Functional Adequacy: Taking Decision-Making Beyond Condition Data. Ron Fraser CPM Director, Capital Planning Infrastructure Ontario

Transcription

1 Functional Adequacy: Taking Decision-Making Beyond Condition Data Ron Fraser CPM Director, Capital Planning Infrastructure Ontario 2014

2 IO s core mandate 1. Infrastructure procurement and project manager IO is the leading infrastructure delivery agency in North America and well recognized globally 2. Real estate manager IO manages the second largest (and of one of the oldest) real estate porbolios in Canada and is increasingly a land developer to maximize value of public buildings and lands 3. Infrastructure lender IO is an infrastructure bank providing low- interest loans for municipalihes and other public sector clients to invest in infrastructure 4. Commercial advisor IO is an advisor to the government on commercial transachons at the intersechon of the public and private sectors 2

3 Taking Decision- Making beyond CondiHon Data Generally speaking, it s important to look at a porbolio holishcally, and consider facility condi:on and func:onal adequacy. Poor Condi:on may mean high improvement costs Not fiqng- in with the Demographic needs of the neighborhood/municipality/region may generate low usage for Tenants Issues with Func:onal Adequacy may mean it is no longer serving the purpose for which it was built

4 MEDEI s Goal for Capital Planning Goal: Maintain Assets in a State of Good Repair Objec:ve: Plan and deliver a capital reinvestment program which focuses on maintaining the current porbolio of assets in a state of good repair, defined as addressing key health and safety issues, code compliance issues and imminent breakdowns. Performance Measure: Full expenditure of the Capital Repair budget within 5% of approvals; with MEDEI approvals for all funds diverted from deliverables.

5 Government Real Estate PorBolio The Government of Ontario through MEDEI ownership holds the second largest porbolio in Canada. GREP is: Large 152,000 acres, 5,124 buildings, 46M rentable square feet (35M square feet is owned and 11M square feet is leased from third parhes) Old the average building age is 50 years Valuable Book Value of $2.2B in land and $12B (est.) in base buildings and structures Expensive Over $850M annual spend on operahng/ maintenance and $319M (est)/year on capital repair projects Diverse including large land banks (e.g. Seaton), new community developments, large office buildings, courthouses, houses and fish hatcheries As of March 2014

6 Capital ResponsibiliHes for MEDEI Inventory

7 How We Make Investment Decisions We look at our porbolio holishcally, priorihzing: 1 st level - The buildings within the porbolio; 2 nd level The systems and components within the buildings; 3 rd level - The project requirements for the repair or renewal of building systems/ components.

8 1 st level Building/Asset CategorizaHon Highest Lowest Core assets idenhfied for long term use to fulfill current or future ministry- program needs. Transi:on assets idenhfied as requiring review to determine their future use and value. Hold - assets that are no longer used for program delivery, but cannot be demolished or disposed of due to various constraints. Disposal assets recommended for disposal (sale or transfer). Demoli:on - assets recommended for demolihon

