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1
INTRODUCTION
The nation's public buildings--government administration
buildings, health care facilities, schools, correctional facilities,
and a variety of other elements of public infrastructure--are crit-
ical to the nation's high quality of life and productive environ-
ment. These facilities are public assets that have been acquired
through the investment of public tax dollars over the years. Pub-
lic officials are the stewards of these assets, and their decisions
about how these facilities are used, operated, maintained, retired,
or replaced can have far-reaching consequences for the public.
These public assets are substantial. Department of Defense
buildings alone are estimated to be worth more than $500 billion.
Replacement cost of the nation's S8,021 public school buildings
might exceed $422 billion. It would cost more than $300 billion
to replace the physical structure of Americans institutions of
higher learning (public and private). State and local govern-
ment building replacement value is estimated to be $400 billion.)
~ There is no compiled estimate of current replacement value
for all publicly owned buildings. The committee drew these- ex-
amples primarily from recently published reports and notes the
variety of methods used to determine replacement costs: insured
values, appraised values, unit costs to reconstruct per square foot
of facility space. Department of Defense estimates are reported
in Renewing the Built Environment: Real Pronertv Maintenance
Activities, Department of Defense Report to Congress, 1989. Re-
placement value of public school buildings is estimated in Wolves
at the Schoolhouse Doors Education Writers Associations 1989.
page 4. College and university estimates are stated in The Decav-
ine American Camous: A Ticking Time Bomb, Association of
Physical Plant Administrators of Universities and Colleges, 1989,
page 21. State and local government building replacement values
were calculated by Building Research Board staff based on an
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In addition, water supply, waste disposal, transportation, and
other physical infrastructure systems, an investment worth many
billions of dollars, are beyond the scope of this report but play a
similarly critical national role.
Ha,
It is unfortunate but inevitable that the construction of new
facilities attracts far greater attention than the maintenance and
repair of existing ones. While facilities are designed to provide
service over long periods of time, the substantial costs of con-
struction are addressed all at once in public debate and manage-
ment decision. In contrast, the yearly costs of maintenance seem
small, although over the course of a facility's service life they
generally total much more than the initial costs of construction.
The commissioning and occupancy of a new facility are a news-
worthy event that attracts public attention, but the ongoing work
of maintenance and repair receives little notice except when
failures occur that affect the ability of a facility's users to
perform their work.
At local levels particularly, few government entities recognize
their buildings as more than a "trapping incidental to the provi-
sion of public services, to be maintained at the lowest possible
cost" (ICMA, 1989~. This view pervades all levels of government.
Public agency managers and elected officials, faced with the
constant challenge of balancing competing public priorities and
limited fiscal resources, often find it easy to neglect the main-
tenance and repair of public buildings, and not only because new
construction or other activities have greater public interest. The
cumulative effects of wear on a facility are slow to become ap-
parent and only infrequently disrupt a facility's users. Managers
of facilities seldom have adequate information to predict when
problems will occur if maintenance efforts are deferred. These
managers are often poorly equipped to argue persuasively the
need for steady continuing commitment to maintenance. Under-
funding of maintenance and repair is such a prevalent practice
in the public sector that it has become in many agencies a de
facto policy that each year compounds the problem as the back-
log of deficiencies grows.
Neglect of maintenance can nevertheless affect public health
and safety, reduce productivity of public employees, and cause
long-term financial losses as buildings wear out prematurely and
must be replaced. Decisions to neglect maintenance, whether
made intentionally or through ignorance, violate the public trust
and constitute a mismanagement of public funds. In those cases
estimated inventory of 4 billion square feet at an average
replacement cost of $100 per square foot. All estimates exclude
costs-of land and major infrastructure.
2
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where political expediency motivates the decision, it is not too
harsh to term neglect of maintenance a form of embezzlement of
public funds, a wasting of the nation's assets.
· . · .
~ he purpose or this report Is to provide public decision
makers and facility managers guidance that may-help to over-
come this persistent problem of underfunding of maintenance
and repair. The central principle of this guidance is full
recognition and firm commitment to the cost of ownership of
public facilities, the stream of costs incurred by the decision to
acquire a new facility. In the absence of an adequate statistical
basis for recommendations, the authors of this report have ap-
plied their extensive experience and judgment to propose a
benchmark for budgeting for the maintenance and repair com-
ponent of this cost of ownership. Adequate funding is not the
only element of effective maintenance and repair, but it is so
critical that no maintenance and repair program can be success-
ful for long without it.
SOURCE OF THIS STUDY
Concern about maintenance and repair of Public buildings led
the agencies of the Federal Construction Council (FCC)2 to ask
the Building Research Board (BRB) of the National Research
Council to undertake a broad review of the operation, mainte-
nance, and repair activities of federal facilities. The FCC asked
specifically for advice on how federal agencies might (1) predict
the impact of decisions regarding construction materials and
building systems on future operation, maintenance, and repair
costs; (2) improve their methods of determining professional
staffing requirements for field-level facilities management; (3)
improve their procedures for programming and budgeting for
operation, maintenance, and repair work; and (4) make effective
use of diagnostic techniques for determining the need for main-
tenance and repair.
