The Next Generation: HCI�s Sustainable Facility Governance Solutions

By James T. Kavanagh

In this new era of sustainability and stewardship, the importance of embracing new approaches and methodologies towards managing facilities and infrastructure is paramount if real change is to occur. Organizations must consider alternatives to the �status quo� in order to realize and achieve measurable success in meeting the evolving goals of corporate social responsibility.

Recognizing this need, HCI Solutions, LLLC (HCI) developed the iPlan� Sustainable Facility Governance solution to help organizations improve their performance along financial, energy, environmental and social dimensions to achieve sustainable facility governance. iPlan� provides a truly unique value proposition for HCI�s clients, and is a key differentiator in the marketplace from the �status quo� offerings of services and software.

Capital Planning is a Means to an End

In the first generation of strategic asset management systems, facility condition assessments were a means to the end of capital planning. Next generation solutions recognize, however, that capital planning is itself the means, not the end. The capital planning process is but a part of the overall sustainable facility governance process for facilities, that at its core is based on performance management. That is, capital plans are but a means to achieve the end result of performance improvement.

These performance requirements mean that economic, energy and emissions, environmental, security, and workplace access and productivity assessments, along with traditional facility condition assessments and lifecycle information, must be included in the next generation of sustainable facility governance solutions and business processes. Further, next generation solutions are, at their core, performance management solutions rather than capital planning systems, since capital planning is but a part of a larger process that serves the goal of performance improvement. The underlying objective of an organization is to improve the performance of a facility portfolio. The following outline introduces the next generation of sustainable facility governance solutions and business processes.

The Performance Management Mindset

Organizations that move from functional to performance mindsets become leaders. But understandably, this change comes hard to many organizations and employees. Often, managing this change is a difficult process that requires a few key thought leaders and sheer persistence and determination of staff to make it through. Most employees whether executives, managers, or technical staff, do not view themselves as performance management professionals. But everyone is, and that is the mindset change that needs to take place to move beyond viewing capital planning as an end to realizing that capital planning is an integral business function of a performance management process.

Management and business process consultation and training is required to shift an organization to the performance management mindset. Once everyone in an organization realizes that the function they are performing has an impact on improving performance, an organization is poised for leadership. But this realization only comes from a comprehensive understanding of the performance management process. This begins with defining key performance indicators (KPIs), measuring and benchmarking current performance levels, setting organizational goals and objectives for improvement, identifying opportunities for improvement through assessment and analysis and understanding an organization�s financial model and available resources. This process supports the creation of a capital plan that achieves performance improvement goals based on financial, energy, environmental and social dimensions, as well as through effective project execution, with measurement and verification of results, while keeping all stakeholders informed through sustainability reporting.

HCI Process Implementation

Sustainable facility governance business processes are specifically designed for an organization either through an in-house thought leader or outside consultant working closely with a few in-house team members. In the case of sustainable facility governance, this team must design the following core business processes specifically for the organization:

1. Performance Management � consisting of the following steps for establishing a framework for continuous improvement along each dimension of performance, such as financial, energy, environmental and security.
   • Define KPIs and benchmark values: The process owner defines performance KPIs and benchmark values for these KPIs. The definitions of KPIs are revisited periodically to maintain best practices, and may be part of an organization�s overall performance scorecard.
   • Generate KPIs: The KPIs are measured and generated to define current performance levels for a portfolio of facilities and buildings.
   • Define Goals and Objectives: The process owner defines organizational performance goals and objectives. These performance objectives are assigned to owners who have responsibility for implementing the business plan to achieve the objectives. The objectives define priorities and consideration factors for capital planning.
   • Monitor KPIs:The KPI owners continually monitor performance of the facility and building portfolios. This monitoring includes all KPIs and usually includes measurement and verification of economic return for specific capital investments in the capital plan.
   • Revise Best Practices:The process owner works with all performance owners to continuously revise best practices based on actual measured performance. As part of this process, the process owner may redefine KPIs to reflect the process improvement.
   
   
2. Portfolio Management � consisting of the following sub-processes that identify opportunities for performance improvement along each dimension of performance, such as financial, energy, environmental and security.
   • Inventory and Recordkeeping:The process owner defines and implements the portfolio inventory and recordkeeping process, defining data hierarchy, inventory classification system, and recordkeeping requirements, taking the inventory of the facility portfolio, implementing a procedure for updating records, and continually improving the inventory and recordkeeping process. The recordkeeping requirements are typically determined in part by reporting of non-compliance events.
   • Define Analysis Model:The process owner works with stakeholders and implementers to define the analysis model for performance improvement. The model definition is at the classification system level and specifies data collection and validation requirements. The model definition can be affected by performance management standards and stakeholder reporting requirements, such as, Federal or State Executive Orders that require cost/benefit reporting or performance management standards, the Facility Energy Decision System (FEDS) energy analysis model designed to provide a comprehensive approach to fuel-neutral, technology-independent, integrated energy resource planning and acquisition, or the FEMA 426/429 Guidelines for security performance. These types of embedded analytic models are typically a core component of sustainable facility governance solutions.
   • Define Assessment Level and Scope:The process owner works with stakeholders and implementers to define the assessment level and scope. The assessment level specifies detail, while the scope specifies extent across facility hierarchy.
   • Develop Assessment Instrument and Process:The process owner works with implementers to define the assessment instrument and process. The implementers are often in-house facility managers, building inspectors or a team provided through outsourced services contract. An electronic instrument creates efficiencies in collecting and analyzing the assessment data.
   • Conduct Assessment:The process implementers conduct assessments of the portfolio. This process is often outsourced on a periodic schedule or performed in-house on a rotating basis.
   • Review Analysis Parameters and Run Analysis:The process owner and implementers review assessment data and set parameters of the analysis. Different sets of parameters can be specified to compare alternative scenarios. The process owner and implementers perform analyses to generate capital plan items and expected performance metrics for proposed plan items using preliminary costing estimates. The assessment and analysis triggers events in capital funding and planning, energy, environmental, and security performance management, and stakeholder reporting processes
   • Revise Best Practices:The process owner works with implementers and stakeholders to continuously improve portfolio management processes and implement best practices.
   
