1. Overview of the Selected Industry Sector

Strategies for IT Adoption in Facility Management Industry.

(Final)

JAE MIN LEE 1. Overview of the selected Industry Sector

1.1 Scale of a industry sector Construction industry is one of the biggest industrial sectors in most of country. Especially in korea, construction industry charge 17% in GDP. It’s total cost is 50 billion dollars in 1996. But, In the view of life cycle cost, the building construction cost is not a main part of it’s total cost.

As like above Figure, Construction cost is concentrated in short time, but management cost has continued from construction to destruction. So, total cost of building management is 4 or 5 times more than construction cost. Generally The percentage of construction cost is 16~18% , and Management cost is 80% in Total cost. Although, Facility management market is shared long time than construction market, it is not a small business sector because of the volume of construction industry.

2 1.2 The costs in LCC of building view. According to the army corp. of engineering, The total LCC of building can be broken down like following. “ - DATA FROM THE ARMY CORP OF ENGINEERING - Initial Costs: The cost of design, construction, and equipment of facility is included. And, all planning, engineering and architectural fees, building and utility construction, equipment purchases and installation, site preparation and project administration cost is added. Finance Costs: It means the cost of interest for bellowing money. Program Costs: the personnel or staffing costs, transportation costs, warehousing and distribution costs, training cost and the required for the operation of the facility are included. Operational Costs: Operational costs are directly related to the operation of the facility itself and it also include custodial care, utilities, security, and employee services. Maintenance and Repair Costs: It means the cost of regularly scheduled preventative maintenance and emergency repairs. Energy Costs: This includes the cost of all services for heating, cooling, and power delivered to the building including gas, oil, electric, steam, chilled water etc. Environmental Costs: Environmental costs include the cost associated with waste management, regulatory compliance, pollution prevention, and site remediation. Replacement Costs: This includes the cost of replacing those major building system or components which have useful lives shorter than the original facility. Municipal Service and Other Costs: This includes the cost paid to the local municipality to reimburse them for providing police, fire, and other services. It also includes other identifiable costs not covered elsewhere such as insurance.

Residual Value and Salvage Value: Residual or salvage value is the value at the end of the study period. Salvage value may be based upon the remaining un- depreciated useful life of the initial building and subsequent component replacements, or it may reflect the projected market value at the end of the study period. Residual value may be negative if disposal costs are significant. “

As we see above, Facility management are related all of the cost except for initial cost. So, There are a lot of possibility to reduce the total cost by facility management.

3 Figure 2. Relation between The costs and FM

2. The Building Entities and Activities in Facility Management With the checking list used actually for FM, we can find out what kind of building entities and activities are. By identifying the building Entities and activities, we can know more clearly the structure of FM.

2.1 The Physical Building Entities for FM. Fire Protection : Fire Alarm, Sprinkler system, Fire Water Pumps, Smoke Control system, Fire door. Heating, Ventilation, and Air Conditioning: Air Handling Units, Re- circulating Pumps, Chillers, Boilers, Air Distribution Devices, Duct System, Controls, Fuel Oil Dispensing system for boiler, Fuel Storage Tanks for Boilers, Heat Transfer Devices, Cooling Towers, Chilled Water Distribution system, Steam Distribution system. Plumbing : Domestic Hot and Cold Water system, Sanitary Drain System, Storm Drain system, Food Service Equipment, Cart Washes, Waste Disposal system, Water Fountains. Vertical and Horizontal Transport : Elevators, Dumb Waiters, Escalators, Pneumatic Tube system, Automatic Box Conveyors,. Electrical : Emergency Generators, Automatic Doors, Essential Electrical Distribution system, Normal Power Electrical Distribution, Fuel Oil Dispensing system for Emergency generators, Fuel Storage Tanks for Emergency generators. Structural : Roof, Fire Proofing, Exterior wall, Exterior Door, Windows, Loading Ramps/Platforms.

