Integrated Capital Asset Management Program (ICAMP)

Case Study

Background

The University of California has over 5,000 buildings that comprise approximately 124 Million Square Feet of space with an estimated capital asset value of $55 Billion.
• The current maintenance and repair (OMP) costs are $587M (FY11-12 Financial Report)
• $3.25 Billion in Deferred Capital Renewal (state space only)
• 40% of all UC buildings are 40 years old or older
• Deferred Maintenance conditions create unsafe conditions for faculty, staff, students and visitors that result in additional claims costs to the University.

There are over 70 “Custodians” across the system who manage these Assets and there is currently no system wide means to measure or prioritize the maintenance needs or conditions of the Assets across the system; benchmark/compare systems across asset type; or conduct system wide lifecycle based capital renewal budgeting.

The lack of a system wide asset management system prevents UC from managing capital assets and maintenance from and Enterprise Risk Management perspective.

 

Goal

The goal of ICAMP is to provide the University with an integrated methodology and system to track the condition of its assets, to provide information about their expected useful life, to provide cost information about current replacement value, to provide budgetary information and to provide information in support of the University’s risk management program.

Acquired software will be the basis of ICAMP and to be used as an ongoing asset management tool as well as providing the framework, methodology and data collection tools for the physical assessment (to be procured separately) of University space.

 

Successes

Programs similar to ICAMP are common amongst entities with large asset portfolios, such as UC. There is tremendous interest across the UC System for the implementation and development of ICAMP with support from the CFO Division and campus Senior Management. Facilities Management has hired a Program Manager to direct the development and implementation of the program.

 

Challenges

This program will have a variety of stakeholders from Facilities, Planning, Budget, Risk Services, etc. The process of developing the parameters of a system to meet the various interests will be considerable.

 

Initial investment
Depending on possible phased approaches, the initial investment including software cost, facility assessment inspections and administrative costs could range between $5 and $20 Million, with ongoing maintenance costs estimated at $5 Million.

 

Fiscal results, current and anticipated

Through ICAMP, locations will be better prepared to identify, quantify and prioritize the maintenance and lifecycle activities of their facilities, which will allow for improved management of budget planning and funding provided for maintenance, operation and renewal. The actual fiscal impact has not been estimated.

According to an ERM Assessment conducted in FY2010/11, the Vice Chancellors of Administration perceive Deferred Maintenance as one of the most under controlled risks. Claims data for the period of 10/05 through 2/11 indicates that the University’s Self Insurance Programs incurred almost $10 Million in costs for incidents arising out of, or involving aspects of Deferred Maintenance. ICAMP will provide the means to better control this area of risk and ultimately reduce claim costs.

Office of the President Risk Services (OPRS) also anticipates that the demonstration of an improved risk profile will assist the University in establishing more favorable insurance rates.

 

Current action and next steps
Facilities Management has hired an interim Project Development Manager who is overseeing the launch and implementation of the ICAMP Project. Since his hiring in the Fall, he has begun the following tasks:
• Determine who the Campus and Med Center contacts are who actually manage and/or control the UC assets.
• Determine the assets that will be inventoried and monitored/documented in the Condition Assessment Program
• Identify what management systems (CMMS, Condition Assessment or others) are currently being used by the Campuses and Med Centers.

There will be interviews for the permanent ICAMP Project Manager position in March 2013 and this person will responsible for the day to day management of this program.

It will take several months to collect stakeholder input and to develop the condition assessment and software program requirements prior to conducting the RFP for these services.

 

Concluding statement

The implementation of ICAMP will provide the University a holistic view of the operational and capital cost elements for facilities will allow UC to:
• Improve its risk profile through better information about facilities
• Identify mission critical facilities needs to guide renewal expenditures
• Provide basis of system wide bond funding for capital renewal
• Identify potential catastrophic failures
• Promote good asset stewardship and responsibility