9 Community / PorBolio Plan Data DRAFT Portfolio Plan City of Oshawa October 10, Version 7 Current Office Portfolio 281 RSF / FTE Other Future State - Office Portfolio 180 RSF / FTE Other TOTAL Michael Leased Owned TOTAL Michael Leased Owned Starr Space Space Starr Space Space Owned Special Purpose 50,178 [ 9%] Current Owned & Leased Provincial Real Estate Portfolio Leased Office 138,185 [26%] Future Owned & Leased Provincial Leas ### Real Estate Portfolio Leas ### OwneLeased 0 Special Owne 0 Purpose 62,951 [14%] RSF 600, , , ,000 Oshawa - Occupancy Summary by Tenant Leased 63,013 Owned Michael Starr Consolidationt Total Number of Office Locations Existing FTE Count 1, ,417 1,417 - RSF Excluding Special Purpose Space 459, ,507 98,243 27, , ,060 - Average RSF / FTE Total RSF Balance (+/-) (79,447) (79,447) - Owned Office 337,127 [63%] Office: 475,312 RSF Special Purpose: 61,705 RSF Leased Special Purpose 11,527 [2%] Leased Office 377,069 [86%] Office: 377,069 RSF Special Purpose: 62,957 RSF 200, , ,911 30,737 24,725 20,746 4,859 6,050 14,432 Tenant 4,308 3,938 1,588 1,956 Total Rentable Square Footage (RSF) 529, , ,670 27, , , Building Gross Up Factor (%) Total Atrium Space 6,000 6, ,000 6, Total Special Purpose Space 61,605 50,178 11,427-50,178 50, ,250 FTE Sensitivity Analysis 600,000 Existing M-Lease(s) 1,956 1, ,956 1, ,000 Number of Workspaces TBD TBD TBD TBD TBD TBD TBD TBD Annual Occupancy Cost per Workspace TBD TBD TBD TBD TBD TBD TBD TBD FTE 1,500 1,417 1,417 1,346 1, ,000 RSF All Office Locations , , , , ,000 Total Number of Office Locations Total Rentable Square Footage (RSF) 529, , ,670 27, , , FTEs 1, ,634 1, Existing Future Requirement (180 RSF / FTE) 5% Future FTE Reduction 10% Future FTE Reduction 0 Office Space Lease Summary Building Address O / L Tenant Lease End RSF Vacant Leased - Office 12/31/ Simcoe Street South, Oshawa Leased MOF 14, King Street West, Oshawa Leased MGS 04/30/2016 4, King Street West, Oshawa Leased MOHLTC 04/30/ , King Street West, Oshawa Leased OAHPP 04/30/2016 1, Thornton Rd S, Oshawa Leased MGS 01/31/2014 4, King Street W, Oshawa Leased MGS 09/30/ , King Street W, Oshawa Leased MGS 05/31/2013 2, King Street W, Oshawa Leased MGS 05/31/2013 5, King Street W, Oshawa Leased MOF 09/30/ , King Street W, Oshawa Leased MOF 05/31/2013 6, King Street W, Oshawa Leased MOF 05/31/2013 2, FTEs* Action 34 Relocate to Michael Starr (in progress) 17 No Action - Service Ontario (location closin 45 Possible relocate to Michael Starr 5 Possible relocate to Michael Starr 10 Relocate to Michael Starr 22 No Action - Service Ontario (back office) 12 No Action - Service Ontario (back office) 66 No Action - Service Ontario (back office) 141 Relocate to Michael Starr (in progress) - Relocate to Michael Starr (in progress) - - Relocate to Michael Starr (in progress) 111 Simcoe Street N, Oshawa Leased MEDU 06/30/2014 6,050-2 No Action - public facing training centre Sub-Total 115, Owned - Office Land Registry Office, Whitby Owned MGS 03/31/ , No Action - Service Ontario (back office) Land Registry Office, Whitby Owned VAC 03/31/2012 5,581 5,581 - Vacant - no current plans Land Registry Office, Whitby Owned MOHLTC 03/31/2013 6, CACC - 24/7 high security, 911 call centre Land Registry Office, Whitby Owned MTO 03/31/ Relocate to Michael Starr Land Registry Office, Whitby Owned ORC OP 03/31/2013 1, Property Management office - leave as-is Michael Starr Building, Oshawa Owned MOF 03/31/ , Right-sizing to 160 USF/person underway Michael Starr Building, Oshawa Owned Private 03/31/2013 1, M-lease tenants - leave as is Michael Starr Building, Oshawa Owned IO OP 03/31/2013 3, Includes operating (special purpose) space Sub-Total 415,756 5,581 1,054 Leased - Special Purpose 850 King Street W Leased MCSS Various 24, No Action - ODSP Office 475 Bond Street W Leased MTO 08/31/2013 4, Relocate to Michael Starr 475 Bond Street W Leased MCYS 04/30/2015 4,308-7 No Action - Youth Probation Office Sub-Total 33, Total 565,368 5,581 1,427 * FTEs as per WIN 2/2012. Preliminary Implementation Schedule 2012/ / / /2016 Task 2016/ /2018 Q2 Q3 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q4