4 2.2 The Physical Building Entities for FM 2.2.1 Equipment maintance checking - Were Mechanical / Electrical and Equipment areas clean and uncluttered? - Were the proper spill control/ hazard control materials found per the hazards used or as required by the dept. safety SOP? - Were fire extinguishers, in equipment spaces, inspected on a monthly basis? - Were air handling units’ filters clean? - Was all duct work properly insulated, secured and free of leaks? - Were all temperature and pressure gauges operational? - Were all pumps and piping properly secured and free of leaks? 2.2.2 Interior Appearance and maintains checking - Was it easy to find one’s way around the facility utilizing the current way-finding system? - Were floor finishes is good condition? - Were interior surface in good condition? - Were elevator in good condition with no sign that outages are frequent? - Were all fire doors in good condition and operating properly? - Were all exit signs lit and emergency lights in proper working order? - Were all lighting fixtures and lamps clean and in proper working order? - Were all ceiling tiles properly installed and in good condition? - Were wall bumper guards securely fasten and at the correct elevation, preventing wall damage? - Were interior doors in main traffic areas in good repair and operable? - Were emergency electrical outlets properly identified? - Were hazardous materials properly stored? - Was the FM able to access all secured areas? - Were all areas with in the control of the FMB free of cigarette butts?

5 - Was all fire proofing material on structural elements in good condition? - Were crawl spaces and basements dry? - Were all observed unsealed penetrations through fire or smoke barrier listed in the SOC and PFI? 2.2.3 Exterior Appearance and Maintenance. - Were exterior walls in good repair and not showing signs of leakage? - Are windows and exterior wall panels caulked properly? - Were the MTF’s grounds properly maintained? - Were parking lots properly maintained?

6 3. The relation between The costs , The Activities, and Entities

3.1 Traditional Relation

Costs Entity Action

Sprinkler Fire Alarm System Initial Costs Broken or Smoke DIsorder. Fire Water Control Pumps system Finance Costs Equipme Fire door nt Checking maintanc e checking Fix , Replace and Repair Program Costs Fuel Oil Air Dispensing Repair Handling Re- system for Units circulating boiler Pumps

Operational Cooling Chillers Towers Costs Boilers

Chilled Air Duct Water Distribution System Distribution Devices system Maintenance and Repair Cost Heat Fuel Transfer Steam Storage Devices Distribution Tanks for system Boilers Interior Appearan Checking ce and Domestic maintains Energy Costs Hot and Sanitary checking Storm Drain Fix , Cold Water DrainBuilidng Entity ACTIVITY system Replace system System and Repair Repair Waste Cart Water Disposal Washes Fountains Environmental system Cost Food Service Equipment

Replacement Pneumatic Costs Tube Dumb system Elevators Escalators Exterior Waiters Appearan Checking ce and Normal Oil Maintena Essential Dispensing Automatic Power nce Electrical Electrical system for Fix , Doors Distribution Municipal Distribution Emergency Replace Service and system generators and Repair Other Costs Repair Roof Exterior wall Fire Windows Proofing

Loading Ramps/ Emergency Exterior Fuel Platforms Generators Door Storage Residual Value Tanks for and Salvage Emergency generators Value Automatic Box Conveyors

Book Keeping

Main character of Traditional way ( without computer, Just keeping book what happened and what they did). 1) It did not consider Entities relation, structure and hierarchy. . 2) It did not Organize cost structure too, so it is very hard to find out the cause and effect relation between Building Maintain action and costs change. 3) Action data ( Checking, replacing, and repair) is not organized. So It is hard to organize what they did as a history data . so experience is not stored.

