1. The Elephant in the Room
DEFERRED MAINTENANCE
The Elephant in the Room

2. INTRODUCTION
University of New Mexico – BA Architecture (1981)
Institute for Environmental Education (1980 – 1981)
Registered New Mexico Architect ( today)
Project Manager – State of New Mexico, Property Control Division ( )
Statewide Building Inventory and Condition Assessment ( )
Manager – State of New Mexico, Property Control Division, Facilities Management Bureau ( )
Deputy Director – State of New Mexico, Building Services Division ( )
National President – National Association of State Facilities Administrators ( )
Maintenance Director – Rio Rancho Public Schools ( )
Facility Manager for Sandia Laboratory Federal Credit Union ( today)

3. WHAT IS DEFERRED MAINTENANCE?
Federal Financial Accounting Standard 40 definition of Deferred Maintenance and Repairs. (25 pages)
Maintenance and repair activities that were not performed when they should have been or were scheduled to be and which, therefore, are put off or delayed for a future period. Maintenance and repairs are activities directed toward keeping fixed assets in an acceptable condition. Activities include preventive maintenance; replacement of parts, systems, or components; and other activities needed to preserve or maintain the asset. Maintenance and repairs, as distinguished from capital improvements, exclude activities directed towards expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, its current use.

4. WHAT IS DEFERRED MAINTENANCE?
Maintenance and Repairs are not Capital Projects but it may be a Capital Expense.
Capital Project: Long-term investment project requiring relatively large sums to acquire, develop, improve, and / or maintain a capital asset (such as land, buildings, roads).

5. THE ISSUE IS?
“Projects put on hold, repair that is neglected, and preventive maintenance that is ignored add up to a costly and complex problem.”
Buildings.com - June 5, 2006
88% of Facility Managers say that deferred maintenance is an issue.
Average age of a Commercial Building in the US is 32 years.
Facilities Maintenance Decisions survey

6. HOW TO ADDRESS DEFERRED MAINTENANCE
Identify why projects, maintenance, and repairs have been deferred.
Recognize and understand the scale of the problem.
Quantify and communicate the financial impact of deferred maintenance.
Prioritize projects and develop a strategy to secure adequate funding.
Understand your funding.
Conduct preventive maintenance and complete repairs promptly to avoid backlog redevelopment.
“As Facilities Managers we must plan and communicate the long-term needs of our facilities, in order to support the successful operations of the company we serve.”

7. WHY?
Funding
Budgeting.
Manpower
Not sufficient for the work load.
Lack of expertise.
Maintenance could interrupt or interfere with operations.
Must be scheduled, delayed or cancelled.
Parts Are Not Readily Available.
Identify these parts in advance.
Determine if they should be in stock or where they can be acquired.

8. SCALE OF THE PROBLEM Building and Condition Inventory Assessment
Size, Age, Value, Use, Major Systems, Major Equipment, Special Features, Accessibility, Historic , Environmental etc.
Assessment
Perhaps a third party is needed.
Involve maintenance staff. Perform Inspections and Reporting as part of PM Program.
FCI (Facility Condition Index) FCI= Maintenance/Repair/Replacement $ / Current Value $
$325,000 / $2,000,000 = (Poor)
Good > Fair ( ). Poor (0.1 and Over)
How Big is the Problem (Example)(Bite Size Nugget)
National Park Service (Sept 30, 2017) (In Billions of $)
TOTAL Deferred Maintenance: $11.607
Deferred Maintenance for Paved Roads and Structures: $5.900
Deferred Maintenance for All Other Facilities: $5.707
Highest Priority Non-Transportation Facilities: $2.459

9. SCALE OF THE PROBLEM Building and Condition Inventory Date Installed
Expected Life of the System (Sample)
5 years – Carpet, Lamps
10 years – Paint,
20 years – Roof, Roof Top Equipment, Millwork, Plumbing Fixtures
Escalators, Fire Alarm
30 years – Boiler, Chiller, Asphalt, Landscaping, Elevators
32 years – Average Building Age
50 years – Electrical Systems, Concrete
Potential Opportunities for Upgrades (Cost Savings)
Lamps – Convert to LED
HVAC Equipment – Higher SEER (Seasonal Energy Efficiency Ration)Rating
Xeriscape – Rebates
Renewable Energy Systems

10. COMMUNICATE Estimated Risk Potential Subsequent Escalation of Costs
Life Safety issue?
How does it affect the functioning of the business?
Subsequent Escalation of Costs
Inverse Square Rule for Deferred Maintenance (Tod Geaslin)
If you defer maintenance, you can expect future expenses to be equal to or greater than the cost of the part squared or 15 times the total repair cost.
Example: $100 part ($1002 = $10,000) or $600 repair ($600 x 15 = $9,000)
Historic Data
Add credibility to your financial predictions. Provide examples.
Work Order System
Budget / Expenses

11. PRIORITIZE Currently Critical (NOW!) Potentially Critical (1 Year)
Immediate action needed to return a facility to normal operation, stop accelerated deterioration or correct a cited safety hazard.
Fire Marshall / Insurance Inspectors / Code Compliance
Systems Failure
Maybe an EMERGENCY. (See Part 2)(You must have a process for these situations)
Potentially Critical (1 Year)
Will become critical within one year if not corrected expeditiously.
Predictive plans
Moved up from Necessary.
Necessary, not yet critical (2-5 Years)
Will require reasonably prompt attention to precluded predictable deterioration or potential downtime and the associated damage and higher costs.
Identify these issues as early as possible.

12. PRIORITIZE
An emergency condition is a situation which creates a threat to public health, welfare, safety or property such as may arise by reason of floods, epidemics, riots, equipment failures or similar events. The existence of the emergency condition creates an immediate and serious need for services, construction or items of tangible personal property that cannot be met through normal procurement methods and the lack of which would seriously threaten:
The functioning of the business
The preservation or protection of property
The health or safety of any person
State of New Mexico – Procurement Code Regulations (Section )

13. UNDERSTAND (Buckets and Cups)
What are the funding sources? (Buckets)
Where are the funds allocated? (Cups)
Ops
Bonds
SB9

14. AVOID BACKLOG Emphasize Preventative Maintenance. Work Order System
Goal: 70% of all work orders are PM in nature.
Separate PM Team.
Do not find out once it is too late.
Work Order System
Reports
KPIs (Key Performance Indicators)
Early Intervention
Make repairs sooner than later.
Spend Money now or spend money later.
Develop your Business Case
Potential Cost Savings

15. AVOID BACKLOG Top 10 Building Systems to Inspect
Roofs
HVAC
Paved Surfaces
Plumbing
Electrical
Fire and Life Safety Systems
Elevators
Escalators
Pools and Fountains
Landscaping
Utility Tracking
Develop Schedules appropriate for the particular system and inspect and or test on a regular basis.
Yearly
Six Months
Monthly
Weekly
Also take into consideration when is the best time to test and inspect.

16. IN SUMMARY
Spend money now or spend more money later - once everyone understands the rapid escalation of costs, obtaining adequate funds should be easier. By making the business case for funding and proactively managing maintenance every day, you’re less likely to develop a deferred maintenance backlog that seems too overwhelming to overcome.
Jana J. Madsen, Managing Editor at Buildings Magazine.

17. QUESTIONS?