10 Community / PorBolio Plans

11 Building/Asset Category ConsideraHons (Lifecycle prioritization considerations) Asset Category Category Applies to Building Land Capital Repair Plan Core ü ü 10-year CRP + Energy Projects Maintenance Plan Regular Transition ü ü 3-year CRP Regular (if in use) Disposal ü ü 1-year CRP (H&S + Code) Demolition ü 1-year CRP (H&S + Code) Hold ü ü 3-year CRP (Envelope Only) Minimal Minimal Minimal Building Inspection Plan Detailed Annual Inspection Detailed Annual Inspection Annual Inspection Annual Inspection Annual Inspection Occupancy Plan Maximum Occupancy Interim Use (if possible) No Ministry Program Use Vacant Vacant

12 2 nd level PrioriHzaHon of Building Systems Critical Noncritical Key Components those building components and systems, for which failure would seriously impede the building s funchonality: life- safety systems; cladding/fenestrahon systems; roof systems; electrical systems; elevator systems; HVAC systems; foundahon; Main air- supply fan(s) Aesthe:cs building finishes and furnishings

13 Unique CondiHon Assessment Process IO s Capital Planning assessment process is unique in the industry: combining condi:on assessment methodologies, for determining the need for near- term repairs and studies; with life- cycle es:ma:on methodologies, for determining the long- term end- of- life component renewals and/or replacements; and apply this approach across a thousand MEDEI- owned buildings by leveraging our CBRE facility managers and the VFA soiware.

14 3 rd level Project PrioriHzaHon Highest Lowest Priority 1 MiHgaHon of safety hazards and health hazards Priority 2 Ensuring compliance with current codes and legislahon Priority 3 MiHgaHng imminent breakdown of crihcal building components that lei unajended would threaten Ministry program delivery. Priority 4 Applies to projects involving the proachve renewal/replacement of building components with planned Ministry funded tenant alterahons. Priority 5 ProacHve renewal/replacement of building components at the end of their useful life. 14

15 What were our Drivers? Consistency we need consistency in data gathering and analysis Scenario Modeling we wanted a system that would allow simple (or complex) What if? analysis for strategic decision- making Aggrega:on - we wanted a system that would allow different levels of aggregahon Web- enabled - we wanted a system that could be accessed in real- Hme from anywhere in the province

16 How did we get here? 1. We developed our integrated lifecycle approach for effechve stewardship of infrastructure assets; 2. IdenHfied the objechves and funchonality of a supporhng soiware system; 3. Prepared an RFP and procured an off the shelf soiware system; 4. Configured the soiware for our mulh- building type porbolio; 5. Coordinated the inihal data gathering and loading; 6. Coordinated the ongoing maintenance and updahng of the data; 7. UHlize the data to make decision- making informahon for the development of both our proposed project plans and Capital Submissions

17 CondiHon Assessments All properhes are to be inspected on an annual basis; with the level of rigour determined by the Asset CategorizaHon and current replacement value of the subject building. Detailed Building Condi:on Inspec:ons (approx. 1,000 bldgs.) Basic Asset Condi:on Inspec:ons (approx. 800 buildings).

18 Building InspecHon Reports (ABIRs), which idenhfy condihons and deficiencies requiring repair, renewal or further study; Assessment Outputs 10- Year Plan of repair, renewal and study project requirements; Performance metrics

19 CondiHon Indices Two common types of condihon indices are in use: Needs Based Indices: Including FCI and Age, where FCI is the standard index in use across North America. It is a measure of financial need, which may or may not reflect the ability of the asset to meet its performance standards. Serviceability Condi5on Indices (SCI): While less common, the serviceability of an asset should be the focus of asset management. The SCI directly measures how the condihon of the asset impacts on the delivery of services.

20 Facility CondiHon Index Facility CondiHon Index (FCI) is a comparahve industry benchmark used to indicate the relahve investment need of an asset, or group of assets, expressed as a raho of the cost of remedying exishng deficiencies (Need) to the current replacement value of the asset (s). Current Need Renewals and repairs as of current fiscal year Planning Years Need AnHcipated repairs and renewals in the next two planning years Current Replacement Value Total eshmated cost to replace the exishng asset with another asset having equivalent uhlity using new technologies, current costs, standards and specificahons for materials, labour, engineering, installahon and overhead. 0-10% 10-30% 30-60% 60+% Limited if any deteriorahon observes on major systems. Minimal repairs required. Normal deteriorahon and minor distress observed; repairs requires within next 5 years to maintain funchonality - - Approaching Functional Obsolescence - - Significant deteriorahon and distress observed; repairs and some renewals required within 1 year Significant deteriorahon and major distress observed, possible damage to support structure, may present risk to people and must be dealt with immediately 20

21 Serviceability CondiHon Index The level of Deferred Maintenance (DM) is used as a proxy for the serviceability condition index, given that increases in DM adversely affect the performance of assets. Deferred Maintenance the amount of funding needed to address the combined backlog of deferred renewal and major repair requirements.

