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  • Writer's picturePaul Torkan, P.Eng.

Lifecycle Planning: A Facility Manager's Approach

Updated: May 8, 2019

Within the realm of facility management (FM), lifecycle plans should formulate an optimal solution by considering all costs, risks, and performance indicators for installing, operating, maintaining, upgrading, replacing, and disposing of a physical asset(s).

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The lifecycle of an asset is defined as the period of time from installation to retirement and when the asset reaches end of its lifecycle, the asset is considered obsolete, expired, or no longer functional. Planning an asset’s lifecycle is about setting decision priorities by fully understanding the current condition of an asset and its required performance.

Lifecycle information is often used to develop and execute an informed financial plan by interconnecting the asset condition & historical data to forecast the remaining life expectancy of a physical asset. Physical asset may be a building, a component, a service plant, an equipment, or a system that under goes wear and tear during its normal use period. Activities surrounding lifecycle planning are important to organizations as they facilitate long-term decision-making that reduces cost, maximizes the use of physical assets, and reduces the risk profile.

Performance Indicator

While all equipment and physical assets can be evaluated independently by a facility manager, a Facility Condition Index (FCI) is widely used to methodically evaluate the current condition of a facility and its components against other facilities. Represented as a number between 0.00 to 1.00, FCI is a fraction of the current cost of maintenance (Deferred Maintenance) against the current replacement value of the same asset. The equation is simple, but requires live collection of accurate data and figures for FCI to be meaningful:

Various FCIs

Excellent Condition: ≤ 0.05

Fair Condition: 0.06–0.10

Poor Condition: 0.11–0.30

Critical Condition: ≥ 0.31

Companies have been using various capital & lifecycle planning software to keep track of their facility condition, however, the accuracy of the data has been subjective in some cases. Due to a number of factors, the data used for FCI calculation could be inaccurate. For example, the data may have been provided by a biased contractor aiming at increased revenue. Facility administrators may have lacked experience and could be using rough estimates or outdated information. A basic maintenance management structure must be in place in order to collect accurate information against each asset so capital and lifecycle funds can be planned reliably.

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Reliable Lifecycle Planning

Lifecycle planning heavily relies on the collection of the right information regarding the asset/building condition by facility administrators and contractors. Without reliable information facility administrators will have difficulty of predicting the asset’s remaining life expectancy, its cost of repair/overhaul, and its cost of replacement. Human error and the varying methods of data collection are the main contributing factors an inaccurate FCI, and it is for this reason FCI should only be used subjectively as a relative figure against other assets of similar nature.

There are a few fundamental steps that should be followed by a facility administrator to ensure asset history and numbers associated with repair, replacement and upgrade are up-to-date and non-subjective:

1- Ensure that you have a robust information management system;

A central document repository will need to be developed for historical data storage from various sources such as CMMS, energy dashboard, reports, quotation, etc. The designer of this system should envision where, how and by whom the data will be used in the long-term and build the system’s structure accordingly. This is analogous to a simple filing cabinet system that has adequate drawers, each containing its own, appropriate sub-filing system.

2- Fully understand your asset condition at any time;

Facility administrators need to have their hands on the pulse of their facility, and should know at any time which section of the building or which equipment needs repair or replacement. It is important to monitor the trends for mean time between failures and annual wear & tear of the asset. This can be achieved by:

  • Surveying the site condition and plant performance.

  • Obtaining contractor reports on obsolescence or wear and tear.

  • Analysis of ongoing maintenance work and equipment reliability.

  • Studying Mean Time Between Failures (MTBF) from work order systems.

  • Predicting an asset’s behaviour using time- or knowledge-based methods.

3- Review alternatives to replacement and build a scope of work;

It is always favourable to sweat the assets, or in other words, replace a whole asset only when it is absolutely necessary. Innovative facility managers may rejuvenate an asset drastically by replacing an internal component or section. For example, you could restore site functionality by replacing the flooring of only high traffic areas and the building could stay updated at minimum cost. If equipment consists of a housing with many internal electrical, mechanical and electronic components and end devices, then component replacement makes sense.

Based on your decision to either partially or fully replace/upgrade, you will need to develop the scope of work to include the activities of all parties and the effects on other assets, equipment, or systems.

4- Obtain multiple quotes for restoration, upgrade, or replacement;

Once a few scenarios have been determined, it is time to obtain a price estimate for an overhaul or partial replacement, upgrade, or full replacement. This estimate should not only include the cost of contractors but should also consider the cost of the internal team, required parts, and potential disruption to the operation.

5- Consider the effect of energy consumption;

An asset may either start losing energy efficiency or a new product may emerge with a much lower energy requirement. Energy consumption data, using adequate metering, will need to be available to perform alternative analysis for specific equipment or a space in a building. The cost of energy inefficiency could justify for an asset upgrade/replacement.

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6- Calculate the current cost of asset replacement including associated upgrades.

The cost of replacement of an asset, building fabric, or equipment is linked to a market value based on a national price list. The national price list should be verified according to the type of usage, nature, and location of the asset. When calculating the cost of replacement, consider the compatibility of the new asset with associated equipment, systems, software, and licenses. Your newly purchased asset needs to be compatible with the existing environment.

Lifecycle of Electronics

The rapid advancement of technology has changed the way facility administrators plan their lifecycle funds for electronic assets. When your digitalized system contains a number of electronic components, the only viable option is to replace components as they fail or when the unit is determined to be obsolete. Component replacements may work until reaching a point where components are no longer compatible or cannot be upgraded. At that point, the whole system will need to be replaced and facility administrators have a limited control over this cost. Having a redundant system has an advantage and could increase your bandwidth, increase reliability, and reduce downtime during maintenance and upgrades, however the lifecycle cost will double.

The more integrated your digitalized systems are, more difficult and costly it will be to plan for their lifecycle replacement. Original equipment manufacturers (OEMs) tend to only use their sales data to average out the lifecycle for each component and provide notification two years in advance. To plan lifecycle replacement for integrated digital equipment, date stamping of hardware along with an adequate expertise in electronics will go a long away in your facility.

The Bottom Line

If handled methodically with the right information, planning for lifecycle replacements can be successfully achieved using data collected on physical assets and building condition surveys. The visibility of data will help rate the performance of maintenance departments and will allow for the development of strategies for sweating the asset. It will also assist with decisions to repair, upgrade or replace a physical asset.

The Facility Condition Index (FCI) can be used as a relative measure against other sites of similar nature, but the information used to calculate the FCI will need to be reliable. Collection of accurate data will initially require construction of a framework for gathering and storing data by qualified individuals, then using the appropriate software to store, manage, and share data with those who need it when they need it.

The six immediate steps listed above should be followed by facility administrators to ensure that their information for lifecycle planning is correct and their FCI is as accurate as possible to ensure proper lifecycle planning of their physical assets.

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