7 3.2 Current FM solution

2D Interface Costs Entity Action

Sprinkler Fire Alarm System Initial Costs

Smoke Fire Water Control Pumps system Finance Costs Equipme Fire door nt Checking maintanc e checking Fix , Replace and Repair Program Costs Fuel Oil Air Dispensing Repair Handling Re- system for Units circulating boiler Pumps

Operational Cooling Chillers Towers Costs Boilers Broken or DIsorder. Chilled Air Duct Water Distribution System Distribution Devices system Maintenance and Repair Cost Heat Fuel Transfer Steam Storage Devices Distribution Tanks for system Boilers Interior Appearan Checking ce and Domestic maintains Energy Costs Hot and Sanitary checking Storm Drain Fix , Cold Water DrainBuilidng Entity ACTIVITY system Replace system System and Repair Repair Waste Cart Water Disposal Washes Fountains Environmental system Cost

Food Service Equipment

Replacement Pneumatic Costs Tube Dumb system Elevators Escalators Exterior Waiters Appearan Checking ce and Oil Normal Maintena Essential Dispensing Automatic Power nce Electrical Electrical system for Fix , Doors Distribution Municipal Distribution Emergency Replace Service and system generators and Repair Other Costs Repair Roof Exterior wall Fire Windows Proofing

Loading Ramps/ Emergency Exterior Fuel Platforms Generators Door Storage Residual Value Tanks for and Salvage Emergency generators Value Automatic Box Conveyors

DataBase

Main Character of current FM 1) Most of them use relational DB and 2D interface 2) Actions and Entities history is recorded in RDB. So, we can easily find out the relation between actions and entities. 3) The relation between costs and Entities also save in RDB. So, we can use this information not just to find out data, but also to set up future plan in strategically. 4) 2D interface make us understand data more easily, and clearly.

8 3.3 More detail analysis of current commercial CAFM ( computer aided space management) solution

As a leading company in CAFM area, Archibus CAFM solution has somewhat more strategic approach for using space data. Fundamentally, they are consist of main two part. One is Graphic information part generated by autocad system and the other is text data part saved as a relational database table ( oracle db). This two part are managed and controlled by archibus own object management system.

Except such that command program structure, archibus has their own unique data management system. First, they divide space concept as a 5 layer such as person, furniture, flour, facility, architectural plan. Each data are saved in relational database with its own properties. The Overlapping of activated layer, we can easily figure out the spatial relation of each layer in 2D image.

9 Second, they can make a relation between other layer by ‘region’ object. Region object means that client define specific area. Like a following image, we can define every specific space as a region.

After defining region, the entities placed in region are automatically selected. So we can easily find out what is in a region and out. Extra data which is not automatically generated but necessary should be manually inputted.

3.4 Summarize of current facility management system. 1. Current facility management system has main characters like followings. First, Static every entity data are saved relational database type. These main entities are categorized by layer concept. This layer concept is useful for classifying entity’s information and

10 figure out the relation of each entity. By overlapping on 2D drawing screen, we can easily detect current problem caused by inconsistency of layout and arrangement. This layer concept can be regarded as horizontal concept. This horizontal concept can be linked by vertical concept, region. Region has a role of main throughout idea used for integrating horizontal layer data. By checking in-out of every entity in specific region, we can finally extract space related data from every level layer data. This induced data can be followings. 1. Available leasing space. 2. Space occupancy per person. 3. Space using frequency. 3. Relation of each entity in space view point. 4. Space using history. 5. Space area information each kind of view ( such as service area, public area…) Such that first extracted data is fundamental information for strategic using of space. When making annual space allocation plan, forecasting space requirement, and analyzing space using cost for business planning, company manager can use such 1st extracted data usefully.

3.5 The impact of IT technology in FM

3.5.1 Traditional FM vs. CAFM In traditional way of managing space, space is just one of the physical areas needing timing treatment and repair. It was not regarded as a asset and managing is only focused in maintenance and preserving facilities. The history data of maintenance, using and repairing were saved only by enumerative way without relation of space. So it is not easy feed back what they have been doing and extracting information in any point of view. And it was interested only current situation data. If there is no matter in facilities, there is no more needed. Their needed technology was also just mechanical or just labor based knowledge for repairing and maintaining. In otherwise, CASM ( computer aided space

11 management) area has a different view for facility management. It don’t consider space as a just maintaining area any more. It think space as a most valuable asset which should be managed by strategic way. its focus for space manage is to save space related data more systemic ally and using this data for optimizing space use and increasing space value or reducing management cost. Furthermore, it is interested in forecasting space requirement and satisfy requirement more strategic way.

