Capital Life Cycle Renewal
Policy Document
Prepared by:
Pierre W. Jolicoeur, FMA, RPA
Manager, Comprehensive Asset Management
Real Property Asset Management Branch
Corporate Services Department
December 2003
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Capital Life Cycle Renewal – Policy Document
INTRODUCTION
An aging building and park portfolio increases the requirement for timely and
substantive investments in life cycle renewal. Typically, such investments are predicated
on a standard value equal to 1% to 2% of the replacement value of the asset (for
buildings). The vast majority of public infrastructure has not been afforded this level of
investment, resulting in a significant backlog of deferred maintenance and capital rust
out. Faced with fiscal limitations, it is imperative that the City direct its limited funds
toward projects of highest priority and consistent with the purpose of the capital funds
for life cycle renewal.
The purpose of this document is to clarify the eligibility of projects for funding under the
life cycle renewal capital programs administered by the Real Property Asset
Management (RPAM) Branch of the Corporate Services Department and specify the
policy statements that will govern the management of these respective life cycle renewal
capital programs.
BACKGROUND
The physical state of public facilities has been well documented and there is concern that
future generations will inherit public facilities with a legacy of significant deferred
maintenance. The United States General Accounting Office (GAO) confirmed that the
real property assets held by the federal government in 2002 totaled more than $ 335
billion. It concluded that the restoration, repair and maintenance backlogs in federal
facilities were significant and reflected the federal government’s ineffective stewardship
over its valuable and historic portfolio of real property assets. It further noted that the
state of deterioration is alarming because of the magnitude of the repair backlog,
estimated at tens of billions of dollars. (Highlights of GAO-03-839T document).
The Canadian situation is not much different than the American experience. Public
Works and Government Services Canada has noted that, over the last decade, the federal
government has not been able to make all the investments necessary to maintain its built
infrastructure. The federal real property community has realized how the reductions in
the level of investment and reinvestment have affected the condition of the assets. It is
recognized that significant capital expenditures are now required to ensure that federal
real property assets are maintained to an acceptable level.
The impact of accumulated deferred maintenance at Canadian Colleges and Universities
has been the subject of review by the federal and provincial governments. A Standing
Senate Committee on National Finance explored the role of government in the financing
of deferred maintenance costs in Canada’s post-secondary institutions. The Association
of Universities and Colleges of Canada submitted a proposal addressing accumulated
Capital Life Cycle Renewal Policy– December 2003
2
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
deferred maintenance on Canadian university campuses. Both studies concluded that
Canada’s universities had not carried out the level of maintenance necessary to preserve
their infrastructure, resulting in accumulated maintenance and repair costs totaling
more than $ 3.6 billion in the year 2000.
At the municipal level, the issue of capital rust out was studied by the City of Ottawa.
The Comprehensive Asset Management Division within the Real Property Asset
Management (RPAM) Branch investigated the amount of capital rust out experienced by
the City of Ottawa and this analysis was incorporated within the Long Range Financial
Plan developed by the City’s Finance Division. This work was supplemented by a
Contribution Rate Study undertaken by the Comprehensive Asset Management Division
in October 2002. The Contribution Rate Study examined the efforts of other Canadian
municipalities in addressing the issue of deferred maintenance and in particular, their
success in establishing a dedicated reserve for building life cycle renewal. Due to
downloading pressures and limited revenue generating capabilities, the vast majority of
Canadian Cities decided to under fund asset maintenance and repair, out of financial
necessity. These decisions have resulted in a significant list of deferred maintenance
work.
The accumulated capital rust out amount for the City of Ottawa has been estimated at
$ 38.5 million for the building portfolio (excludes park assets) at the end of 2003. Based
on current and forecasted capital budgets for building life cycle renewal, the capital rust
out amount rises to $ 107 million by the year 2017. Please refer to Table 1 presented
below.
TABLE 1
BASE BUILDING LIFECYCLE PROGRAMS - CITY FACILITIES ($38.5M INITIAL DEFERRED MTCE. LOAD)
$40,000,000
$20,000,000
$0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Life Cycle Funding ($)
-$20,000,000
-$40,000,000
-$60,000,000
-$80,000,000
LRFP Budget Funding
1.5% Funding Level
-$100,000,000
Total Funding Shortfall
RESERVE FUND
-$120,000,000
-$140,000,000
Budget Year
Capital Life Cycle Renewal Policy– December 2003
3
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Based on these figures, it is clear that a series of defined policy statements need to be
implemented in order to ensure that limited life cycle renewal funds are directed to
projects of highest priority and are clearly applied to life cycle renewal projects. It is also
necessary to achieve a solid comprehension of the terms and definitions applied to asset
maintenance and renewal efforts.
DEFINITIONS
1 . Real Property
Real property is generally defined as facilities, land and anything constructed on,
growing on, or attached to land. Within the purview of RPAM, real property is
comprised of land; parks and their integrated elements; and buildings and their
associated components.
The life cycle renewal capital programs administered by RPAM are focused entirely on
the base components of a building and park. Typically, a distinction is made between the
components of a facility (e.g. an elevator) which define the structure and operation of
the building and components which are tied to a specific program or service being
developed by the building or park occupants (e.g. picnic tables, fitness equipment).
