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Strategies to Renew Federal Facilities (2023)

Chapter: 3 Federal Facility Asset Management Systems

« Previous: 2 The Operating Context for Federal Facility Renewal Strategies
Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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3

Federal Facility Asset Management Systems

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

—Sun Tzu

INTRODUCTION

The preceding chapters frame this report’s objectives and operating context for federal facility renewal strategies. This chapter builds on these by defining how a facility asset management system works. Neither the Office of Management and Budget (OMB) Circular A-11 nor A-123 defines what a facility asset management system looks like or how management functions are related. They only define behaviors or outcomes of what facility asset management systems do or accomplish.

Using the chapter’s opening quote for context, facility asset management systems are used to organize the tactics for implementing federal facility renewal strategies. This is consistent with the standards in International Organization for Standardization (ISO) 55000, which when applied make federal facility real property capital plans the means for guiding and communicating tactical actions.1 To accomplish this, agencies must employ management system thinking and change their approach to facility resource-and-investment decision making. This level of change is required to incorporate federal facility asset management as a fiduciary responsibility. As defined in ISO 55000, a management system is a “set of interrelated or interacting elements of an organization to establish policy and

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1Appendix C provides an expanded discussion of the material in this chapter.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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objectives and processes to achieve those objectives” (ISO 2014c, § 3.4.2). This report applies this definition and expands it to encompass the concept of management system thinking activities, including change management, which are needed to implement facility asset management systems as the precursor to generating meaningful and impactful federal facility renewal strategies.

This chapter will cover these topics, provide examples of management system thinking, and introduce facility asset management principles that agencies can use to incorporate facility management systems into their overall management approach and implement facility renewal strategies.

MANAGEMENT SYSTEM THINKING

The way the U.S. federal government is managing its facility assets is not working. Or more directly, paraphrasing Albert Einstein, sometimes we cannot solve our problems with the same thinking we used when we created them. To solve this problem, we need management system thinking.

Management system thinking is used to operationalize asset management systems, standards for which are detailed in ISO 55001 (ISO 2014b), which can be used to evaluate compliance of an organization’s asset management system. While doing so represents a step toward an organization gaining ISO 55001 certification, the committee does not recommend that agency facility operations be ISO 55001 certified. Instead, it strongly recommends that agencies gain knowledge of ISO 55001 asset management system requirements and use this knowledge to guide development of federal facility renewal strategies.

National Research Council2 reports on federal facilities management include Committing to the Cost of Ownership: Maintenance and Repair of Public Buildings (NRC 1990); Stewardship of Federal Facilities: A Proactive Strategy for Managing the Nation’s Public Assets (NRC 1998); Investments in Federal Facilities: Asset Management Strategies for the 21st Century (NRC 2004b); Core Competencies for Federal Facilities Asset Management Through 2020 (NRC 2008); and Predicting Outcomes of Investment in Maintenance and Repair of Federal Facilities (NRC 2012b). These reports demonstrate that the problem of underinvesting in facilities, causing ever-increasing maintenance backlogs, has been recognized for decades and likely longer. Since it started producing the Infrastructure Report Card in 1998, the American Society of Civil Engineers has rated the U.S. infrastructure at an overall D or D-plus with one exception: in 2020 it rated U.S. infrastructure at a C-minus. Furthermore, the Government Accountability Office (GAO) placed Department of Defense facilities on their High-Risk list in 1997 (GAO 1997) and added the whole federal facilities portfolio to this list in 2003 (GAO 2003), where they have remained ever since. These respected,

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2 Prior to July 1, 2015, reports of the National Academies of Sciences, Engineering, and Medicine were authored by the National Research Council.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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independent sources generally agree on the problem: Underfunding in facilities and infrastructure is bad and increases the risk to the organization’s ability to achieve its mission objectives.

Could it be that the reason these problems have been unresolved for decades is that we are looking at the problem in the wrong way? This section explores this question and introduces new perspectives. Facility planners, architects, engineers, specialists, and managers understand how facilities operate and what is needed to sustain their operations. This report frames this objective around the concept of renewal, meaning that facilities, and more broadly facility portfolios, serve to keep the organization fresh and vigorous and able to achieve mission objectives continually. By logical extension, the facility portfolio’s good repair, functional capabilities, and ready availability are critical to achieving this objective. This perspective has focused problem-solving on perfecting ways to deliver and maintain needed facilities, representing what this report calls classical facility management thinking.