Traditional FM CAFM

Character of MG Case by case Strategically

Main purpose Maintenance, preserve Optimization, renovation

Manage focus Broken,old facility All facility

Target point Current information Current information, prospect

Related knowledge engineering Engineering, financing, IT,

Related department one More than one

3.5.2 The merit of CAFM – real example. - GM “General Motors (GM) formed WFG in 1995 to consolidate common facilities activities and provide a significant cost savings to the company. As part of GM's manufacturing division, WFG-FM provides the full scope of corporate facilities services that include maintenance, housekeeping, space management, and administrative services. The CAFM system is part of the space management function. Since its inception, WFG has saved GM an estimated $1 billion in operating costs. WFG-FM set out to capture key facility and tenant information for each site and to support FM business processes by establishing standard metrics and consistent benchmarking across the portfolio. The resulting CAFM system links tenant data with CAD drawings to provide facility managers, corporate officers, and project teams with integrated space, occupancy, and planning information. The Space Information System (SIS) was developed with assistance from business partners Computerized Facility Integration. SIS is used to track and report space and tenant information. It generates WFG standard space utilization reports based on a variety of criteria and distributes the information via email. Once new data is verified, it can be automatically loaded into the system with the click of a mouse. Development is underway

12 to convert the SIS to be a completely Web-enabled system within the GM firewall.” -- From GSA web page. --

4. The Limits of current CAFM

4.1 Why strategic approach is needed in CAFM area? As a matter of course, The purpose of CAFM is to acquire a profit by managing space related data . For this, We should define what is most important data rather than any others and how can we use this data for acquiring merits. GM’s Facility manager said that "Understanding specific facilities management needs and what each one requires is essential, but it's just as important to understand who is utilizing the data so you can provide useful tools to support their core work," His comment means that understanding the data for whom is the most important factor for making useful CAFM system. To know data for whom is important because the kindness , importance and The way of using of data is totally depend on user’s point of view. In addition, the kindness of space is also important for CAFM programming. The importance of space related data is totally deferent in each spaces. So, We should set our plan with regarding user and the kindness of space. To distinguish the importance of data, Analysis of space data is needed. For this reason, Off the shelf software is generally ineffective in CAFM area. With out deep understanding of practical business and strategic approach to space related data, we can not make a effective system for getting merit.

4.2 The limits of current facility management system Current Facility management system have main two limits. 1. lack of consideration for space own character A. Space character are very diversity depend on building. Space of hospital and Space of hotel are totally have different concept. Space performance, organization, and user are different. So for making good space management system, we should make a way for representing building’s own character, performance and organization. Without this information, gathered data even though they are saved in relational database system are just enumeration of information. 2. Unclear definition about user. A. Different user put different value on same data. According to user, the value of data and usage of data can be changed. Without consideration about user for specific data, we can not expect proper management. So we should define the view of user for specific data.

13 4.3 The suggestion for facility management system Space management started as a passive way to manage building space efficiently. But nowadays, it means strategic usage for improving asset value by using space related data. For this, Space management system should consider space character and user. Practically, for this, Space management system should definitely be a part of ERP. In reality, Space management is linked closely with related works such as human resource management and work schedule management. So facility management should not be treated as one independent work area but as part of ERP and considered as an organically linked module.

5. The Strategic Approach in Facility Management For Strategic approach in Facility management, Fist of all, we should define the kind of space and the point of view for using information. This time, I will focus on commercial building especially big shopping market.

5.1 The problem of Current FM in the strategic point of view. Income of current shopping market is mainly leasing fee, and net income is defined as income subtract expenditure. So most of FM solutions are focused on how system can increase net income by reducing expenditure. So we can think current FM solution’ view as like following diagram.