Furthermore, in relation to the life cycle program, the base building components of a
building or park are deemed to be congruent with the Canadian Institute of Chartered
Accountants (CICA) definition of a capital asset. Any asset with a service life greater
than one year is capitalized whereas those with a service life less than one year are
expensed. In addition, the base building components to be considered for life cycle
renewal funding are subject to the test of materiality. The concept of materiality
determines the usefulness of tracking an asset vs. the cost and effort expended in doing
so, and whether the accounting treatment of that asset will influence the users of the
financial statements.
Asset
An asset is considered to be physical property that the City owns that is subject to work
interventions performed by RPAM and which supports the core-mandated service
requirements of the City.
Base Building Asset
A Base Building Asset is considered to be physical property that is an integral
component of the fundamental building systems and is not singly attributable to a client
department work process. See Table 2 for a detailed listing of Base Building Assets.
Base Park Asset
A Base Park Asset is considered to be physical property that is an integral component of
the fundamental park systems and is not singly attributable to a client department
activity. Please refer to Table 3 for a detailed listing of Base Park Assets.
Capital Life Cycle Renewal Policy– December 2003
4
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
2. Capital
Capital Budget
The Capital Budget is a business process that aligns the capital asset base with the City’s
program requirements. It involves the integration of financial, maintenance, facility and
capital program management systems to provide a comprehensive picture of the value,
funding requirements, future liabilities and life cycle of corporate assets. There are
essentially three types of capital expenditures which are considered:
•
•
•
Changes in capacity or capability
Changes in functional requirements
Renewal of existing assets
This report is principally concerned with definitions and policies pertinent to the
renewal of building and park assets.
Capital Programs
Capital Programs integrate all Capital Projects in a manner wherein an organization will
achieve maximum benefit from its short and long range capital budget. The City
currently has a number of Capital Programs, which are focused on life cycle renewal as
well as operational improvements. Each Capital Program has a distinct purpose.
Capital Projects
Capital Projects are the individual elements which fit within the definition of a Capital
Program. Capital Projects contain a set of business processes which control the initiation
and completion of a Capital Project by establishing the scope of activities, the
corresponding timelines and of project milestones, tracking of costs against approved
budgets and recording of physical completion of project milestones.
Capital Events
Capital Events are the individual elements, which are contained within RPAM’s capital
life cycle renewal forecast system. Capital Events are projected individual capital
expenditures. Capital Events become Capital Projects once they are approved as part of
the Capital Budget.
3. Life Cycle
Lifecycle of an asset is defined as the period of time between the initial conceptual
design through design, construction, operation, maintenance, renewal and ultimate
replacement of an asset. There are many activities associated with the lifecycle of real
property and they are described below.
General Maintenance
General Maintenance improves or preserves the appearance of an asset and is completed
at discrete intervals based on seasonal considerations, accumulated experience or
aesthetic preferences. It is considered as routine maintenance and is normally funded by
Capital Life Cycle Renewal Policy– December 2003
5
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
the operating budget. Typical General Maintenance activities include stripping and
waxing floors, re-painting walls, planting flowerbeds, performing artificial ice
maintenance functions, etc.
Preventive Maintenance
Preventive maintenance is performed to an operational device or asset to continue
operating at its optimum efficiency without interruption. Preventive maintenance work
is completed at regular intervals and if it is continually neglected may result in dramatic
and costly failures.
Deferred Maintenance
The degree to which spending on routine repair and maintenance falls below what is
required to achieve the building or park component’s designed service life.
Repair Work
Repair work involves restoring to operation some component of the building or park
after it has failed. Typically, repairs do not result in a significant extension of the
expected useful life of the building or park.
Capital Repair
Capital Repair is a periodic expenditure which corrects a defect with a cost exceeding
$10,000. It is expected that Capital Repair work will help extend the service life of the
building or park; however, it will not expand the building or park’s capabilities (i.e.
improvement).
Life Cycle Renewal (Replacement)
Planned replacement is performed when the building or park component has reached
the end of its useful life, when it can no longer perform due to degradation of its internal
or external components and repair is no longer cost effective, or due to obsolescence and
a shortage of performance that meets minimum standards. Included in the replacement
category is the major re-building of a component, since re-building restores
performance. Life Cycle Renewal is the final step in an orderly maintenance program,
which has extracted the most cost effective use out of a building or park component. It
involves the exchange or substitution of one base building or base park component by
another having the capacity to perform the same function. Life Cycle Renewal usually
refers to a building or park system or component, not the entire replacement of the
building or park itself.
Capital Rust Out
The physical deterioration of Real Property, causing degradation in the building or park
component’s performance below service requirements, which in turn may cause
increased operating and maintenance costs and a negative impact upon service delivery.
Premature Capital Rust Out occurs as a result of the deferral of routine maintenance or
inadequate funding of Capital Repairs and Life Cycle Renewal during the period of the
building or park’s designed service life. Capital Rust Out for a building is normally
assessed by means of a Facility Condition Index (FCI).