The concern about maintenance and repair is not limited to
federal agencies. State and local governments are similarly
confronted with problems of inadequate maintenance and repair
of their facilities. A number of these agencies formally
, ~
~_
2 Fourteen federal government agencies with major interests
in building and facilities research, construction, operation, and
maintenance comprise the FCC. These agencies have a combined
annual construction budget that typically exceeds $12 billion.
3
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articulated their concerns through the BRB,s Public Facilities
Council (PFC), a group of state and local government agencies
organized to identify and share technical needs for buildings at
state and local levels. A statement endorsed by the BRB,s PFC
sponsors in 1987 urged the undertaking of a research project that
would "lead to a determination of the percentage of building re-
placement cost that should be reinvested annually in building
maintenance in order to protect the original investment, assure
structural integrity, assure continuous usage within designed
capacity, and reduce the potential for system breakdown or ~nca-
pacitation."3 The PFC thus became cosponsors of the study that
led to this report.
. · ~. ~
THE STUDY COMMITTEE AND ITS WORK
.
The BRB selected a committee of professionals with broad ex-
pertise and extensive experience to respond to the FCC and PFC
request.4 This committee reviewed available information; heard
testimony by professional staff of federal, state, and local
government agencies: and debated at length the key issues and
nstltutlonal challenges 1nnerent in its charge.
The committee decided early in its deliberations that the
problem of persistent underfunding of maintenance and repair
in public buildings is of such overriding importance that the four
tasks given in the committee's statement of work should be recast.
The committee concluded that prediction of the impacts of deci-
sions about building materials and systems and advice on opera-
tion and maintenance staffing requirements--legitimate concerns
of substantial importance--can be considered only within a con-
text of an integrated maintenance and repair management pro
~ ~ · - · . . · · . .
_
gram and that such a program is impossible without adequate
and reliable funding.
The committee therefore focused on the latter two tasks as a
means to combat the institutional incentives to underfund--that
is, improving maintenance and repair budgeting procedures and
using diagnostic techniques to determine the need for main-
tenance and repair. The committee undertook to propose means
to demonstrate the need for an effective maintenance and repair
3 From "Proposal for Public Facilities Councils submitted to
the Public Facilities Council on June 5, 1986, by Mr. Harry
Stevens, then director of Design and Construction for the State
of New York.
4 Appendix A presents biographical descriptions of com-
mittee members.
4
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management effort and to describe the impact of underfunding;
to define elements of an effective maintenance and repair-
management effort, including condition assessment and resource
management; and to propose tools for facilities managers to use
in justifying resource requirements for maintenance and repair
of public buildings.
WORK YET TO BE DONE
It was recognized at~the start that time and available-re-
sources would not permit the committee to deal-adequately with
all aspects of the problems of maintenance and repair. Under a
cooperative agreement between the National Research Council
and the American Public Works Association (APWA), an arrange-
ment was made to have active APWA liaison participation on the
committee in order to bring to the committee the views and
experiences of APWA's 850 member jurisdictions that comprise
the association's Institute for Buildings and Grounds. The
APWA's Research Foundation subsequently approved a research
project to be sponsored and supported by APWA members to use
the results of the BRB committee's work to develop tools, tech-
niques, and procedures for use by facility managers at state and
local levels to forecast maintenance and repair needs. The
Research Foundation plans to develop training materials to make
these management aids accessible to a broad audience through an
APWA-sponsored workshop series. (See Appendix B.)
Other work will be needed as well, to develop applications,
guidelines, education programs, and reliable measures of the
influence of maintenance on the government and private users of
facilities. This committee's work is at best an important step
toward overcoming a serious problem.
KEY DEFINITIONS
The committee found in its early deliberations that such
commonly used terms as operation and maintenance (O&M) or
maintenance and repair (M&R) are often defined and measured
quite differently by different agencies. The committee appointed
a subcommittee to review public and private sector definitions of
such key terms and to develop working definitions for the
s
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committee's use.5 The following definitions are meant to be
simple while conveying important principles that the committee
wishes to emphasize in this report:
Cost of ownership of a building is the total of all expendi-
tures an owner will make over the course of the building's service
lifetime. How these expenditures are measured and reported may
vary from owner to owner, depending on such factors as whether
the owner is a private individual, business enterprise, or a public
agency as well as relevant accounting procedures and current tax
laws. Regardless of the specific accounting methods, the cost of
ownership will generally include not only planning, design, and
construction but also maintenance, repairs, replacements, altera-
tions, and normal operations such as heating, cooling, and light-
ing as well as ultimate disposal. A building owner should recog-
nize at the outset that the cost of ownership is not fully paid
when construction is complete or when a building is purchased
but instead continues for many years.- Failure to recognize this
can lead to short-sighted decisions that increase the overall cost
of ownership.
