Evolving Your Flywheel for Deferred Maintenance

Evolving Your
Flywheel for Deferred
Maintenance

July 2022

Backlogs in deferred THE CHALLENGE OF DEFERRED MAINTENANCE – MAKING THE
maintenance account INVISIBLE, VISIBLE
for billions of Facility managers are challenged with managing limited financial
dollars globally resources while addressing the constant depreciation of their assets.
Annual funding for general maintenance, preventative maintenance,
and renewal and replacement is often insufficient to cover an
organization’s yearly maintenance needs. These annual maintenance
costs are typically between 2%-3% of the current replacement value
of the assets.

Insufficient maintenance funding often results in postponing repairs or
renewal and replacement of assets that have exceeded their end-of-life.
This practice, known as “deferring” maintenance, contributes to significant
balance sheet liabilities. There are many reasons for this, not the least
of which is that many deferred maintenance needs are “invisible” or
“out of sight, out of mind.” Deferred maintenance issues are not easily
understood by leadership and stakeholders in an organization.

Deferred maintenance backlogs account for billions of dollars globally
and frequently cost millions of dollars for any organization that owns
and manages a portfolio of facilities.

THE FACILITY MANAGER’S ROLE IN DEFERRED
MAINTENANCE MANAGEMENT
Unfortunately, facility managers are often misrepresented as glorified
maintenance technicians, which could not be further from the truth.
Facility managers are responsible for managing the largest financial
assets in an organization’s portfolio, requiring careful planning of
finances, balancing limited resources, gaining organizational support,
and systematic decision-making.

The solution to helping an organization proactively manage deferred
maintenance is to provide the data and tools necessary to support
the best fiscal decisions in balance with the organization’s needs.
Often, deferred maintenance can be narrowly viewed as a “facilities
management” issue, when, in fact, it impacts every significant
constituency. It requires significant engagement from leadership as any
other critical business function.

Organizations may not be willing to jump on board immediately,
especially if the out of sight, out of mind approach has historically
masked the severity of the condition. Facility management
professionals will need to engage the institution in a continual process
of adaptive change and new ways of thinking.

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...the flywheel moves THE FLYWHEEL
faster, delivers results, For those unfamiliar with “The Flywheel” concept, it’s a very useful
and continues to analogy for implementing the business strategy described in Jim
build momentum... Collins’ book “Good to Great.” It explains how driving a new strategy
is like pushing a huge flywheel into motion. With great exertion of
will, leaders are able to deliver results to get the flywheel moving. If
the underlying architecture of the flywheel is accurate and executed
with discipline, the flywheel moves faster, delivers results, and builds
momentum that lasts decades.

DEVELOPING THE “FLYWHEEL” FOR DEFERRED MAINTENANCE
The following flywheel represents one way to evolve deferred
maintenance into a broader corrective maintenance program. Corrective
maintenance represents the actions taken to address an organization’s
deferred maintenance. The goal is to embed corrective maintenance
planning into master planning efforts, cementing it as an institutional
discipline that becomes the “new normal” for facilities planning.

Deferred Maintenance Flywheel

GATHER DATA

1

6CORRECTIVE RATED FACILITIES PLA 2 EXECUTE VISIBLE
RESULTS
MAINTENANCE INTEG Corrective NNING
An Institutional Discipline Maintenance

Capital INTEGR
Projects

NING Facilities
Master Plan

5 PLAN ATED 3

FACILITIES GAIN INSTITUTIONAL
COMMITMENT
INTEGRATED DEFERRED
MAINTENANCE

With Capital Planning

4

ADVANCE
FUNDING LEVELS

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Data collection is like 1. Gather & Prioritize Data – This is where “The Flywheel” begins
turning on the lights; Gathering accurate data is critical to gaining institutional support for
it creates a clear and deferred maintenance initiatives. Data collection is like turning on
visible picture for the lights; it creates a clear and visible picture for the current state
the current state that that helps leaders make informed decisions. In addition to accuracy,
helps leaders make existing facilities’ data is often insufficient as well. Systems are also
informed decisions. necessary to continuously gathering data on deferred maintenance and
communicate this to the organization.
CONDITION INDEX =
COST OF REPAIRS This system should include a detailed database of facilities and assets
with the following information:
CURRENT REPLACEMENT VALUE
• age of facilities and building components
• components that need to be managed
• facility utilization
• current replacement values
• energy consumption