Capital Life Cycle Renewal Policy– December 2003
6
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Facility Condition Index (FCI)
The Facility Condition Index is the sum of the identified deficiencies (in dollars) divided
by the estimated current replacement cost of the building. Depending on the type of
building surveyed, the facility condition is rated “good” if the condition index is 0.05 or
lower. The FCI is used in two principal ways. First, to establish priorities for project
funding based on the index value for each facility. Second, to project the amount of reinvestment that will be required to either maintain the FCI at its measured level or to
reach a target index over a prescribed investment period.
Obsolescence
Obsolescence is a loss in value due to reduced desirability and usefulness of a building
or park asset because its design and construction has become out-dated. A time is
reached eventually in the life of the park or building asset when it is not practicable to
continue investing capital funds in the asset. Increased maintenance and repair
(patching) is typically then implemented to keep the facility operational over the short
term. With the onset of obsolescence, no further investments should be made pending
disposal and the services supported by the asset should be relocated.
Obsolescence can be subdivided into two main components:
• Structural
• Functional
Structural obsolescence refers to the diminishment of asset performance below a level to
which it was designed to deliver and reflects deterioration with age. Functional
obsolescence refers to the inability of the asset to meet a (changed) service requirement
due to ongoing technological developments, or performance standards, or emerging
program trends.
Disposal
Disposal is the process which occurs when a facility has effectively reached the end of its
useable life and can no longer be sustained by means of an affordable maintenance and
life cycle renewal effort. In the case of real property, the requirement for disposal is
signaled by a disproportionate or excessive Facility Condition Index (FCI) and/or a
threshold cost to address Capital Rust Out greater than 40-50% of the replacement cost
of the facility. Disposal may also be predicated in the event that continued operation of
the facility presents an unacceptable financial and liability risk to the City. Disposal may
involve the sale of the real property or its decommissioning and demolition.
The decision to dispose of property is based on the results of an asset rationalization
review undertaken by CAM, in consultation with the affected client department. When
disposal is identified as the preferred option, the client department will complete a
program review to justify the requirement for a replacement facility (new construction).
It is the responsibility of the client department to justify and fund any real property
acquisition and development.
Capital Life Cycle Renewal Policy– December 2003
7
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Improvement
Improvement work enhances the operation or reduces the operating costs of a building
or park. They are not considered as Life Cycle Renewal projects but may be configured
and added as part of a larger Life Cycle Renewal effort in order to achieve cost efficiency
and lower the impact on the occupants and users of the facility. Energy conservation
work is an example of an improvement project.
Modification
A modification project is an enduring increase to the service potential of an asset. It
alters the park or building in order to accommodate a new function or corporate
initiative. An artificial ice arena, for example, may undergo a renovation in order to
support indoor soccer.
Capital Life Cycle Renewal Policy– December 2003
8
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Life Cycle Renewal – Policy Statement
1. Purpose
This policy statement describes the policies and practices that govern RPAM’s capital
life cycle renewal programs, administered by the Comprehensive Asset Management
Division. The following capital programs fall under the auspices of this policy statement:
•
•
•
•
Life Cycle Renewal – Buildings
Life Cycle Renewal – Parks
Life Cycle Renewal – Transit Facilities
Life Cycle Renewal – Heritage Properties
This policy was developed in accordance with the policy framework adopted by RPAM,
entitled “RPAM Capital Programs – Policy Framework, September 2003”
2. Program Description
The description for each of the four individual life cycle renewal capital programs that is
presented in the capital budget submission is provided below.
Life Cycle Renewal – Buildings
The City of Ottawa owns and operates in excess of 800 buildings including large
recreation complexes, fire stations, ambulance posts, administrative headquarters,
libraries, water treatment facilities, police buildings, public works operations centers,
homes for the aged, indoor and outdoor swimming pools, arenas, community centers,
special shelters and field houses. In total, the gross area exceeds 7 million square feet,
with an estimated replacement value of $ 1.7 billion. The Real Property Asset
Management Branch through its Comprehensive Asset Management (CAM) Division
supports the on-going performance of buildings and their associated systems and
components. A specific life cycle renewal plan is established for each building and
building element, based on strategic asset management reviews, planned use, the
validated condition of the building as well as input from the users and operating staff of
the facility.
This capital program entails a wide assortment of major repairs and replacement work
including roofing; heating and cooling systems replacement; major repairs and
replacement work related to elevators and other specialized building systems; building
interior finishes replacement such as carpet replacement; overhead door replacement;
etc. Condition audits of the building inventory also form part of the planned program in
order to ensure that building life cycle renewal projects are documented and
implemented in accordance with stated priorities. This capital program is required in
order to work toward the reliable operation of the City’s diverse and aging portfolio of
building assets and to maximize the initial real property investment.
Capital Life Cycle Renewal Policy– December 2003
9
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
It should be noted that this program does not address the life cycle renewal
requirements of Police Services facilities, libraries, transit facilities, heritage properties
and water treatment facilities since they are funded separately.
Life Cycle Renewal – Parks
The City of Ottawa owns and maintains in excess of 735 parks, grounds and outdoor
public spaces. The Real Property Asset Management Branch through its Comprehensive
Asset Management Division supports the on-going performance and sustainability of
these park and site components. A specific, planned life cycle renewal program is
established for each park and site element, based on the planned use, the validated
condition of the park element as well as input from the users and operating staff.