22 Capital Repair Performance Measures Levels of service and performance measures are used to assess the effects of investment decisions and are linked to IO s strategic goals. The levels of service describe the quality of service provided by an asset for the benefit of the customer. Performance measures are quanhtahve descriphons of the funchons and services delivered by an asset and consist of an indicator and target value.

23 CRP Performance Service Level Satisfied Clients Reliable Building Systems Owned Buildings Reliable Building Operations Owned Buildings Performance Measure Measures Tenant satisfaction survey - Services measuring the effectiveness and quality of services provided, every two years Critical Building System/ Component Failures: - Internal electrical distribution system failure resulting in no power to entire building, for >30 minutes - Life safety system failure, for > 2 hours - Main supply fan(s) failure, for >4 hours - Total cooling loss during period: May 15 - Sept 15, for >4 hours - Total heating loss during period: Oct 15 - April 15, for > 4 hours - Pipe leak at any water supply, drainage, fire, heat and/or cooling lines - Elevator / escalator failure, for >2 hours - Water leaking from roof, any leak - More that 80% of elevator(s) out of service, for > 2 hours Building/Space Downtime - Total # of Closings (days). Building/Space Downtime - Total area affected Building/Space Downtime - Total Duration 23

24 CRP Performance Service Level Operating & Maintenance Spend Re-Capitalization Facility Condition Index Program Delivery Performance Measure Measures Maintenance Spend to Replacement value ratio. Operating Spend to replacement value ratio. Average O&M cost per rsf for MOI-owned Office Buildings compared to BOMA Private Sector. Average O&M cost per rsf for MOI-owned Office Buildings compared to BOMA Government Sector. Ratio of capital renewal funding to annual replacement cost depreciation, for Core assets managed by IO (SUM of CRP Capitalized Projects / Average Depreciation rate for Core Assets where ORC has Full and Partial responsibility for Capital Repairs) % of Core assets managed by IO in each FCI Condition Group A FCI = 0% to < 5% B FCI = 6% to < 10% C FCI = 11% to < 30% D FCI = 31% to < 60% E FCI > 60% Ratio of forecasted to actual improvements based on 5-year allocation 24

25 DisHllaHon of the Need The rolling 10- Year Plan of project requirements (Need) goes through three filters: 1 st Urgency and Priority; 2 nd Needs and Risk, against anhcipated funding and other priorihes 3 rd individual Project Jus:fica:on analysis Outputs: 3- Year Plans and Deferred Maintenance

26 Moving Forward We are working with our Ministries to help them develop Program- specific funchonal metrics, so that they can be applied to their occupancies to determine the level of Func:onal Adequacy for our assets. inihally with Ministry of the Ajorney General (Judicial)

27 QuanHfying FuncHonal Adequacy We are facilitahng the gathering of relevant data to quanhfy Ministry program FuncHonal Adequacy: IdenHfy and analyze inventory of assets Generate and analyze performance metrics IdenHfy and analyze risks and associated mihgahon strategies IdenHfy and analyze current repair needs required to achieve intended funchonality IdenHfy and analyze long- term lifecycle renewal/ rehabilitahon needs

28 Overview of our PrioriHzaHon Currently, we look at our porbolio holishcally, priorihzing: 1 st level - The buildings within the porbolio; 2 nd level The systems and components within the buildings; 3 rd level - The project requirements for the repair or renewal of building systems/ components. Soon, we will overlay FuncHonal Adequacy at the three priority levels, as appropriate.

29 Discussion How do you measure funchonal adequacy? At what level are you applying funchonal adequacy metrics?