The roof is leaking in one building, the sidewalks all around your property are cracking, and your AC stopped working two weeks ago. Does any of that sound familiar? While it may be a bit of an exaggerated example, you’re probably experiencing issues similar to these in your own facilities if you aren’t using a Capital Improvement Plan (CIP). While asset failure is inevitable, a CIP can help make sure you have the funds available when a piece of equipment does break down. So, let’s dive into how to create a CIP in four easy steps.

1. Define the needs of your facility (facility condition assessment).

Facility condition assessments (FCAs) can help you understand how to keep your facilities and assets in good working condition. Along with identifying any shortfalls in your facilities, an FCA will calculate the remaining useful life of your assets, any capital replacement needs, and the cost of replacing your facility. The assessment should also include a list of recommended repairs in order of priority. You can use this as a foundation to choose which projects to take on first. It’s important to note that an FCA only looks at your facilities at one moment in time. Because your assets are constantly changing, the data acquired can become outdated fairly quickly. Be sure to use the information from the assessment to prepare your CIP as soon as possible.

How FMX can help

Any FMX customer can leverage our team’s services for a facility condition assessment. In a standard assessment, FMX will measure and evaluate the mechanical, electrical, plumbing, fire protection, and technology systems, then provide you with the results of their findings. You will also be given a thorough report of the assessment as well as recommendations for viable improvement options that target the needs of your facility, such as energy efficiency, meeting code requirements or other changes to accommodate current and long-term facility needs. In FMX, you can use the Capital Forecast dashboard to plan your budget and your CIP.

Facility Condition Assessment

The FMX Deep Dive

Thinking you can conduct your own Facility Condition Assessment? Read the FMX Deep Dive for the metrics you should measure.

Facility condition index: The facility condition index (FCI) was created so that facilities managers could compare the conditions of their facilities to a benchmark. In general, the lower the number, the better the condition of that facility as the FCI shows the percentage of the facility that has deteriorated. Here’s how you can calculate the FCI for each of your facilities:

(Current maintenance, repair, and replacement costs of a facility/
Current replacement value of the facility)

An FCI ranges from 0 – 100%. A higher number indicates the need for capital improvements. Generally speaking, an FCI of 10% or less means your facility is in good working condition. On the other hand, an FCI greater than 10% indicates the building has begun to fail and some of your assets are nearing the end of their lifecycle.

API: An API report lists your assets by relevancy. There is no formula used to calculate this – instead, major stakeholders come together to determine the contribution value of each asset as it pertains to the overall mission of your organization.

The score (from 0-100) will give you an idea of how important your assets are to the organization and which ones deserve capital improvements first in the eyes of your stakeholders.

Critical systems identification: With a critical systems identification, you (the FM) get to decide which assets, if not working properly, would prevent your business from operating. These may be similar to the results of the API, but this allows the facilities department to weigh in on the importance of each equipment item.

To calculate this, first determine the critical systems in your facilities (HVAC, lighting, plumbing, production equipment for manufacturing companies, etc.). As a rule, a system should be deemed critical if a building or asset’s performance will be negatively affected if it isn’t functioning properly. Next, you need to determine which of these assets are performing with minor (long-term impact), serious (impact within the next 2-5 years), and critical (almost immediate impact) deficiencies.

Critical systems with serious and critical deficiencies should be included in your capital improvement plan, whereas systems (either critical or non-critical) with only minor deficiencies can be postponed until the next CIP.

2. Choose which capital projects to take on first.

Using information from your facility condition assessment (or from the calculations you performed on your own), you can begin to prioritize which improvements to take on first. It’s recommended to stick to the priority list given to you during the FCA, but if you’ve done some of your own calculations, feel free to include those in your decision.

During this step in the capital improvement planning process, it’s a good idea to figure out if you can make use of economies of scale for any of these projects as well. For instance, if two of your facilities are performing with critically deficient roofs, then you are most definitely going to put this in your plan. But, let’s say you have another building that needs a roof replacement, but it’s only a minor issue. You may be able to increase cost and labor savings if you replace all three roofs at once. Using economies of scale can really benefit you for capital improvements and other important projects. So, be sure to look into it when possible!

3. Prepare and recommend a capital improvement budget.

A CIP is going to cost some money up front despite the long-term savings you’ll reap. And – I know I’m taking a shot in the dark – I’m going to guess your department probably doesn’t have 100% of the money to fund your plan.

So, it’s time to put this CIP into a presentable format and prepare to share it with your boss. In addition to the reasoning behind your decisions (either the information given to you from your facility condition assessment or the metrics you calculated on your own), you will need to let them know what kind of funding this is going to require.

The best way to ask for funding is to present your improvement budget in a digestible format. Make sure they understand the amount of money each improvement requires and, most importantly, why this particular improvement needs to be done. You should even solicit bids from qualified contractors so that you can present specific numbers at the meeting. This will give you more credibility and make your budget more accurate.

4. Update and monitor your capital improvement plan over time.

Now that you’ve put all of this time and effort into creating a plan, you need to ensure your hard work doesn’t get poured down the drain. This means continuously monitoring your assets to make sure those minor deficiencies don’t turn into critical deficiencies, as well as assessing whether or not the projects you have chosen to tackle before others are still appropriate.

You should plan on making a new capital improvement plan once every four years – so, assessing about 25% of your assets each year should make your next capital improvement plan a breeze!

How FMX can help

With FMX, keeping up with your capital improvement plan is easy. You can create and assign maintenance tasks for all of your capital improvements in our easy-to-use work order software, so that when it’s time to start working on an asset, the right people are notified. You can even create tasks weeks, months, or years in advance. So, if you know exactly when you are planning to get these projects started, you can be sure it won’t fall through the cracks. If there’s a certain set of steps a technician needs to take when performing these tasks, you can list those in FMX too. With your entire team on the same page, there is no confusion as to how to get the job done!


  1. Facility Condition Assessment, Partner ESI
  2. Capital Budgets: A Step-by-Step Approach, BUILDINGS
  3. National Park Service’s Asset Priority Index Helps Guide Maintenance, Operations, FacilitiesNet

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