This capital program entails a wide assortment of major repairs and replacement work
including play structure replacement; park lighting replacement; hard landscaping
work; replacement work related to water play facilities; fencing; re-construction of
asphalt parking lots; concrete and stone rehabilitation work in park settings; etc.
Condition audits of the park asset inventory also form part of the planned program in
order to ensure that park life cycle renewal projects are documented and implemented
in accordance with stated priorities. This capital program is required in order to work
toward the reliable operation of the City’s diverse and aging portfolio of park and site
assets and to maximize the initial real property investment.
Life Cycle Renewal – Transit Facilities
The City of Ottawa owns and maintains a sizeable inventory of buildings and structures
that are in direct support to the City’s public transportation service. Buildings such as
OC Transpo Administrative Headquarters at the St-Laurent Complex; the extensive
garage and bus maintenance facilities at St-Laurent, Pinecrest and Merivale; the network
of bus shelters and directory boxes and transit stations form the bulk of the building and
structure asset inventory. The replacement value of this asset inventory is estimated at
$237 million. The Real Property Asset Management Branch through its Comprehensive
Asset Management Division supports the on-going performance of these buildings and
their associated systems and components. A specific life cycle renewal plan is
established for each building and building element, based on strategic asset
management reviews, planned use, the validated condition of the building as well as
input from the users and operating staff of the facility.
This capital program entails a wide assortment of major repairs and replacement work
including roofing; heating and cooling systems replacement; overhead door
replacement; parking lot re-construction; fencing replacement; building interior finishes;
bus shelter replacement; directory boxes replacement; glazing work at transit stations;
etc. Condition audits of the asset inventory also form part of the planned program in
order to ensure that life cycle renewal projects are documented and implemented in
accordance with stated priorities. This capital program is required in order to work
toward the reliable operation of the City’s diverse and aging portfolio of buildings and
structures for the public transportation network and to maximize the initial real
property investment.
Capital Life Cycle Renewal Policy– December 2003
10
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Life Cycle Renewal – Heritage Facilities
The City of Ottawa owns and maintains a number of buildings, structures and facilities
that have heritage value. Buildings such as Arts Court; Billings Estate; Pinhey’s Estate;
the former Teachers College as well as certain park sites such as Strathcona Park are part
of the heritage building and structure asset inventory. The Real Property Asset
Management Branch through its Comprehensive Asset Management Division supports
the on-going performance of these heritage properties and their associated systems and
components. A specific life cycle renewal and preservation plan is established for each
building and building element, based on specialized assessments, planned use, the
validated condition of the building and asset as well as input from the users, heritage
and operating staff.
This capital program entails a wide assortment of major repairs and replacement work
in order to preserve the heritage value of the property. Work such as roof replacement;
window restoration; door re-construction; masonry repairs; structural work; wall reconstruction; lighting; etc form the essence of the capital program. Condition audits and
special restoration reviews also form part of the planned program in order to ensure that
life cycle renewal projects are documented and implemented in accordance with stated
priorities and heritage value. This capital program is required in order to work toward
the safeguarding of the City’s diverse and aging portfolio of heritage properties.
3. Identifying Candidate Projects
Capital budgeting in the Comprehensive Asset Management (CAM) Division has
evolved into a more structured process. CAM has developed a comprehensive “events
forecasting system” to create and track work interventions related to the capital repair
and replacement of all components and systems in City buildings and parks. This
computerized application (City of Ottawa Asset Management System or COAMS) tracks
over 15,000 individual interventions and has a multitude of retrievable data elements
associated with the event. Appendix “A” provides an example of the information
content of a typical life cycle renewal event. These interventions, in the aggregate,
comprise the capital life cycle renewal program that is needed to maintain the City’s real
property inventory throughout the life cycle of each property asset
Event versus Project
The “events” contained within COAMS are considered to be within the planning period.
An “event” only becomes a “project” when it is approved as part of City Council’s
budget review process. Once the LC renewal capital project is finished, the loop is
completed and COAMS pre-programs a new replacement event, for a future date, based
on an appropriate life cycle schedule for that component. CAM employs manufacturer’s
recommendations as well as historical performance data whenever it places an event
within COAMS.
Capital Life Cycle Renewal Policy– December 2003
11
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Validation
CAM has incorporated past legacy municipality events within COAMS; however, a
considerable amount of this information has been reviewed and adjusted prior to its
inclusion in the division’s event forecast system. CAM has rejected the use of modeled
data as a primary source of information for the LC Renewal capital program and has
relied primarily on condition audits and validated site surveys to confirm the capital
submission for the next budget year. To that end, and as part of the data integrity
exercise, CAM has implemented a regular validation procedure to systematically inspect
events that are calendared for attention in the next three budget cycles. The event can be
extracted for budget approval or if, based on inspection, the item can be deferred, the
event is given a revised calendar date.
Asset Vocation
The role and future of each asset in relation to the client department’s program direction
needs to be identified in the long-term life cycle renewal capital plan. The future
direction of each asset is a key ingredient in determining the best approach to
maintenance and repair plans. For large and more complex assets, it is necessary to
develop individual asset management plans to ensure coordination of the overall
maintenance, repair and replacement program for the asset.