The leading, authoritative source defining management systems that employ management system thinking is ISO. Over the past few decades, ISO has systematically evolved management system thinking across many management disciplines, published in more than 80 standards. Well-known ISO management system standards include ISO 9001—Quality Management (ISO 2015a) and ISO 14001—Environmental Management (ISO 2015b). Other management system standards cover information security management, occupational health and safety, facility management, human resource management, and innovation management.3 Management system thinking provides the means to identify stakeholders, their needs, and how their needs are translated to policies, objectives, and processes designed to achieve these objectives. For the given problem set, the best management system standard series is ISO 55000—Asset Management. As defined by ISO, asset management does not focus on the asset, but on the value generated by the asset. This standard series covers the following four published standards:

Management system thinking, as introduced in this report, seeks to manage the value generated by facilities, changing the focus from managing assets to managing the value derived from them. To accomplish this, management system thinking focuses on leading indicators of performance, viewing inputs as objectives, strategies, plans, standards, processes, and resources. Outputs are viewed as efficient, effective facilities. Outcomes are the agency benefits, capabilities, and value realized from facilities. Generally, outputs are defined in terms of facility performance, and outcomes are defined in terms of products, services, and assurances generated by the agency fulfilling its mission.

  • ISO 55000—Asset Management—Overview, Principles, and Terminology,
  • ISO 55001—Asset Management—Management Systems—Requirements,

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3 For more information on ISO management systems, see https://www.iso.org/management-system-standards.html.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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  • ISO 55002—Asset Management—Management Systems—Guidelines for Application of ISO 55001, and
  • ISO 55010—Asset Management—Guidance on the Alignment of Financial and Non-financial Functions in Asset Management.

These asset management standards are referred to collectively as “ISO 55000” throughout this report.4 ISO Technical Committee 251 manages these standards and has produced an article titled “Managing Assets in the Context of Asset Management” (Dempsey 2017), which adeptly contrasts classical facility management thinking and management system thinking as presented in this report. A summary of this comparison and an excerpt from the article are provided in Table 3-1.

This article compares managing assets, a classical facility management thinking perspective, to asset management, a perspective that applies management system thinking. The basic point made in the article—and used with purpose in this report—is that both are critical to successful federal facilities management. The committee agrees with this premise but believes that management system thinking is the viewpoint needed to develop and implement impactful federal facility renewal strategies.

This distinction is important because most facility management strategies used by agencies today are dominated by classical facility management thinking—that is, figuring out how to better manage assets. Although this is an important perspective and always will be, this report focuses on how to generate value through better federal facility renewal strategies. The committee views this as an asset management problem in need of an asset management solution. This key concept is important for understanding the report’s findings and recommendations. It also highlights a requirement for agencies to establish facility asset management systems to generate effective, impactful federal facility renewal strategies. Implementation of this perspective will be improved when federal policy recognizes federal facility asset management as the means to fulfill an agency’s fiduciary responsibility to renew its facility portfolio efficiently and effectively.

Facility Asset Management System Definition

The purpose of federal facility renewal strategies is to ensure and assure that federal facilities are being used to achieve the agency’s mission efficiently and effectively. Execution of this strategy requires tactics, such as how to perform planning, prioritize resources, and operate and maintain facilities. These tactics are organized through a disciplined facility asset management system—one of

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4 The exception to this is when referring to the ISO 55000 standard separately. When this is the case, it will be referred to as “ISO 55000, Asset Management—Overview, Principles, and Terminology.”

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

TABLE 3-1 Classical Facility Management Versus Management System Thinking

When you listen, what are others really focused on?
Managing Assets Asset Management
Your colleagues are focused on:
  • Asset data, location, and condition assessment
  • Current KPIsa
  • Department budget
Your colleagues are focused on:
  • Information supported decisions (strategic context and related to customer needs)
  • Strategies to select and exploit assets over their life cycles to support business aims
  • Collaborations across departments to optimize resources allocated and activities
Your stakeholders are focused on:
  • Costs
  • Current performance
  • Response to failures/maintaining function
Your stakeholders are focused on:
  • Triple bottom line and value
  • Clarity of purpose of the organization
  • Focus on impact of activities on organization’s objectives
Your top management is focused on:
  • Short term gain/loss
  • Departmental/individual performance
  • Savings, especially OPEXb
Your top management is focused on:
  • Long-term value for the organization
  • Developing competence and capability across workforce
  • Business risks understood and mitigated
Your suppliers are focused on:
  • Short-term contracts and performance
  • Service-level agreements are focused on contract specifications
Your suppliers are focused on:
  • Long-term contracts and/or partnering relationships in support of client value and objectives
  • Understanding client strategy and needs in 5-10 years

a KPI = key performance indicator.

b OPEX = operating expenditure.

SOURCE: © ISO. This material is reproduced from Asset Management First Edition ISO/TC WG4 (white paper) with permission of the American National Standards Institute (ANSI) on behalf of the International Organization for Standardization. All rights reserved.

many management considerations used by an agency. As a guide, ISO 55000 defines asset management key terms and relationships applicable to federal facility asset management, as shown in Figure 3-1.

