually exceed the current value of the car - not
a good investment! Another quick analogy is a snapshot versus a full-length feature
movie! The same thinking applies to a decision
support system. Physical assets have 'book value' on your company's balance sheet.
And it can dramatically impact your tax base if you're an institutional fund or
a public agency. For example, by documenting that a physical asset is functional
and has lasted longer than a standard depreciation schedule allowed by the government,
you can change the way you depreciate the asset. The bottom line is that
a decision support system brings more value to organizations because the modeling
analyses provide a more sophisticated framework for determining exactly what repairs,
replacements and maintenance will be required over 'X' months and/or years. Projects
that clients believed had to be done 'now' may not actually be a wise use of funds
and these monies can be redeployed to increase ROI. Editor's Note:
William J. Faesenmeier is Director of NexDSS, a MACTEC company. The firm's flagship
product, Vertex, is an integrated suite of software modules that helps facility
owners and managers document facility assets, evaluate current facility conditions,
forecast asset deterioration and develop budgets for building systems life-cycle
costs.
Contact Mr. Faesenmeier at 770/514- 2006, wfaesenm@lawco.com Also
log on to
www.nexdss.com
for additional information. |