Due to the breadth of work undertaken within the various life cycle renewal programs,
the different building and asset types served by the life cycle renewal programs, the
multitude of City services delivered at these sites and the difficult fiscal limits imposed
by external forces, it is of paramount importance that CAM align strategic asset issues
with the list of required life cycle renewal jobs. The strategic asset management
functions performed by CAM provide an integrated perspective to the list of projects,
one that exceeds the simple limits of condition status. It is with this perspective that
CAM has developed a capital event prioritization tool to be used throughout the capital
budget development process.
4. Handling of Life Cycle Projects – Budget Preparation
Capital Prioritization Tool
Each event is ranked, by CAM, in terms of its priority for being elevated to project
status. The ranking system guides the selection of projects to be put forward for
approval in the annual capital budget submission. The ranking scheme has a
hierarchical weighting structure.
The top tier weighting is at the level of asset type (e.g. fire halls vs. community centers).
The second weighting is applied at the level of project types (e.g. roof replacement vs.
exterior cladding replacement).
The weights introduce a deliberate systemic “bias” into the prioritization system,
recognizing that certain asset classes and certain project types are inherently more
critical. With the weighting set, the scoring of individual events within the project type
is then performed. Of all the roofing jobs to complete, for example, which is the most
critical to attend to and so on. This final step of the scoring process is facilitated by a
Capital Life Cycle Renewal Policy– December 2003
12
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
standard approach to collecting information on the condition of the asset so that events
can be rationally scored on a consistent basis. The emergence of asset specific FCI’s
being pursued by CAM will enhance its ability to prioritize life cycle renewal events.
Appendix “B” illustrates the use of the capital prioritization tool in rating a typical life
cycle renewal event.
Budget Submission
Although the capital budget is based on a five-year timeline, CAM focuses its efforts on
a three year planning horizon. The division prepares a list of specific work interventions,
together with their cost estimate, primarily for the first planned year of the capital
budget. The preliminary list of life cycle renewal events is distributed to various internal
operating units for review once CAM has achieved a program that meets budget
guidelines. The operating units whose input is solicited include Parks Operations, the
IDP and Community Services divisions within the People Services Department and the
maintenance and operating divisions within RPAM. The preferred method of review
involves an evaluation of the program computerized data content, with adjustments
being made in “real time”. This real time approach ensures that the financial impact of
all decisions is immediately captured and reflected in the proposed capital submission.
The final life cycle renewal budget document tendered for Council approval consists of
an extensive and detailed listing of life cycle renewal events under each applicable
program. The list identifies the facility name, a brief description and a cost for each line
item. The list is segmented by ward. Once the capital submission is approved by City
Council in the form of a resolution or by-law, it is deemed to be “published” and
therefore, sacrosanct.
Appendix “C” illustrates the CAM method of budget presentation.
5. Implementation of LC Renewal Program
Once the capital budget is approved by City Council, the final list of life cycle renewal
projects under each life cycle renewal capital program is released to the Comprehensive
Asset Management Division. The individual projects are then captured under the Project
Systems (PS) Module within the SAP integrated business solution. It is the responsibility
of CAM to create the life cycle renewal projects in SAP.
Each individual life cycle renewal project is assigned to a CAM project manager or
project coordinator. It is the responsibility of the CAM staff member to manage the
project in its entirety by assigning the various milestone dates, completing the tendering
process and actioning the required approvals. Due to the large number of individual
projects that are contained within the four capital life cycle renewal programs, the
execution of the work is sometimes coordinated by external project management firms
retained on a City standing offer agreement or by other City personnel working in the
operations and maintenance area. Certain projects, such as the re-sodding of a
sportsfield, are performed using exclusively City forces. Although the work is executed
and/or managed by others, it is understood that the project remains under the tutelage
Capital Life Cycle Renewal Policy– December 2003
13
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
of a CAM staff member. All applicable financial releases and controls remain the
purview of CAM.
It is the responsibility of the CAM project manager or project coordinator to action or
oversee all financial transactions related to a life cycle renewal project. Furthermore,
CAM staff updates the necessary status fields under the PS module in order to ensure
that consolidated project status reporting is provided at the required intervals. Once a
project is completed, the CAM project manager or project coordinator completes the
technical release. This action triggers the closing of the project file by others, resulting in
the filing of the project file and the updating of project data within SAP. CAM staff then
ensures that COAMS is updated with a new planned life cycle renewal event as a
follow-up to the recently completed LC renewal project.
6. Policy Statements Governing LC Renewal
The life cycle renewal capital programs managed by RPAM are governed by the
following policy statements:
6.1 Definition
6.1.1
6.1.2
6.1.3
6.1.4
6.2
Work items deemed eligible for capital life cycle renewal funding are
those individual replacement work items which exceed $ 5000 in value or
are capital repairs with a cost greater than $ 10,000, that have a useful life
greater than one year and are base components of a building or park.
The final determination of whether an item is eligible for funding under
RPAM’s capital life cycle renewal programs rests with the Manager,
Comprehensive Asset Management.