Figure 3-1 establishes alignment between the agency’s facility portfolio and mission objectives. Within an ISO 55000–based facility asset management system, the facility portfolio is the generating source for value. Connecting the dots is the asset management system, which coordinates management activities defined in terms of policies, doctrine, objectives, organizational structure, information technologies (IT), and processes.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×
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FIGURE 3-1 Relationship of key terms relating a facility asset management system to an asset management system, based on ISO 55000.
SOURCE: © ISO. This material is reproduced from ISO 55000:2014 with permission of the American National Standards Institute (ANSI) on behalf of the International Organization for Standardization. All rights reserved.

This approach applies management system thinking to focus on how to make good resource-and-investment decisions. Management system thinking is used to implement an asset management system, which in turn is used to generate the agency’s facility renewal strategy. This strategy coordinates resource-and-investment decisions related to managing facility assets. Finally, in managing the organization, the ultimate determinant of asset management success is a well-functioning facility portfolio that generates value in the form of mission support that helps the agency achieve its mission objectives efficiently and effectively. In its fullness, as outlined in Chapter 1, this elevates federal facility renewal strategies into an overarching policy that guides resource-and-investment decision making across the agency’s whole facility portfolio, whole facility life cycles, and whole mission sets—which is also the stated requirement of the agency capital plan defined in OMB Circular A-11 Supplement—Capital Programming Guide (OMB 2022b).

FACILITY ASSET MANAGEMENT SYSTEM FRAMEWORKS

Facility asset management systems are implemented through frameworks. This section introduces two frameworks helpful to agencies seeking to establish or improve their facility asset management capabilities. The first framework, shown in Figure 3-2, depicts how facility asset management aligns with OMB Circular A-11’s Performance Management Framework.

As covered in this framework, OMB Circular A-11 requires agencies to establish a strategic plan. This plan typically involves several subordinate plans.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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Image
FIGURE 3-2 Facility asset management system framework.

While some of these plans will state specific facility needs and requirements, in most cases, this support is assumed or inferred, meaning the objective of effectively sustaining existing facilities to support agency mission operations may not be clearly stated—or often, not even mentioned—in high-level strategic plans.

As detailed in the previous chapter, the Capital Programming Guide, combined with OMB M-20-03, requires agencies to establish and implement a real property capital plan (OMB 2019). In ISO 55000 terms, this is called a strategic asset management plan, defined in the context of an organization’s asset management system. This approach is consistent with federal policy governing a real property capital plan. In alignment, a real property capital plan translates strategic planning objectives into actionable facility asset management objectives. This is because strategic planning objectives do not often, or at all, specify facility asset or portfolio performance objectives; they are simply inferred. The purpose of these facility asset management objectives is to define how facility performance links to agency performance in a way that guides facility resource-and-investment decision making. In the context of this report, the real property capital plan is

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

the artifact and communication strategy that states the agency’s facility renewal strategy.

Subordinate to the agency’s real property capital plan are many other plans. Each focuses on different subset objectives—for example, installation master plans; capital investment plans; or environmental, energy, resiliency, and security program objectives. Other facility asset management plans may focus on specific management initiatives or be organized using the agency’s organizational structure or geographical regions or relationships. Often these efforts are orchestrated through dedicated planning activities, such as master planning, focus studies and investigations, market surveys, and facility assessment programs. Collectively, subordinate facility asset management plans all seek to execute asset management objectives coordained by the real property capital plan. Also, consistent with the Capital Programming Guide requirements (OMB 2022a), the purpose of these plans is to inform resource-and-investment decision making, ultimately leading to development and execution of the agency’s budget.

Resource-and-investment decision making is coordinated by agency planning, programming, budgeting, and execution (PPBE) policy. As covered in Chapter 2, OMB Circulars A-11 and A-123 contain detailed requirements all agencies must follow when executing appropriated funds. Activities at this level are generally focused on executing different funding streams aligned to the agency’s authorities and appropriations, an activity involving many steps and procedures. Supporting methods for implementing federal facility renewal strategies are detailed in Chapters 4 and 5. At this point, it is sufficient to say that this involves management system thinking championed by executive leadership and often involves technology enablement and organizational change management. It is also important to note that PPBE policy only covers resource management tactics (e.g., developing budgets, allocating funds, prioritizing work) as opposed to asset management tactics (e.g., optimizing resource and mitigating risk to mission execution). Specific tactics are related but different in that resource management focuses on how to manage use of resources, while asset management focuses on the value generated by assets. Objectives to be achieved through PPBE activities are established in the real property capital plan and conferred through subordinate facility asset management plans.