< the point of view of current FM solution >

But is it right? Is reducing expenditure only way for increase net income? Of course not. The building assessment is not decided only by income such as leasing fee and expenditure like operation cost, energy cost.

14 As following diagram, Increased value of building is also important factor for rising net income. More spending money in operation , energy or interior can make building more valuable. In this case, naturally expenditure is increase. So, Increment of Expenditure acts both as a minus and plus factor to net income.

< Considering building value in cost structure>

So, I try to find out the relation between expenditure and value of building. In real estate, capital return rate means net operation income / Fair Market value. Net operation income means that income minus expenditure. And Fair Market value means reasonable building value in specific area. Especially in korea, captical return rate is 7.81% at 1999 year. With capital return value, we can calculate Fair Market value of building. For example, In case Net operation income is ten million dollars, Fair Market value is 128 million dollars( 100/ 0.0781). Fair Market value is the same meaning with recent estate value. When we calculate total profit rate in one year, total profit rate is the business profit rate + capital value profit rate. As following diagram, if net income operation income increased, both business profit rate and capital value profit rate also increase. This case, most interesting fact is that capital value profit rate increase is more bigger than business profit rate increase in same net operation income increase. This result is caused by fact that net operation income is divided by capital return rate. For example, In case capital return rate is 10% and net operation income increase 10% , It’s result is 10 times bigger in capital value profit rate than in business profit rate. Moreover, most of the case, operation cost such as utility cost and maintenance cost are imposed to each shop owner. So, these cost are not interested to shopping mall owner.

15 rental fee, labor cost, interest of net opertation management, deposit, income maintenance maintenance expenses bill

net business profit business profit rate basic estate value The effect of increase rental fee in capital profit is more bigger than in business profit because of this value business capital value is divided by capital return rate. Total profit rate + profit rate profit rate

recent estate basic estate value value capital value profit rate basic estate value net opertation income Capital return net opertation rate income Fair Market Fair Market Value ( recent Value estate value ) Capital return rate < total profit calculation>

According to the EEC(Experience Exchange Report) report from BOMA (BUILDING OWNERS AND MANAGERS ASSOCIATION) in 1999, In case of Class A type ( good quality building) the 11% increase in maintenance cost result 32% income increase. It means that proper investment in maintenance can make more benefit. ($/SF) Income Class A Class B Class C

임대수입 $ 19.87 $ 14.97 $ 11.05

부수입(창고) $ 1.58 $ 0.90 $ 1.34

Total Income $ 21.45 $ 15.88 $ 12.39

Expenses Class A Class B Class C

Operating Exp $ 6.16 $ 5.54 $ 5.36

Fixed Expenses $ 2.96 $ 2.01 $ 1.38

Total Expenses $ 9.12 $ 7.55 $ 6.73 < Income and Expenses in each Class>

So, By investment to proper area, we can get more profit. For this, we need to make it clear the relation between space element and income. In this case, Income is somewhat vague term. When we invest some money in specific space element, we should know what is change and what can be a indicate factor for anticipate income change.

16 5.2 The Needed information for Strategic FM model.

For this, I assume that amount of passenger and the speed of passing can be indicator for anticipating income change. Because these factors are important value for deciding exposure time of commodity to the customer. Following is the diagram for this.

Both amount of passenger and the speed of passing are affected by space element such as location of wall, the area of viewing and so forth. By make a relation between space element and those two factor, I wish to clarify how we can use space information more strategically. Followings are the factors that affect to amount of passenger and the speed of passing.

1. Viewing density Specific position in enclosed space have a specific viewing area. People usually do not go where they can not see what is there. And people generally set one’s viewing direction parallel with one’s on going direction. If we overlap viewing area while working in specific space, we can get a information that how much specific area is exposured by viewing. So it can be called viewing density.