The RPAM life cycle renewal capital programs do not fund the full, single
replacement of buildings or parks.
Life cycle renewal projects must fit the description of the pertinent capital
program in order to be included under that program.
Asset Vocation
6.2.1
6.2.2
6.2.3
Strategic asset management is used to confirm asset vocation and is
therefore an integral component of the life cycle renewal program
managed by RPAM.
Strategic asset management reports, whether in the form of a suitability
assessment review or an asset rationalization report, will incorporate and
consider facility condition data as an integral part of the strategic
analysis.
Facility Condition Index (FCI) data is to be used to assess the suitability
and performance of property in support of core-mandated services. The
Facility Condition Index and resulting target are to be tailored to the type
of facility surveyed.
Capital Life Cycle Renewal Policy– December 2003
14
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
6.2.4
6.2.5
6.2.6
6.2.7
6.2.8
6.2.9
6.3
Client departments are expected to work closely with CAM staff to
undertake and complete a functional audit and determine the extent of
functional obsolescence for a given facility. CAM will not include life
cycle renewal events for any park or building that has reached a level of
functional obsolescence as deemed untenable by the client department.
CAM will not include life cycle renewal events in the current capital
budget for any park or building that has been identified as non-essential
or low priority by the client department.
CAM will not include life cycle renewal events in the current and future
capital budgets for any park or building whose FCI and/or threshold
costs for backlogged replacement work (capital rust out) is greater than
40-50% of the replacement costs of the park or building.
The responsibility for life cycle renewal costs related to leased properties
will be assigned to the landlords. The City will limit and restrict life cycle
renewal obligations attributed to the City within the covenants of an
agreement for leased property.
It is the practice of the CAM Division to limit the expenditure of life cycle
renewal funds toward temporary structures and buildings. Temporary
structures and buildings are intended for use within a specified time
period, resulting in little or no requirement of life cycle renewal funding.
The Client department is expected to incur all capital repair and life cycle
renewal costs for temporary buildings and structures or for facilities
constructed as temporary/interim facilities.
Planned capital rust-out is deemed to be an acceptable asset life cycle
strategy and is primarily targeted for low-value and low public use
facilities.
LC Forecasting
6.3.1
6.3.2
6.3.3
6.3.4
6.3.5
6.3.6
CAM will not use modeled data as the primary source data for its life
cycle renewal capital programs.
Condition audit information in the form of Type II(a) investigations as
well as site validation reviews performed by CAM staff are the primary
source of data for the life cycle renewal forecast system.
All life cycle renewal events contained in the capital budget must be
validated to be included in the capital submission and must be validated
by CAM staff.
CAM will apply current year costs for all life cycle renewal events to be
added to the forecast system
Events that are not life cycle renewal work interventions are not eligible
for input to COAMS.
The development, updating and management of the life cycle renewal
event forecast system (COAMS) resides with CAM.
Capital Life Cycle Renewal Policy– December 2003
15
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
6.3.7
6.4
The acquisition of real property for strategic purposes is rationalized by
CAM. Following the acquisition and construction of the building or park
asset, CAM incorporates life cycle renewal events for that building or
park within COAMS.
Capital Budgeting
6.4.1
A life cycle renewal event, contained within the forecast system, only
becomes a project once it is included in the next year capital submission
and the capital budget is approved by City Council, unless emergency
and unforeseen conditions should arise.
6.4.2 Each life cycle renewal event of more than $ 10,000 and listed in the
capital budget will have a contingency allowance factored in the amount
of the event in order to accommodate price inflation and scope creep.
6.4.3 The CAM capital prioritization tool is recognized as the only empirical
ranking instrument to be used in the validation and listing of life cycle
renewal events for the capital budget.
6.4.4 The application of the CAM prioritization tool is performed exclusively
by CAM staff.
6.4.5 The various contingency funds contained in each life cycle renewal
capital program are deemed to be of highest priority
6.4.6 The presentation of the life cycle renewal capital budget is based on a
detailed listing of each event comprising the ward, location, description
of the work and amount.
6.4.7 Capital budgeting for life cycle renewal is based on defined capital
programs and the transfer of funds between capital life cycle renewal
programs is not normally performed, except under extenuating
circumstances.
6.4.8 The replacement standard to be applied for life cycle renewal projects is
based on a replacement with equivalent capacity, service characteristics
and compliance with applicable codes and regulations.
6.4.9 Each individual event contained in the capital life cycle renewal budget
will tolerate the inclusion of a non-life cycle renewal item (e.g. energy
conservation item) to a maximum value of 10% of the event costs or
$10,000, whichever is the lesser amount.
6.4.10 For building and park renovation projects funded by others, CAM will
determine what life cycle renewal events for the applicable park or
building will be considered in the capital budget in an effort to coordinate
work, reduce facility downtime and achieve costs savings for the City.
6.4.11 For building and park renovation projects that are funded by others, life
cycle renewal events up to three (3) years ahead of planned replacement
for the given facility will be considered for inclusion in the current capital
budget.
Capital Life Cycle Renewal Policy– December 2003
16
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
6.5
Capital Work Execution
6.5.1
6.5.2
6.5.3
6.5.4
6.5.5
6.5.6
6.5.7
6.5.8
6.5.9
CAM will work to ensure that detailed design for all projects, having a
value in excess of $ 50,000 or of sufficient complexity, is completed a
minimum of one budget year preceding the execution of the project.