It follows that the real property capital plan and subordinate facility asset management plans must also establish facility performance objectives. This is an ISO 55000 requirement implemented through enterprise risk management and internal controls detailed in OMB Circular A-123 (OMB 2016). A basic principle of asset management is that resource decisions should only be made in relation to achieving measurable performance objectives. Furthermore, it is prudent to report, verify, and validate achievement of facility asset management performance objectives through periodic assessment protocols organized by the asset management system. The most common forms of this are requirements-based

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

budgeting, planned-versus-actual performance analysis, performance–cost balance sheet analysis, and performance–cost forecasting.

The last part of this framework is agency performance. This step seeks to assure that agency strategic objectives are achieved. The best time to obtain this assurance is in cycle with the agency’s PPBE process when establishing future budgets, which is consistent with the Capital Programming Guide (OMB 2022a). Simply put, this activity seeks to confirm that the current facility renewal strategy is meeting the agency’s mission needs. If not, it also involves figuring out what needs to be done to make improvements that ultimately produce desired agency performance outcomes. This and the preceding performance step highlight another asset management principle: feedback loops must be clear and impactful to ongoing planning activities if the asset management system is to conform with ISO requirements.

As highlighted in the gray background in Figure 3-3, the agency facility renewal strategy area of influence ranges from the agency strategic plan to agency performance. It covers all aspects of agency facility resource-and-investment decision making. Its purpose is to guide facility decision making to best support agency mission achievement using tactics organized by the agency’s facility asset management system.

The second framework helpful to implementing facility asset management systems is also shown in Figure 3-3. This framework depicts the anatomy of a facility asset management system.

A description of the facility management system anatomy follows. See also Appendix C, which applies this anatomy more specifically to strategies for communicating an agency’s federal facility renewal strategy.

  1. Mission execution is defined by the agency’s operating context and prescribed through the agency’s authorities, policies, and mission. This is Step 0 because it is considered outside of the scope of the facility asset management system. It is, however, influential in defining its purpose and operating parameters.
  2. Organizational objectives are conferred through the agency’s strategic plan and supporting strategic guidance. In accordance with OMB Circular A-11, these sources establish organizational performance objectives and priorities.
  3. Facility asset management objectives are developed to ensure achievement of objectives established in the agency’s strategic plan. Facility asset management objectives translate esoteric and aspirational strategic plan objectives into practicable facility management performance objectives that can be understood easily by facility users and managers. Examples include condition, functionality, utilization, and availability criteria and performance objectives. Facility asset management objectives must also be established using specific, measurable, attainable,
Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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FIGURE 3-3 Facility asset management system anatomy.
SOURCE: Courtesy of J. Dempsey, founder, Asset Management Partnership, LLC.
Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×
  1. relevant, time-bound (SMART) criteria and thresholds that double as performance baselines and reporting for planning and resource-and-investment decision making.
  2. Assessments of asset capabilities report performance of the agency’s facility assets and portfolio compared with facility asset management objectives. Information is typically obtained through facility assessments, inspections, analysis, and studies to include master planning, condition assessment, space studies, and application of data science techniques. A requirement is a gap found between an asset management objective and a facility’s actual performance that requires work to mitigate or remove, ranging from performing a maintenance work order, executing a repair project, or building or acquiring a new building, to a major activity such as moving capabilities from one location to another or bringing on new capabilities in response to dynamic mission needs.
  3. Risk management and resource planning is a gap assessment process and planning activity. It includes comparing facility asset management objectives with assessed facility asset and portfolio capabilities, and developing action plans to address resulting requirements. This planning sets the context for the facility asset management plan while considering resource and capability limitations as required by OMB Circulars A-11 and A-123.
  4. Real property capital plans report on the culmination of previous steps and collectively state the agency’s facility renewal strategy. Through incorporation, the agency’s real property capital plan includes all subordinate facility asset management plans, becoming the focal point for integrating and reconciling resource-and-investment priorities. In the ISO 55000 context, this is the agency’s facility strategic asset management plan. Work includes:
    • Establishing facility asset management objectives linked to agency strategic objectives and priorities,
    • Establishing and justifying budgets to achieve these objectives,
    • Planning and prioritizing facility requirements responding to these objectives,
    • Developing plans to execute prioritized requirements, and
    • Establishing performance baselines to manage and continually improve work execution.

    It is typically left to subordinate facility asset management plans to develop specific execution plans for specific facility programs and management areas. In this planning context, the agency real property capital plan represents the focal point of an agency’s facility renewal strategy. It is through the real property capital plan that the agency plans budget

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

    execution and performs the supporting enterprise risk management and internal controls dictated in OMB Circular A-123. It is also through these activities that many planning, programming, and budgeting actions detailed in the agency’s PPBE process are completed.