Facility condition assessments are an excellent tool for gathering the
information above, and should be performed regularly to inform
deferred maintenance projects for all building components. This allows
each building and system to be classified according to its condition
index. The condition index is defined as the ratio of the cost
of repairs of the building or system divided by its current
replacement value.

Once the condition assessment data has been gathered, a system
should be created to continuously update the data for:

• projects completed
• removal or additions of facilities to the portfolio
• new projects

Program Condition Audit - Budget Allocation by System

This system for keeping the data updated is critical to the momentum
of the flywheel, since old or inaccurate data makes it difficult to make
ongoing, informed decisions and justify funding.

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Visible results will objectively to justify annual funding requests. The prioritization method
encourage the program should match the facility condition assessment criteria listed above.
to perpetuate and for
future funding levels to Communicating data in a compelling way to every level of the
increase, helping the organization is critical in gaining financial commitment and support;
flywheel turn. this is precisely what makes the first step of “The Flywheel” turn.
Executive-level communication should include the total corrective
backlog for the institution and year-over-year budgetary projections
in a simple, visual, and concise report. Mid-level reporting, which
is typically utilized by finance departments, facility planners, and
managers, should include corrective needs by building, by system,
and by priority. Base-level reporting should include specific projects
to be executed and would inform day-to-day work efforts for facilities
management and maintenance technicians.

2. Execute Visible Results
Even when data is presented in a compelling, prioritized, and
understandable way, the next steps may seem overwhelming. Again,
the goal of presenting data is to help the institution take actionable
steps toward developing annual funding mechanisms to address
deferred maintenance. However, once presented with the deferred
maintenance data, an institution may not be willing to open their
checkbook completely. In this case, it’s important to start “small”
because any funding is better than no funding, and it’s incumbent
upon the management team to make this funding count.

A small amount of funding against a significant deferred-maintenance
backlog may not appear to be of any consequence. However, when
implementing a new program with limited funding, executing projects
with visible results is a good strategy.

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It’s important to Develop corporate communication on the corrective maintenance
note that funding program and the tasks that will be completed, ensuring that there are
for corrective visible results to the environment, such as landscaping, walkways, or
maintenance finishes, or simply power washing high-traffic areas. Regardless of the
should be protected improvement, ensure that the corrective maintenance program receives
for corrective recognition for these activities.
maintenance projects.
Visible results will encourage future funding levels, allow the program
to grow, and keep the flywheel turning.

3. Gain Institutional Commitment
Demonstrating responsible use of corrective maintenance dollars will
galvanize institutional commitment for growing budgets and annual
commitments. Once a corrective maintenance program exists, continue
to provide the data metrics at key leadership meetings to institutionalize
it as the “new normal.” In addition to data and quantitative metrics,
sharing stories, anecdotes, and images illustrating the improvements’
impact on people’s experiences increase institutional commitment.

4. Advance Funding Levels
After obtaining corrective maintenance funding and gaining
institutional commitment, advancing annual funding levels becomes
the next challenge.

As with any organization, a baseline budgeting approach should be
considered, with an assumption that funding from previous years
remains the status quo. Based on the needs identified in the capitalized
maintenance program, the case for increased annual funding
should be clear.

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It will be incumbent It’s important to note that funding for corrective maintenance should be
upon the managers protected for corrective maintenance projects. Using the finite resources
of this program allocated to corrective maintenance for other facility needs, such as
to perpetuate its improvements aligned with operational changes, will undermine the
presence and program. Most significantly, it may impact future funding, which can
importance to slow or completely stop the flywheel. The maintenance team must
the institution. have the data prepared to illustrate the quantitative, qualitative, and
financial impact this will have on current assets.