Since the RPAM life cycle renewal budgets are published in the capital
budget document, CAM will adhere as much as possible to the
completion of the published program of work, except under extenuatory
circumstances and emergency situations.
Ad hoc projects normally cannot substitute for budgeted projects.
Substitutions will only be accepted if the dollar value of the work that is
cancelled is equal to or less than the dollar value of the substitution; the
priority ranking of the substitution is equal to or greater than the original
project; the cancelled project(s) originate within the same ward and the
substitution has been approved by the local councilor and the Manager,
CAM; and the cancelled project(s) as well as the substitution are defined
within the same capital life cycle renewal program.
Although the execution of some life cycle renewal projects may be
performed by others, it is recognized that the management of life cycle
renewal projects is undertaken exclusively by CAM.
The free balance of all completed life cycle renewal projects is returned to
funding in support of unanticipated failures, emergencies and higher
than projected project costs is available.
It is CAM practice to conduct post audits of selected projects and to
involve both staff and clients in assessing how the actual results of
implemented projects measure against the anticipated results.
The planned demolition of a active building is managed by CAM and
funded through the life cycle renewal capital budget.
The need to replace a demolished facility is identified by the client
department and is subject to the asset rationalization process, delivered
by CAM.
The capital cost for the replacement of a demolished facility is assumed in
its entirety by the applicable client department
Capital Life Cycle Renewal Policy– December 2003
17
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Appendix “A” – Example of the Information Content of a Typical Life Cycle
Renewal Event
Typical COAMS Event Entry Screen
1. Reference Number: System assigned number for the event.
2. CAM Project Number: Old CAM Project Number from 2001/2002 system. Being
phased-out.
3. Project Year: The year in which the event is scheduled to be approved as a project.
4. Facility Name: The name of the facility to which the event is attached.
5. Facility Number: The unique number of that facility.
6. Budget: The anticipated budget for the eventual project
7. Priority: The calculated relative priority ranking for this event (from 0-100).
8. Lifecycle Interval: If this event represents a “life-cycle” project, the number of
years before the project is automatically recycled in the long range forecast.
9. Classification: The type of event. (LCR=Life Cycle Renewal, RPR=Major Repair,
etc.)
10. Project Type: The project type associated with this event (i.e. Mechanical, Roofing,
etc.)
11. Political Sensitivity: User rating set at one of NONE, LOW, MEDIUM or HIGH
based on political inquiry or insistence. Changing this value will adjust the
priority accordingly.
12. Year Originally Requested: The year in which the event was first requested.
13. Year Recommended: The year in which the event was originally recommended for
execution.
14. Years Deferred: The difference, in years, between the Project Year and the Year
Recommended.
Capital Life Cycle Renewal Policy– December 2003
18
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
15. Scope of Work: A more detailed description of the event.
16. Project Originator: Name of the individual who first identified the requirement for
this event.
17. Validated By: Name of the CAM staff who validated the event, if any.
18. Facility Category: Category of the facility in which the event is planned.
19. Budget Program: Name of the supporting Capital Budget Program (typically a
CAM program).
20. RPAM Division: Name of the associated RPAM Program Properties or Venture
Properties District or Campus.
21. CAM Section: Name of the CAM Section assumed to be assigned to the event as a
project.
22. Legacy Municipality: Name of the legacy municipality in which the facility and the
event are located.
23. Ward Number: Ward in which the facility and the event are located.
24. Facility Identity: Master group to which the associated facility belongs. (i.e.
Recreation Facilities, Public Works Facilities, etc.)
25. Project Validation: Brief commentary on the validation exercise.
26. Heritage: Set to YES or NO, determines whether or not this is a heritage facility
and flags it for project manager. Also results in automatic assignment of project
to “Heritage Program”.
27. Year Event Last Completed: If this is a life cycle event, identifies the year in which
the event was last executed.
28. Last Update: Date on which this event record was last changed.
29. Time of Update: Time at which the record was changed on that date.
30. By User: Name of System User who made the last change.
Capital Life Cycle Renewal Policy– December 2003
19
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Appendix “B” – Application of CAM Prioritization Tool for a Typical Life Cycle
Renewal Event
CAM Prioritization Tool
Process Flowchart
Project Is
Identified
Project Is
Categorized
Is Project
Seperately Funded?
Yes
Project Must Be:
Carry Over Project
y
Council Approved
y
Grant or Contribution
y
Supported
No
Health & Safety?
Yes
No
Legislative, Legal?