  1. Execution of facility programs seeks to achieve objectives conferred through facility asset management plans that are coordinated by the agency’s real property capital plan. These activities also represent the execution portion of the agency’s PPBE process and management of work in response to facility requirements. On the whole, supporting activities seek to execute established plans and manage change given dynamic working conditions and operating environments.
  2. Performance evaluation and reporting—the last step in the facility asset management system anatomy—is both an ending and a beginning. It is an ending because it performs a final assessment on the performance of the agency’s facility renewal strategy. This includes performance reporting on facility asset management objectives and their contribution to achieving broader objectives enumerated in the agency’s strategic plans. It is also a beginning because it starts the next planning cycle. This is completed through feedback loops, principally in the form of planned-versus-actual comparisons, trend analysis, internal audits, and management reviews.

The committee deems this anatomy a critical missing link to guidance that should be covered in OMB Circulars A-11 and A-123, as detailed in Chapter 2. A final representation of the facility asset management system anatomy is mapping it to ISO 55001—Asset Management System Requirements, Standard Clauses, as shown in Table 3-2. ISO 55001 stands out for this purpose because it is the only one that defines requirements for asset management systems. Note that ISO 55001 asset management system requirements start at Clause 4 with the preceding clauses covering standard requirements for ISO standard use.

This mapping shows how the facility asset management system anatomy detailed above is covered in full by ISO 55001. This is important because, as detailed in Chapter 2 and further developed in Appendix C, neither OMB Circular A-11 nor A-123 defines what a facility asset management system looks like or how many management requirements are related. They only define behaviors or outcomes of what a facility asset management system would do or accomplish. As stated in these OMB policies, agencies are expected to apply requirements and guidance contained in each to develop facility asset management systems that best apply to their specific circumstances. This report recommends that ISO 55000 standards be used to fill this gap in guidance.

OMB’s policy approach assumes agencies are equipped to understand and fully comply with its circulars and memorandums. As detailed in GAO-19-57, Federal Facility Asset Management—Agencies Could Benefit from Additional

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

TABLE 3-2 Facility Asset Management System Anatomy and ISO 55001 Clause Comparison

Relationship Between Facility Asset Management System Anatomy and Asset Management System Requirements ISO 55001 Clauses
4 ‒ Context of the Organization 5 – Leadership 6 ‒ Planning 7 ‒ Support 8 ‒ Operation 9 ‒ Performance Evaluation 10 ‒ Improvement
0 – Mission Execution              
1 – Organizational Objectives              
2 – Facility Asset Management Objectives              
3 – Assessment of Asset Capabilities              
4 – Risk Management and Resource Planning              
5 – Real Property Capital Plan              
6 – Execution of Facility Programs              
7 – Performance Evaluation and Reporting              

SOURCE: Sourced from data in International Organization for Standardization, 2014, ISO 55001: Asset Management—Management Systems—Requirements.

Information on Leading Practices, this is not the case (GAO 2018f). To remedy this, the committee agrees with recommendations made in this GAO report citing use of ISO 55000 asset management standards as an appropriate, available, and authorized source for agencies to use in developing and implementing facility asset management systems (GAO 2018f). This position is further supported by OMB Circular A-119—Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities, whose criteria meet the ISO 55000 asset management standards established in OMB Circular A-119.

In conclusion, two frameworks used to define facility asset management systems were presented in this section—the facility asset management system framework and the facility asset management system anatomy. Both support and implement requirements and objectives detailed in OMB Circulars A-11 and A-123, and ISO 55000. Both are presented as generic frameworks that represent, but do not dictate, how an agency would define its facility asset management system. These frameworks also inherently enable effective communications of an agency’s renewal strategy. As will be detailed in the committee’s recommendations, supported by the findings below, a disciplined facility asset management system that employs management system thinking is a prerequisite to implementing effective, impactful federal facility renewal strategies.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

Finding 3-1: Development of federal facility renewal strategies requires the use of disciplined facility asset management systems employing “management system thinking.” Management system thinking evaluates resource- and-investment decision making from the perspective of how facilities generate value for supporting agency mission achievement. This perspective is different from the way most agencies now evaluate facility resource- and-investment decision making, which is generally biased toward facility life-cycle management value propositions, referred to as “classical facility management thinking.”

Finding 3-2: OMB policy, notably Circulars A-11 and A-123, does not provide sufficient guidance on how to implement and exercise facility asset management systems capable of generating federal facility renewal strategies detailed in this report. The ISO 55000—Asset Management System standards series is an appropriate, available, and authorized resource able to fulfill this need. Use of this standard also satisfies policy and objectives detailed in OMB Circular A-119.

Finding 3-3: Effective communications of federal facility renewal strategies are advantaged when they conform to clauses pertaining to facility asset management systems in ISO 55000.