5. Integrate Deferred Maintenance with Capital Planning
The corrective maintenance program should go beyond funding
deferred maintenance. It should be a tool to help inform other
planning initiatives. Whether the organization is developing a facilities
master plan or reviewing needs for future capital projects, the deferred
maintenance data should be an integral piece of this puzzle.

For example, corrective maintenance planning may help an institution
decide to renovate a facility (and to what extent) or completely
abandon/replace an existing facility. If this corrective maintenance
data is missing, an institution is not making fully informed decisions
regarding the future needs for its facilities.

RATED FACILITIES PLA

INTEG Corrective NNING
Maintenance

Capital Facilities INTEGR
Projects Master Plan

NING

PLAN ATED

FACILITIES

6. Corrective Maintenance as an Institutional Discipline
With year-over-year funding established and the program fully
integrated with institutional planning efforts, corrective maintenance
planning should be an institutional discipline. It will be incumbent
upon the managers of this program to perpetuate its presence and
importance to the institution.

Tracking corrective action against annual funding levels will help
communicate its continued value to the broader organization.
Whether the program has been in place five years or 30 years, it is the
facility manager’s responsibility to ensure it is continually visible and
reinforced. As the flywheel suggests, corrective maintenance planning
is simply the way we do business; it is the “new normal.”

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Annual funding CASE STUDY
increased and
deferred maintenance located in De Pere, Wisconsin, was facing significant challenges from
precipitously fell as deferred maintenance. This included backlogs exceeding tens of
new capital projects millions of dollars during a struggling economy.
came on board.
Gathering the data to support their business case, we developed the
first corrective maintenance program for this institution. Initial funding
for the program was $100,000; this was not enough investment to
make much of a dent in the institution’s maintenance backlog. Rather
than be discouraged, we saw this as an opportunity to show the
institution a new and better way to steward their capital assets. We
used the initial funding to direct labor crews to give the entire campus
a “spit-shine.” They dug up landscaping with shovels and painted beat-
up trims and doors; all activities contributed to a very visible marketing
campaign with their sweat and determination.

The program had staying power. Annual funding increased and
deferred maintenance precipitously fell as new capital projects came
on board.

The corrective maintenance program became their “way of doing
business,” a new normal that continues on campus more than 30 years
later. The corrective maintenance program is a dedicated source of
funding that is so well-defined, it’s even used to support new capital
project funding where deferred maintenance will be positively affected.
The St. Norbert College story serves as an excellent model for other
institutions to follow. It’s a great example of how one institution evolved
its deferred maintenance “flywheel” to have a positive and lasting
impact for three decades. The genesis of their corrective maintenance
program began with gathering data and executing initial visible results,

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Corrective which gained commitment and led to advanced funding levels. This
maintenance is a started the flywheel turning; once the institution began integrating
natural extension of it into capital planning, it became an institutional discipline that will
our purpose because continue to have a positive and lasting impact for decades to come.
it ensures our clients’
capital assets thrive EUA BACKGROUND
long after we EUA is a purpose-driven, fully integrated architecture, engineering and
design them. design firm. We partner with organizations that see value in starting
with “why” and share our belief that their environment is a competitive
advantage to serve their purpose, care for their employees and deliver
an authentic customer experience.

HOW DOES CORRECTIVE MAINTENANCE PLANNING FIT IN?
At EUA, we believe we exist to give purpose the space to thrive.
Thrive means to flourish; it means to grow or develop in a vigorous
way as the result of a particularly favorable environment. Corrective
maintenance is a natural extension of our purpose because it
ensures our clients’ capital assets thrive long after we design them.
Our integrated approach connects our clients’ capital assets to their
business strategy by enhancing what they already have and bringing
something new to life. The result is a transformational outcome.

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