1. Ivan Graff, PE, CFM, CCP, LEED AP Office of Management Office of Asset Management

2.  Why do repair needs and deferred maintenance matter?  What terms and definitions apply?  What needs a condition assessment?  How do I estimate - ◦ Repair needs? ◦ Deferred maintenance? May 7, 2015 FIMS / Real Estate Training2

3. May 7, 2015 FIMS / Real Estate Training3 Answer: to sustain the mission “[M]aintenance will be used to ensure real property asset availability for planned use...” – O430.1B § 4(d)(5) Perception: “Deferred maintenance makes us look irresponsible”

4. 4  41 CFR 102-84 Annual Real Property Inventories ◦ Establishes the reporting requirement and its applicability  Federal Real Property Profile Guidance for Real Property Inventory Reporting ◦ Based on EO 13327 and 41 CFR 102-84 ◦ Updated annually ◦ Defines reporting element “Repair Needs” May 7, 2015 FIMS / Real Estate Training

5.  O 430.1B, § 4(d)(1) states: ◦ The maintenance program will include:  Condition assessments of real property assets,  A work control system,  Management of deferred maintenance,  A method to prioritize maintenance projects, and  Cost accounting systems to budget and track maintenance expenditures. May 7, 2015 FIMS / Real Estate Training5

6. 6  GAO now seems less concerned with condition only because FRPP tracks it.  Condition remains a concern to agencies  High Risk since FY 2003. May 7, 2015 FIMS / Real Estate Training

7. $459M Increase (Constant Dollars) $380M Increase (Backlog Growth)

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9. Required Supplementary Information (FY 2014 AFR, Page 104): Find the report here: http://go.usa.gov/SjZT

10.  2014 Financial Report of the United States Government ◦ See page 79 for property, plant, and equipment value ◦ See page 199 for deferred maintenance and repair data May 7, 2015 FIMS / Real Estate Training10

11. 11  FY 2015 FRPP Data Dictionary ◦ “[T]he objective amount necessary to ensure that a constructed asset is restored to a condition substantially equivalent to the originally intended and designed capacity, efficiency, or capability.” ◦ Compared to operating costs and replacement value  DROMa Memorandum, Sec. 4(s) ◦ “The estimated cost to restore a real property asset’s component system failures noted during a condition assessment survey to a state substantially equivalent to the most recently configured capacity, efficiency, or capability.” ◦ Accurate (FRPP) and verifiable (annual validation) May 7, 2015 FIMS / Real Estate Training

12. 12  FASAB SFFAS No.40 ◦ “[It] was not performed when it should have been or was scheduled to be performed but was put off or rescheduled for a future period.” ◦ Reporting entities receive “maximum flexibility” ◦ Not audited  DOE O 430.1B ◦ “[It] was not performed when it should have been or was scheduled to be and which, therefore, is put off or delayed beyond its optimum period.” ◦ DOE expects repeatable and logical maintenance program ◦ Accurate (FRPP) and verifiable (annual validation) May 7, 2015 FIMS / Real Estate Training

13. May 7, 2015 FIMS / Real Estate Training13 RN ≥ DM RN = Deficiencies past optimum period + Deficiencies not past optimum period

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15. 15  DOE does not accept sampling methods for estimating deferred maintenance (FASAB: “life-cycle cost analysis”). Why? ◦ Do not assume a future condition. ◦ One is rarely representative of all. ◦ Seeing is believing – DOE O 430.1B requires technical evaluation and reporting of real property condition by professionals. Models with condition- based inputs will provide a better target than text book service lives. May 7, 2015 FIMS / Real Estate Training

16. 16  “That time in the life cycle of an asset when maintenance actions should be accomplished to preserve and maximize the useful life of the asset. The determination is based on engineering/maintenance analysis and is independent of funding availability or other resource implications.” You have a narrow band of time to catch the train The prudent manager effectively predicts the schedule May 7, 2015 FIMS / Real Estate Training

17. 17  Condition assessments tell you when you have reached the optimum period.  Inspections must occur at least once every five years.  Increasing the frequency thoroughness of inspections as the item approaches its “service life” increases the likelihood that you will catch the train. DOE Accounting Handbook Chapter 10 May 7, 2015 FIMS / Real Estate Training