PRACTICAL EXAMPLES AND EMPIRICAL EVIDENCE OF FACILITY ASSET MANAGEMENT SYSTEMS IN USE

To evaluate and better understand problems facing facility owners, the committee met with many public and private organizations to gain perspectives on how they have implemented facility asset management solutions. These organizations have applied frameworks described in the preceding section to manage the value generated by facilities rather than managing assets. A list of presenters to the committee is contained in Appendix B. The operating context, stakeholders, and missions of these organizations vary widely. Still, several common themes emerged that are supportive of asset management principles and requirements for implementing federal facility renewal strategies. This section shows that asset management is not a fad—it is being developed systematically, and in many ways organically, to improve facility performance supporting an organization’s mission achievement. A summation of each theme follows.

Alignment with Organizational Objectives

Facility alignment with the organization’s mission and needs was a paramount concern for all presenters. This alignment requires knowing who the key stakeholders are and knowing what they value. Each organization the committee

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

met with could clearly describe how stakeholder values were translated into organizational objectives and then in turn translated into facility asset management objectives. In doing so, they detailed deliberate steps to ensure that the appropriate stakeholders were engaged in this process. This is consistent with federal facility policy and supported as follows:

  • OMB Circular A-11, Part 6 (Federal Performance Framework for Improving Program and Service Delivery) clarifies how the agency shall establish strategic goals according to their authorized mission and how these goals shall be developed to support operations and budget execution. Figure 3-4 provides an example from OMB Circular A-11 of how agency goals and objectives are structured to accomplish this. These requirements are further supplemented in OMB Circular A-123 by requiring that goal and objective development involve rigorous enterprise risk management and management controls. This level of disciplined attention would apply to federal facility asset management objectives enumerated by the agency facility renewal strategy.
  • Both Army and Air Force representatives explained that the purpose of their agency’s facility asset management activities was ultimately to achieve the U.S. National Defense Strategy (DoD 2018) and subordinate strategic plans and objectives. This includes responding to changes in the operating environment, which in the Department of Defense includes incorporating installation energy resiliency and protection from cyberattacks. This requires that they develop and incorporate supporting, actionable goals and objectives into their agency’s facility renewal strategies.
  • The chief financial officer (CFO) of the city government of the District of Columbia (2017) explained how the city’s strategic plan establishes the context, parameters, goals, and objectives for financial planning to include renewal of the facilities and infrastructure it owns and operates. This plan includes developing strategies and plans for addressing deferred maintenance of its real property assets. In this context, focus on deferred maintenance was presented in the form of a business case that generated value in terms of both improved services and a better financial position for the city.
  • Representatives from Howard and Marymount universities made clear that their efforts guiding facility renewal strategies must directly support their institution’s educational mission and public image.
  • The Air Force recently modernized its Mission Dependency Index (MDI) for installations worldwide. This activity measurably improved analysis linking facilities to mission execution. In this context, the MDI provides the logic bridge needed to ensure that facility resource-and-investment decisions align with the Air Force’s dynamic mission needs; it is used to prioritize and program billions of dollars of work every year (USAF 2018).
Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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FIGURE 3-4 Example illustration of goal relationships.
SOURCE: Office of Management and Budget, 2020, Circular A-11—Preparation, Submission, and Execution of the Budget, Washington, DC, www.whitehouse.gov/wp-content/uploads/2018/06/a11.pdf.
Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×

Resource Management Integration

Asset management can be viewed as the means to translate potential energy (funding) into kinetic energy (work). Given that federal facility renewal strategies are ultimately an investment strategy seeking to generate a return on investment, it was no surprise that many organizations with which the committee met focused their asset management activities on financial decision making, or more broadly, resource management. Leading examples include the following:

  • A representative from the Port Authority of New York and New Jersey (PANYNJ) detailed a broad vision using asset management to establish transparency and accountability, executing approximately $20 billion in mostly private investments in regional airports, including John F. Kennedy, LaGuardia, and Newark international airports. PANYNJ is using systematic asset management strategies to manage these capital investments and establish sustaining strategies for managing the capital assets delivered over their life cycle, including facility assets. This strategy aligns with the committee’s framing of federal facility renewal strategies in this report.
  • Lawrence Livermore National Laboratory (LLNL) has invested methodically in its facility asset management capabilities over the past 25 years. the MARS Cost Forecast System (now CostLab)5 and the later integration of Builder, the U.S. Army Corps of Engineers’ facility condition assessment tool, as well as the development of priorities and strategies using a mission dependency index like the one used by the Air Force and other agencies. LLNL targets a facility condition index (FCI) under 5 percent, where FCI is defined as the sum of maintenance requirements for a facility divided by present replacement value (PRV) of that facility. The outcome of this strategy has been that LLNL can maintain mechanical system life cycles economically and for much longer than design and manufacture estimates. In a broader analysis, LLNL found that for its mission, it could not tolerate an FCI greater than 9 percent on mission-critical buildings. LLNL also found that it needs maintenance funding greater than 2.5 percent of PRV to systematically reduce deferred maintenance backlogs.
  • The District of Columbia’s CFO detailed how their facility asset management strategy directly supported raising the district’s bond rating from A to AAA, resulting in a 30 percent reduction in lending costs to serve its $26 billion infrastructure problem.6 Elements of this success included having accurate inventories and work lists, effective stakeholder