17 < viewing density >

2. Distance of passing node When we pass some space, we can meet crossway point. On crossway point, we can decide the way to go. This crossway point is called pass node. This pass node is related to door of each room. The distance between adjacent node is also important value. Each node can have weigh for representing the importance of place.

< Pass node>

3. The width of passage. The width of passage is also important value of affecting amount of passenger and the speed of passing. In crossway, the width of passage is the closest distance of opposite wall like “width D” in picture.

18 < the width of passage >

4. The angle of between pass node People usually want to go straight without shape turn. In case when need turning, they prefer to go more slow turning. And at this turning point, the speed of passing usually be reduced.

< the angle of between pass node>

19 5. Viewing angle for showing room (angle of approach) In following picture, View Direction B is located with parallel to working direction. So this shop can have more time for exposure their commodity to the customer. But View Direction A is located with angle A from passing Curve A. so this room have more less opportunity than preview room for showing their article to the client.

< viewing angle for showing room>

6. location of door. The Door A is close to node B and The door B is close to node D, In this picture, Node D have more weight than node B. So, location of the door B is more good for approach of customer. So the information of distance between node and door is can be a important value.

20 5.3 The Strategic model for FM. With whole information gather in above, we can make following model.

STRING

Area Viewing density Occupied Angle of approach (DER) Distance of between nodes

veiwing angle (DRR) Space_boundary (DER) The importance of node (DER) (DER) Angle of between nodes

Adjacency[1:?] (DRV) Boudary Space (DER) Next node Adjacency [1:1]

Passage_node Brightness

The width of (DER) passage .geometry passage

asset .placement The speed of Passanger

The amount of Passanger Space element Funiture

.placement Fixture wall Maintanence activity .geometry window

entrance

Document Plan

INTEGER Cost Schedule

INTEGER Labor Maintanence Resource (DER) total_cost INTEGER Cost Activity Part Time INTEGER Supply STRING Occupant Energy

Cost INTEGER Unit person

Sub unit

Every separated space (like a shop in shopping mall) have relation with the passing node. By passing node each space can have a relation. Every space have space element such as wall, window, door, and entrance. Each one have geometry entity. So, when the change of space element happens, the important variable such as viewing density, angle of

21 approach, viewing angle, distance between node and angle of node can be change at the same time. Space element have “maintenance activity” property. Maintenance property have it’s own cost properties. So, we can find out the relation between spending money and what happen on the space by investing money. The speed of passing and amount of passenger can be monitored by sensor. With this model, we can accumulate the data about the relation between space element change, cost and people’s behavior change. This data relation can be analyzed by statistic approach such as variable analysis or regression analysis.

< strategic approach for FM>

22 Reference and data sources 1. http://dsco.ds63.co.kr 2. Paper. Life cycle cost analysis. 1989. korea house organization lab. 2. Paper. The building management system using CAFM. 2001. kim, buyng seon 3. Facility management. Pdf Medcom pam. 4. GUIDELINES FOR LIFE-CYCLE COSTING ON STATE BUILDING PROJECTS State of Wisconsin Department of Administration Division of Facilities Development December, 1997 5. http://www.aik.or.kr/ 6. Forecasting building element maintenance within an integrated construction environment. Jason underwood, Mustafa alshawi. 7. Development of an integrated information resource base for 4D/VR construction process simulation. Nashwan dawood. 8. Extending space syntax towards an alternative model of space within GIS. B.Jiang and C.Claramunt. 9. Computer Aided Facility Management interface between photoprammery, civil engineering and architecture. Thomas schurle. 10. A comparison study on space syntax as a computer model of space. B.Jiang and C.Claramunt. 11. Information technology: “ best practices” of facility management organizations. Robber E. Johnson. 12. Artificial intelligence and networking in integrated building management systems. G.Clark, P.Mehta 13. Achieving integration on capital projects with enterprise resource planning systems. James T.O’Connor and Steven C.Dodd. 14. Automated facilities layout: past, present and future. Robin S. Liggett