A building's service lifetime is the period of years over which
the building provides shelter and an environment supportive of
the activities it houses. Buildings can have lifetimes that last
centuries, although parts of the building may change greatly dur-
ing that period. Builcling owners, designers, and managers
generally make decisions about maintenance, repairs, operations,
and alterations with an assumed design service life in mind,
typically between 10 and 30 years.
Maintenance is the upkeep of property and equipment, work
necessary to realize the originally anticipated useful life of a
fixed asset. Maintenance includes periodic or occasional inspec-
tion; adjustment, lubrication, and cleaning (nonjanitorial) of
equipment; replacement of parts; painting; resurfacing; and other
actions to assure continuing service and to prevent breakdown.
Maintenance does not prolong the design service life of the
property or equipment, nor does it add to the asset's value.
5 The subcommittee consulted the following sources to de-
velop its definitions, which the full committee accepted: (1)
Webster's Seventh Collegiate DictionarY, (2) DuPont's Cost
Accounting Procedures Manuals (3) OMB Circular A-87, (4) ASTM
Standard Terminolo~v of Building Constructions' (5) Public
Health Service Facilities Manual. and (6) Indian Health Service
Facilities Manual.
6
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However, lack of maintenance can reduce an asset's value by
leading to equipment breakdown, premature failure of a build-
ing's subsystems, and shortening of the asset's useful service
lifetime.
Renair is work to restore damaged or worn-out property to a
normal operating condition. Repairs are curative, while mainte-
nance is preventative.
Replacement of an item that is part of the permanent invest-
ment of plant and equipment is an exchange or substitution of
one fixed asset for another having the capacity to perform the
same function. Replacement may arise from obsolescence, cumu-
lative effect of wear and tear throughout the anticipated service
lifetime, premature service failure, or destruction through ex-
posure to fire or other hazard. In contrast to repair, replace-
ment generally involves a complete identifiable item of invest-
ment (i.e., a major building component or subsystem). When
major building subsystems fail, a building owner may sometimes
have a choice of repair or replacement of that subsystem. Re-
placement is typically funded in maintenance and repair budgets.
Deficiencies occur when maintenance and repair tasks are not
performed in a timely manner. Deficiencies may or may not
have immediately observable physical consequences, but when
allowed to accumulate uncorrected, they inevitably lead to
deterioration of performance, loss of asset value, or both. An
accumulation of such uncorrected or deferred deficiencies is a
backlog that represents a liability (in both physical and financial
terms) for a building. When a backlog is permitted to exist from
year to year, some deficiencies in it may threaten public health
or safety or result in major long-term economic losses. Such
deficiencies are critical and require urgent attention. Until
deficiencies reach this state of urgency, building owners and the
public at large may fail to recognize or may choose to ignore the
problem, but it remains a problem nevertheless, a problem of
growing proportions.
Onerations encompass those activities related to a building's
normal performance of the functions for which it is used. The
costs of utilities, janitorial services, window cleaning, rodent and
pest control, and waste management are generally included with-
in the scope of operations and are not maintenance.
Alterations are work performed to change the interior
arrangements or other physical characteristics of an existing
facility or installed equipment so that it can be used more
effectively for its currently designated purpose or adapted to a
new use. Alterations may include work referred to as improve-
ment, conversion, remodeling, and modernization but are not
maintenance.
7
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In principle, any building owner must establish an annual
maintenance and reDair (M&R) budaet.6 An annual maintenance
and repair budget will in general be the sum of two components:
(1) routine expenditures for maintenance, repairs, and planned
replacement and (2) expenditures for correction of deferred
deficiencies (i.e., backlog reduction). An M&R budget should not
include operations or alterations expenditures.
The scale and scope of routine expenditures, the first com-
ponent, are related to the physical nature of the inventory of
buildings and building uses, including design, age, intensity of
use, and climate of the region where a building is located. These
factors influence the rate at which a building deteriorates
through normal aging and use.
- The second component, backlog reduction, is related to the
level of funding available for routine maintenance and repair
and the effectiveness of the owner's maintenance efforts. If
maintenance and repair needs that should be addressed on an
ongoing basis are neglected, the backlog of deferred deficiencies
grows. When physical consequences of deferred deficiencies lead
to more serious repair or replacement needs than might otherwise
have been anticipated, the rate of backlog growth may accelerate.
Taken together, M&R expenses are an important element of
the costs of ownership. Many factors--financial, political, and
social as well as technical--influence a building owner's assess-
ment of what should be done to control the costs of ownership
while assuring that the facilities provide the shelter and services
for which they were designed.
Reference
International City Management Association (ICMA), MIS
Recort, Washington, D.C., April 1989.
6 In practice, small-scale property owners or managers may
not have a formal budget or may fail even to anticipate the need
for M&R expenditures. Public agencies and experienced private
property owners will establish formal budgets for such
expenditures.
8
Representative terms from entire chapter:
service lifetime