Yes
No
Identify Funding
Program
Documentation
Requirements Must Include
One or More of;
Accreditation
y
Inspection Report
Ministry of Labour
y
Orders
TSSA Directives
y
Electrical Safety
y
Authority Directives
Ministry of the
y
Environment Orders
Coroner Report
y
Ontario Fire Marshal
y
Directives
Identify Facility
Establish Facility
Relative
Importance Factor
(RIF)
Establish Facility
Sustainability
Index
Rank Project
Impact on Asset
Integrity
Rank Project
Impact on
Program Integrity
and Delivery
Rank Project
Financial
Considerations
Rank Project
Timing and
Implementation
Considerations
Rank Client
Satisfaction and
Community
Interest/Impact
Apply Weighting
Factors
Automatic 100
Priority
CALCULATE
PRIORITY
(MAX 100)
City of Ottawa
RPAM/CAM
2003-12-24
If Supporting Documentation
is Available
Execute Project In
Next Budget Year
Establish Project
In Capital Plan
Strategic Asset
Management
Capital Life Cycle Renewal Policy– December 2003
20
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
Appendix “C” – CAM Budget Presentation Format
Capital Life Cycle Renewal Policy– December 2003
21
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
TABLE 2 – BASE BUILDING ASSETS
A base building asset is considered to be physical property that is an integral
component of the fundamental building systems and is not singly attributable to a
client department work process. In order to be considered for life cycle renewal
funding, the base building asset must meet these qualifications:
• Replacement cost of the base building asset exceeds $ 5,000
• Capital repair cost of base building asset is $ 10,000 or more
• Required work has a useful life greater than one year.
Code
Building System
Base Building Asset
1.0
Superstructure
Columns, Slabs, Elevator Shafts
Stairwells, Risers, Foundation, Joists. Includes
painting of structural elements and exterior wood
cladding for maintaining structural integrity and
performing structural examinations
2.0
Exterior Closure
Exterior Wall Cladding, Exterior Stairs
Exterior Doors, Exterior Windows, Caulking, Fascia
and Soffitt, Power Door
Operators, Door Hardware, Automatic Door
Devices (excludes Locks, Keys, Tuckpointing)
3.0
Roofing
Roofing Systems, Roofing Ventilation, Skylights,
Eavestroughing, (excludes Minor Roof Repairs,
Snow Removal, Installation of Ice Guards, Roof
Hatch, Safety Ladders,)
4.0
Interior
Wall Systems, Flooring Systems, Ceiling Systems,
Cabinets and Millwork, Interior Doors, Fireplaces,
Interior Stairs, (excludes Locks)
5.0
Mechanical
Plumbing Fixtures, HVAC-Heating Systems,
HVAC-Ventilation, HVAC-Air Conditioning,
Ductwork, Sprinkler System
6.0
Electrical
Distribution, Power System, Lighting,
Fire and Life Safety Systems, Generator, EMCS,
Light Dimming Control, Illuminated
Signs (excludes UPS, Appliances, AV Systems,
Telephone Systems, Computers, etc)
Capital Life Cycle Renewal Policy– December 2003
22
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
7.0
Vertical T.
Elevators, Hoists (excludes scaffolds, personal lift
devices,)
8.0
Utilities
Underground utilities to building, septic system,
replacement of wells, replacement of buried
heating and fuel tank for building and dispensing
station, including applicable pumps, (excludes
land remediation/clean-up)
9.0
Arena
Refrigeration System, Arena Boards and Protective
Glass, Dehumidification, Scoreboard, Central PA
System (excludes hockey goals, protective netting,
Zamboni, furniture, etc)
10.0
Pools
Filtration System, Diving Board Stands, Chemical
Feed System, Dehumidification, Central PA
System, Wave Equipment, Floating Bulkheads,
(excludes diving boards, slides, play equipment,
furniture, etc)
11.0
Specialties
Walk-in freezers, Vaults (excludes appliances, cash
registers, safes
Activities
Life Cycle Renewal capital funds will be used to support the following work
interventions:
•
•
•
•
Remediation of asbestos, lead and pcb’s contained in buildings
Conversion of refrigeration systems to comply with legislated requirements
(i.e. chiller modifications)
Painting of structural elements in order to ensure structural strength and life
cycle of structural member
Painting of exterior wood clad structure in order to ensure strength and life
of this component
Capital Life Cycle Renewal Policy– December 2003
23
COMPREHENSIVE ASSET MANAGEMENT DIVISION, REAL PROPERTY ASSET MANAGEMENT BRANCH
TABLE 3 – BASE PARK ASSETS
A base park asset is considered to be physical property that is an integral component
of the fundamental park systems and is not singly attributable to a client department
activity. In order to be considered for life cycle renewal funding, the base park asset
must meet these qualifications:
•
•
•
Replacement cost of the base park asset exceeds $ 5,000
Capital repair cost of base park asset is $ 10,000 or more
Required work has a useful life greater than one year
BASE PARK ASSET
Sportsfield
Fencing
Lighting Systems
Irrigation Systems
Play Structures/Fitness Stations
Parking Facilities
Retaining Walls
Pathways
Court and sport surfaces
Outdoor Water Play Facilities (i.e. wading pools, spray pads, etc)
Sun shelters
Docks and wharfs
Park Bridges (except bridges that are part of a pedestrian link)
Other hard surfaces (interlock, etc)
Curbing
Spectator stands/Bleachers
Fountains
Sculptures and plaques/Monuments
Skateboard Park structures
Goal posts (excludes netting)
Park identification sign
Non-removable rink boards
Bandshell and fixed outdoor stage
Park utilities and services
Capital Life Cycle Renewal Policy– December 2003
24