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What is a Facility Condition Assessment?

Manage risk and return of existing assets

Whether you are managing an existing asset or a commercial real estate transaction, a thorough understanding of the condition of the properties in question will help you optimize return on investment and manage liabilities associated with the asset. A full-service due diligence company can offer two major products to determine building condition — the Property Condition Assessment (PCA) and the Facility Condition Assessment (FCA).
 
A Property Condition Assessment, also known as a Property Condition Report or Commercial Building Inspection, is an evaluation of a commercial real estate asset based on a thorough inspection, including all improvements and all the systems of each building on the property. It is typically ordered as part of the due diligence process for a commercial real estate property transaction. A lender may request a PCA before issuing a loan, or an investor/buyer may request the assessment before a purchase or sale.
 
Facility Condition Assessments (FCAs) are typically prepared for owners or managers of real estate portfolios to help optimize and maintain the physical condition and value of their assets, develop capital budgets, and prioritize resources. A Facility Condition Assessment can also be used to secure additional funding for renovations. They are a vital tool for owners and managers of real estate portfolios to plan and prioritize short- and long-term investments in their facilities.
 
The most critical parts of the FCA are the Immediate Repairs Table and the Replacement Reserve Table. The Immediate Repairs Table identifies capital needs and prices all failing or damaged building systems and life safety issues. The Replacement Reserve Table identifies long-term capital expenses (typically within 12 years of inspection) based on the expected useful life of the building systems and components.
 
Like the PCA, the FCA involves a thorough property inspection by a team of one or more specialists, typically architects, engineers, or skilled-trade technicians. The goal of the FCA is to identify the following:
· Routine and/or deferred maintenance
· Systemic deficiencies
· Remaining useful life (RUL) of all major building systems
· Capital replacement needs
· Overall system compliance with the original design/engineering intent
· Compatibility with contiguous systems
· Prioritized list of repairs
· Total building replacement cost
 
FCAs are typically constructed through a customized scope that can include a site inspection(s) of all major building systems, a meticulous review of pertinent building  documents and records, and customized data analysis and calculation based on the consultant’s engineering expertise, experience, field observations, and accepted cost.
 
An FCA report is designed to serve as a functional tool to maintain property over time and is generally requested by asset managers with long-term capital expense planning needs. Therefore, it contains a thorough accounting of the material components of each system, usually in the form of inventory tables, as well as detailed estimates for the repair and replacement of systems and equipment than those you would find in a PCA report. Ideally, this data will culminate in a realistic projection of expenses for the ongoing maintenance of the property over a defined period of time. This will help investors and owners maximize the return on investment of their asset. 
 
In addition to year-over-year budget planning, an FCA can be a helpful component of annual preventive maintenance tasks. Facilities managers can track the scores in a computerized maintenance management system (CMMS) to have accurate information about the facility’s ability to meet organizational needs, to measure individual system performance over time, and to know exactly when to replace or repair units and parts. The headaches, equipment breakdowns and costly emergency repairs are worth the initial investment of time and labor.
 
An important component to the FCA is the method of data delivery. Because an FCA is a working document from which asset or portfolio managers project capital expenditures and maintenance expenses, delivery via digital platform that can interface with client-side IWMS (Integrated Workplace Management Systems) is often preferred.
 
To make the most of your FCA, engage the help of professional consultants with advanced levels of knowledge, training, and extensive experience performing superior-quality assessments. Your team’s credentials should include engineers, architects, commercial building inspectors, construction managers, certified energy managers, and LEED-certified professionals.