18. ConsiderationRepair NeedsDef. Maint. Inclusion deciding factorAssetManagement No need to address the deficiencyIncludeExclude Obsolete component systemsInclude Closing a deficiency:  Work now completeClose  Change in management perspective IncludeClose  Transfer within DOEInclude  Demolished or disposed the asset Close May 7, 2015 FIMS / Real Estate Training18

19. 19  Identify the deficiency and determine optimum period. ◦ Many deficiencies are not at their optimum period!  No need to report a deficiency that will not reach its optimum period for correction.  However, deferring specific classes of deficiencies (for example painting) seems short sighted. May 7, 2015 FIMS / Real Estate Training

20. May 7, 2015 FIMS / Real Estate Training20 If It Is Obsolete, Is It Deferred? Deferred Maintenance? A Real Property Record (record unit)No Components (retirement units)Yes  Does obsolescence have a role in determining optimum period? ◦ Yes, especially when failure impacts mission. ActiveClassicLimitedObsolete Product, parts and related lifecycle services have been released for sale Spare parts made and manufacturer support available Repair services and parts are available through 3 rd party No support or parts available Failure results in long outages and sub-optimal repair practices Courtesy of: ABB Inc.

21. 21  We can close deferred maintenance when: ◦ The work needed is complete or obviated, ◦ The facility is demolished, or, ◦ The facility is permanently transferred out of DOE or no longer leased  There is no need to zero deferred maintenance on assets ready to be archived ◦ Let FIMS do the work for you  Note: if the facility remains, then the extant deferred maintenance follows, and DOE should disclose its maintenance logs to the extent practicable. May 7, 2015 FIMS / Real Estate Training

22. May 7, 2015 FIMS / Real Estate Training22 Included: Owned Status 1,2,3,6,&7 B, T, & S

23. May 7, 2015 FIMS / Real Estate Training23 PGM EA EE EM FE LM NE NNSA NR PA SC Total DM/RN ($) 100% 26% 81% 98% 100% 95% 71% 100% 71% 42% 69% All INSP 0% 14% 5% 1% 0% 5% 12% 0% 1% 34% 10% INSP=14 0% 8% 1% 0% 3% 4% 0% 7% 3% % Count of DM≠RN Included: Owned Status 1,2,3,6,&7 B, T, & S

24. May 7, 2015 FIMS / Real Estate Training24 MIRA Super Computer Argonne National Laboratory Questions & Comments Ivan.graff@hq.doe.gov 202-586-8120

25. Repair Needs Deferred Maintenance Maintenance Definitions May 7, 2015 FIMS / Real Estate Training25

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27. 27  DOE O 430.1B Real Property Asset Management ◦ Section 4(d) Maintenance and Recapitalization  “Real property assets will be maintained in a manner that promotes operational safety, worker health, environmental protection and compliance, property preservation, and cost-effectiveness while meeting the program missions.” ◦ Section 4(g)(2) Performance Goals and Measures  “Asset Condition Index... is the Department’s corporate measure of the condition of its facility assets. The ACI reflects the outcomes of real property maintenance and recapitalization policy, planning, and resource decisions.” May 7, 2015 FIMS / Real Estate Training

28. May 7, 2015 FIMS / Real Estate Training28 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. - FASAB SFFAS No.40 (May 11, 2011)

29. May 7, 2015 FIMS / Real Estate Training29 The recurring day-to-day work that is required to maintain and preserve PP&E in a condition suitable for it to be utilized for its designated purpose. It differs from repair in that it is normally worked [SIC] to correct wear and tear before major repair is required, and it is usually less involved than repair work. - DOE Accounting Handbook

30. 30 Day to day work that is required to sustain property in a condition suitable for it to be used for its designated purposes, including preventive, predictive, and corrective maintenance. – DOE O 430.1B Does NOT include - 1. Operations like cleaning, material handling, grounds 2. Betterments like upgrades or in-house construction 3. Conversions or facility replacements Does include replaced systems that –1. Conserve energy and water 2. Have lower emissions 3. Contain renewable components May 7, 2015 FIMS / Real Estate Training

31. 31 The restoration or replacement of a deteriorated item of PP&E, such that it may be utilized for its designated purpose. - DOE Accounting Handbook The restoration of failed or malfunctioning equipment, system, or facility to its intended function or design condition. Repair does not result in a significant extension of the expected useful life. – DOE O 430.1B Repair Definitions Let’s agree that for this discussion that a repair is a type of maintenance May 7, 2015 FIMS / Real Estate Training