1. Betterment Adam Pugh 2015 FIMS & RE Annual Training May, 2014 1

2. Discussion Points Betterments Intent Are These Betterments? Capitalization Capital Adjustment in FIMS 2

3. Betterments Betterments – Improvements to Plant and Capital Equipment that result in better quality work, increased capacity and/or extended useful life as required to accommodate regulatory and other changes to requirements 3

4. Betterments Betterments are typically funded with General Plant Project (GPP), Institutional General Plant Projects (IGPP) or Line Item Projects Construction and Improvements. Examples: Replacing standard walls with fireproof walls Installing a sprinkler system in a building without one Replacement of system components with significantly upgraded components Conversion – change to a new use 4

5. Intent The number one thing to keep in mind when determining “what is a betterment?” is the intent behind the work. This is a hard concept so let’s play a game. 5

6. Are These Betterments? Replacing a burned-out motor on a pump? No; Repair Replacing a 200 hp deteriorated water pump with a 250hp pump? Perhaps; does pump provide superior service? A reasonable argument may be that the old pump did have adequate power to meet the service intended. Replacing a leaking rubber roof with a built-up roof? No, repair. Replacing a leaking rubber roof with a built-up roof and new skylights? Probably, New skylights add capabilities not there before. 6

7. Are These Betterments? Adding a new garage to the firehouse because the new truck doesn’t fit in the old fire house? Yes; new construction Reconfiguring a floor of a five year old building to add laboratories in place of offices? Yes; conversion Replacing a 200 ton chiller with two -100 ton chillers? No; design decision (as long as the existing chiller needed replacement). Replacing a 200 ton chiller with three 100 ton chillers? Yes; adds capacity. Replacing leaking single pane windows with double pane energy-efficient windows? No; windows need to be replaced, better quality windows are the new standard product. 7

8. Are These Betterments? Replacing a ten year old ventilation system to meet new fresh air quantity requirements? Yes; system replaced to comply with a code change. Decentralizing a fifteen year old steam system to save energy? Yes; project meant to improve quality. Replacing old light fixtures with new, efficient ones? Perhaps; do the old fixtures work? A reasonable argument may be that the old fixtures do not have replacement parts and the new fixtures have the same amount of foot-candles. Demoing a building floor by floor and rebuild it to current standards? Yes; results in complete renovation of a plant record unit. 8

9. Are These Betterments? Installing a second feeder on a site to improve system reliability? Yes; better quality; improved capacity. Renovating a floor of a building and clearing out all deferred maintenance. Depends; (Tricky question). If a multi-floor facility, it is not a betterment. If the building is a single floor it would be a complete reconstruction. Repaving a road? No Widening a road? Yes; adds capacity. 9

10. Capitalization Betterments may or may not be capitalized depending on the current accounting capitalization threshold. Examples: Capitalized Betterment: A building addition that increases capacity. Non-Capitalized Betterment: Installing an ADA compliant door where there was no ADA compliant door. 10

11. Capital Adjustment in FIMS If the betterment meets the accounting threshold for a capitalization, then FIMS has the ability to capture this information under the “Cap Adjust” tab. If you designate a property as a building, OSF, land, or trailer, the “Cap Adjust” tab is available for completion. Sample of the “Cap Adjust” tab. 11

12. Capital Adjustment in FIMS Make your job easier! Instead of creating a fictitious asset to show that a non- DOE owned asset has capitalized adjustments, FIMS has the capability of capturing that information. 12

13. Capital Adjustment in FIMS 13 Ownership TypeBuildingOSFsLandTrailer DOE OwnedXXXX DOE LeasedXXXX Contractor LeasedXXXX Contractor LicenseXXXX PermitXXXn/a GSA Owned or GSA LeasedXn/a Easement LandX Long Term Interest LandX Other LandX Institutional Control LandX Withdrawn from Public Domain LandX License

14. Capital Adjustment in FIMS “Cap Adjust Asset Type” Pick List 14

15. Capital Adjustment in FIMS Examples: DOE has funded the replacement of the Forrestal roof at DOE-HQ (which is GSA leased) In the “Cap Adjust Asset Type” which option should you select? 15 800, Improvements To Property Of Others

16. Capital Adjustment in FIMS Report 74, Cap Adjustments Detail in Excel format will give you all of the information you need. Tip: Enter a “Cap Adjust Asset Type” in FIMS. This will help when it comes to using Report 74. 16

17. Questions 17

18. Backup-Recapitalization Major renovations or reconstruction activities, including facility replacements, needed to keep existing facilities modern and relevant in an environment of changing standards and missions. DOE O 430.1B, Attachment 3, Definitions This includes: Restoration Modernization But not the acquisition of new facilities or the demolition of old ones, (unless the demolition is carried out as part of a renovation project). 18