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The Risk Matrix: A Simple Yet Powerful Tool for Asset Management

When was the last time you took a hard look at the condition of your facility’s major systems and assets? Roofs, HVAC units, parking lots and other key components all have a limited usable lifespan. Ignoring that reality can lead to disastrous consequences down the road. Proper planning, however, ensures that you have the assets […]

When was the last time you took a hard look at the condition of your facility’s major systems and assets? Roofs, HVAC units, parking lots and other key components all have a limited usable lifespan. Ignoring that reality can lead to disastrous consequences down the road. Proper planning, however, ensures that you have the assets in place when needed and make for a healthier financial outcome.

A capital reserve study provides a detailed assessment of your facility’s assets and creates a replacement schedule and budget. This proactive approach helps avoid catastrophic failures that can cause severe damage, safety hazards, operational disruptions and skyrocketing costs.

At zumBrunnen, we use a Risk Matrix to determine the urgency level for replacing each asset based on the severity and likelihood of failure. An “acute/very high” urgency-level replacement is one where failure could result in severe injury, large-scale property damage, major operational disruptions and exponentially higher replacement expenses, and is reasonably certain to occur soon. On the other end of the spectrum, a “negligible” concern has minimal impacts if it fails and/or is relatively unlikely to occur.

risk matrix chart

 

severity definitions the risk matrix zumbrunnen

The costs of a catastrophic asset failure go beyond just the replacement expense. Think about the cumulative costs of a hydronic pipe HVAC system failure that spews water and damages interior finishes. You could face personnel displacement, the need for temporary relocations or modular facilities, remediation costs, and a major loss of productivity and operational capabilities. Not to mention liability risks, impacts on your reputation, and other hard-to-quantify consequences.

Don’t let your critical assets deteriorate to a crisis point. Too often, facility managers take a “run it till it breaks” approach with aging equipment and systems to defer capital spending. While this may provide short-term savings, the costs and headaches of an in-service failure are almost always higher. As the saying goes, an ounce of prevention is worth a pound of cure.

There’s also a “false economy” in continuing to operate highly inefficient equipment and assets. As technology rapidly advances, what may have been best-in-class 15 years ago could now be a serious energy hog with excessive operating costs. You’re essentially throwing money away on outdated systems.

A capital reserve study gives you the data to prioritize your capital needs based on anticipated remaining life and failure risks. You can then allocate funds accordingly – replacing items before they become outrageously expensive liabilities. With a detailed condition assessment, you can make informed decisions about capital expenditures rather than reacting to crises.

The stakes are high when it comes to maintaining your facility’s assets and critical system components. Catastrophic failure events don’t just strain your budget, they can jeopardize safety, disrupt core operations, diminish asset values, damage your reputation and more.

A relatively small investment in capital planning can mitigate massive headaches and costs down the line.

Don’t wait until failure leads to an emergency situation. Whether for a single facility or an entire real estate portfolio, a professional capital reserve study is a must for any responsible facility manager. It’s an investment that could save your facility – and your organization – from catastrophe.

Reach out to the experts at zumBrunnen to get started on a capital reserve study and asset replacement plan. With decades of experience across industries, we’ll help you get ahead of challenges before they become emergencies. Prudent capital planning could be the difference between a manageable capital expense and an all-out crisis.

At zumBrunnen, We Solve Problems By Preventing Them.