   
3. Capital Planning � consisting of capital funding and planning sub-processes that deliver on performance improvement goals.
   • Estimate Lifecycle Funding Requirements: The process owner works with implementers to estimate the lifecycle funding requirements for a facility portfolio. Lifecycle investments for a facility based on the portfolio management process, with energy, environmental, condition, and security assessment and analysis models embedded in sustainable governance solution can automatically generate forecasts for sustainable lifecycle capital expenditure budgets.
   • Apply for Funds: The process owner and implementers identify sources of funds by plan item type, such as funds for energy and security improvements, carbon emissions reduction, capital renewal, and deferred maintenance items. Many financial vehicles are now available beyond the traditional leasing and purchase/loan instruments, such as carbon neutral bonds, asset monetization tied to outsourced utility contracts, energy performance savings contracts, and financially structured transactions to meet specific, customized needs of organizations.
   • Release Funds: The process owner releases funds to receive proposals for uses of funds. The uses are typically the plan items identified during portfolio assessment and analysis; the proposals are the draft capital plans for facilities.
   • Define Consideration Factors: The process owner works with stakeholders to define consideration factors for prioritizing capital plan items. Performance management goals and objectives lead to definition of and targets for consideration factors.
   • Prioritize and Propose Plan Items: The process implementers refine estimated plan item costs for preparation of capital plan proposals. This process may involve feasibility studies on specific plan items that were identified during the portfolio analysis process. Once plan items have final cost estimates, individual plan items or a project-based collection of plan items are proposed to be included for specific fiscal years based on consideration factors that yield the performance improvement goals across economic, environmental, and social dimensions.
   • Approve Use of Funds: The implementers propose uses of funds by applying funds to proposed capital plan items. The process owner reviews and approves funding uses.
   • Approve Capital Plan: The process owner approves the capital plan per the governance requirements. The statuses of plan items that are not approved are updated for potential inclusion in future capital plans, and for proper reporting of performance indicators for capital needs and deferred maintenance.
   • Define and Track Capital Projects: The process owner creates projects to implement the capital plan. Project and associated plan item status is tracked for all approved plan items, from the approval stage to completion.
   • Revise Best Practices: The process owner works with all stakeholders and implementers to continuously improve best practices for capital funding and planning. Continuous improvement of capital planning and sustainability reporting requirements may affect data requirements and processes for capital funding.
   
   
4. Stakeholder Reporting � consisting of the following steps for performance management, portfolio management, capital planning, and sustainability reporting to keep all stakeholders informed of progress towards performance improvement goals.
   • Define Internal Stakeholder Reports and Schedule: The process owner works with implementers to define reports for internal stakeholders. These reports are typically tied to internal reporting schedules for supervisors, outsourcing partners, management and board governance. Reporting requirements define, in part, recordkeeping and data requirements.
   • Define External Stakeholder Reports and Schedule: The process owner works with implementers to define reports for external stakeholders. These performance reports are typically tied to compliance reporting schedules for regulatory, political, insurance, financing, and tax stakeholders, as well as filing a energy, emissions or security plan or preparing an annual sustainability report for a facility.
   • Generate and Distribute Stakeholder Report: The reports are generated per the defined schedule, such as weekly, monthly, quarterly, and annually. The portfolio management and capital planning processes could trigger an event to generate a stakeholder report, such as performing a facility security and assessment which updates a facility�s risk score. Likewise, monitoring of the financial, energy, and security performance management could trigger an event to generate a stakeholder report, such as a non-compliance event that is identified through monitoring.
   • Revise Best Practices: The process owner works with implementers to revise sustainable governance reporting best practices, which typically involves re-defining the reports and the reporting schedule.

HCI Solution Implementation

Once business processes are defined, an organization can then turn its attention to specifying sustainable facility governance solution requirements. A sustainable facility governance technology platform, such as HCI Solutions, LLC�s iPlan� Sustainable Facility Governance Solution provides the foundation to implement specific functionality and data integration services to support the business processes. A typical implementation is shown in the following diagram.

Sustainable Facility Governance: Getting Ready for Change

Chances are an organization already has pieces of the sustainable facility governance puzzle already in place. The first step is to identify where the gaps are and, most importantly, to honestly assess the organization�s will and desire to move to a performance management culture if it currently does not exist. Management and systems consultants, like HCI Solutions, LLC, can assist an organization in this initial scoping exercise to best determine the implementation path for an organization. Once a path is determined and committed to, persistence, determination, and expertise will determine success in improving the performance of a facility portfolio. While expertise can be hired, no change management project can be a success without a few key process owners working inside the organization to continuously improve through embracing change.

To learn more about HCI�s solutions please visit www.hcisystems.com

For More Information Contact:
HCI Solutions, LLC
Jim Kavanagh, President & CEO
207.828.7900
[email protected]