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5 Developed by Whitestone Research, MARS was notably accurate with M&R cost forecasts found to be within 10 percent of actual cost over a 5-year period (2005-2009).

6 Jeffrey S. DeWitt, chief financial officer, District of Columbia government, meeting with the committee on November 5, 2019.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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  • communications, proactive management controls, and risk-based priorities that were linked to financial decision making. These are all fundamental and universal features of an effective facility asset management system.

Stakeholder Value Generation

In asset management, only one thing matters: value generation. As detailed throughout ISO 55000, stakeholders are the best judges on the value generated by facilities (ISO 2014a,b,c). The classical facility management thinking perspective discussed above links value to facility life-cycle management activities with the assumption that stakeholders agree with and understand this perspective. In management system thinking, however, the measure of value differs among stakeholder groups. By extension, this means that for a federal facility renewal strategy to be successful, it must be responsive to how different key stakeholder groups measure value.7 Important points and reference examples supporting this objective include the following:

  • OMB Circular A-11 requires federal agencies to develop budgets to achieve their authorized purpose. It also requires all federal managers to ensure that every dollar spent delivers value to the American people. Determining how federal facilities generate value for the American people requires complex asset management analysis. The performance management cycle detailed in this circular supports this analysis by requiring strategic plans to communicate agency mission, service, and stewardship objectives—inclusive of many different stakeholder group perspectives on value. These values, in turn, must likewise be represented in federal facility renewal strategies, given that they are designed to directly support agency mission and strategic plan objectives.
  • On January 29, 2019, the Air Force commissioned its Infrastructure Investment Strategy (I2S), signed by the secretary of the Air Force and leading generals from every major command. This strategy clarifies the relationship between investments in installations and combat readiness—which the Air Force truly values. It further acknowledges that past strategies underfunded facilities, eroding the Air Force’s power-projection capabilities. This strategy addresses these issues through a substantial, graduated increase in facility sustainment, restoration, and modernization (FSRM) funding. On budget, the amount of FSRM funding has increased more than 8 percent between fiscal years 2020 and 2026 to achieve the Air

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7 ISO 55002 has an excellent discussion on this topic in its annex titled “Consideration of ‘Value’ in Asset Management” (ISO 2014a).

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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  • Force’s goal of 2.3 percent of PRV for a funding baseline.8 Given the asset management value proposition presented in this strategy and supporting analysis, it was made clear that every investment in FSRM funding was also an investment in Air Force combat readiness.
  • The New York Metropolitan Transit Authority (MTA) is the largest transportation agency in the United States, managing more than $1 trillion in capital assets, including passenger rail, bus, bridge, and tunnel infrastructure, and supporting an annual $1.4 trillion regional economy. A 2019 Ernst & Young analysis found that a $35 billion, 5-year capital investment in this infrastructure would generate more than $75 billion of statewide economic activity and create nearly 350,000 jobs throughout the state (MTA 2019). This study measured return on investment as the benefit from the capital assets, which formed the basis for investment business cases. MTA’s capital program is further substantiated by earlier success based on asset management principles. For example, one asset management–based solution led to the “number of incidents that delay 50 or more trains dropped from 105 in January 2018 to 38 in August 2019. Over the same period, weekday on-time performance rose from 58% to 84%” (MTA 2019). All of these MTA business case examples were developed using its asset management system linked to what key stakeholders valued most.

It Is a Journey, Not a Destination

Finally, all presenters spoke of their facility asset management systems not only as a kit of parts, but as a continual improvement strategy used to implement the organization’s policy. All discussed the need for better data, procedures, and IT systems, but framed it in terms of a need to advance communications, understanding, and learning. Having better data, procedures, and IT systems is not enough. Having the right data, procedures, and IT systems is important, but still not enough. Each organization with which the committee met spoke to their need for management system thinking to support critical self-evaluation and continual improvement.

OMB Memorandum M-20-10—Issuance of an Addendum to the National Strategy for the Efficient Use of Real Property underscores these ideas, stating that “further work is needed to develop a comprehensive and final strategy document” (OMB 2020a). This memo charts a direction involving research on policies and practices used by other organizations and outlines interim actions for the Federal Real Property Council to take. The memo also sets an investigative course on how to maximize the economic value generated by federal facilities for the American people. Simply put, OMB recognizes that implementation of better facility asset management capabilities is a journey and not a destination.

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8 Air Force Installation Mission Support Center correspondence, August 17, 2020.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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In alignment with this report’s recommendations, ISO 55000 standards provide a helpful roadmap for this journey.

FACILITY ASSET MANAGEMENT PRINCIPLES

This section completes the thought process contained in this chapter by presenting facility asset management principles. Principles and policy requirements are complementary, supporting facility asset management system implementation. While requirements are used to ensure that things are done right, principles are used to assure that the right things are done.

The following facility asset management principles, developed fully in Appendix F, establish concepts and practices foundational to management system thinking and facility asset management systems. Each principle serves a specific need for generating responsive and responsible federal facility renewal strategies. To do so, the committee proposes agencies use the following principles:

  • Data integrity. Data used must be held to integrity standards determined by the facility asset management system’s decision-making needs.
  • Whole life-cycle cost analysis. Federal facility renewal strategies must cover whole life-cycle costs of the assets in their scope.
  • Portfolio management. Federal facility renewal strategies must support the agency’s whole facility portfolio, covering whole life-cycle and stakeholder requirements across whole mission sets.
  • Accounting transparency. Federal facility accounting structures must support integrated and auditable analysis of financial and nonfinancial aspects to perform facility asset management activities supporting planned-versus-actual reconciliation of performance objectives.
  • Mission alignment. Mission alignment of resource prioritization requires the use of validated and verifiable metrics to link the relative importance of individual facility assets to agency missions and stakeholder performance expectations.
  • Facility performance. Knowledge of each facility asset’s condition, functionality, availability, and utilization compared with agency-established standards is required to understand the capabilities and performance of facility assets and portfolios.
  • Decision-making alignment and accountability. Facility asset management system decision making must integrate and reconcile objectives, resources, and performance management activities to promote stakeholder confidence in them.
  • Operational readiness. The relationship between agency operational readiness and the levels of facility operational readiness delivered by federal facility renewal strategies must be balanced across a range of relevant investment horizons and resourcing strategies.
Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
×
  • Performance–budget integration. Investment decision-making frameworks must evaluate planned-versus-actual performance in a way that can simultaneously measure a performance gap (e.g., a requirement) and the means to remedy the gap related to budget development.
  • Balance sheet analysis. Federal facility renewal strategies gain credibility based on their ability to reconcile a comprehensive and exhaustive set of facility requirements and capabilities against resources using a balance sheet analysis. In this context, a balance sheet involves a systematic reconciliation of needed and available capabilities enabled by facilities and their derivatives.
  • Facility asset management system maturity. To ensure and assure that renewal strategies will lead to desired benefits, they must be supported by a facility asset management system that is periodically and rigorously assessed and reviewed using an objective maturity scale.

These facility asset management principles are intended to maximize the utility of facility asset management systems for generating federal facility renewal strategies. More information on facility asset management system principles can be found in ISO 55000—Asset Management Overview, Principles, and Terminology. This review leads to the following findings:

Finding 3-4: Facility asset management systems must be principle-based to ensure their alignment with value generation and desired benefits. Principles complement policy requirements. While requirements are used to ensure that things are done right, principles are used to assure that the right things are done.

Finding 3-5: Operational readiness should be used as the pinnacle principle for federal facility renewal strategy communications because it provides perspective by bringing together multiple criteria valued by stakeholders set within a resource-and-investment decision-making context.

Finding 3-6: Federal agencies can make use of the principles detailed in this report to evolve policies and implementation practices for strategic communication.

Finding 3-7: Federal agencies can communicate facility asset management objectives effectively through real property capital plans that define and maintain federal renewal strategies.

CONCLUSION

This chapter identified leading industry and international standards advancing asset management systems and principles and introduced a series of principles needed to generate federal facility renewal strategies. The next chapter describes the data and models for predicting renewal costs.

Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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Suggested Citation:"3 Federal Facility Asset Management Systems." National Academies of Sciences, Engineering, and Medicine. 2023. Strategies to Renew Federal Facilities. Washington, DC: The National Academies Press. doi: 10.17226/26806.
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The United States real property portfolio is critical infrastructure that provides places and means for the federal government to operate and generate the products, services, security, and assurances that contribute to national prosperity and values. This report identifies broad-based, practical, and compelling strategies for securing continuing investment in the renewal of federal real properties and portfolios. Strategies to Renew Federal Facilities focuses on the how- not the what - for adapting, repurposing, restoring, recapitalizing, and replacing real property assets.

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