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Four steps to develop, track and report KPIs

Developing reports for operating and capital expenditures is key to better asset decision-making
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Key Performance Indicators (KPIs) play a crucial role in health care facilities operations. Developing and reporting both operating expenditure (OPEX) and capital expenditure (CAPEX) metrics is essential for effective management and decision-making. Here are four steps to help develop relevant KPIs.

Step 1 is to understand your non-discretionary OPEX spend. There are four workload categories:

  • Energy and utility costs are measured by energy use intensity, which reflects facility efficiency.
  • Non-asset-driven workload are routine tasks essential for daily operations but not tied to specific assets.
  • Asset-driven workload encompasses labor and expenses directly related to infrastructure and is consistent regardless of facility occupancy.
  • Compliance-driven workload involves efforts to meet regulatory requirements, such as inspections.

Step 2 is to promote the value of discretionary OPEX. Organizations should pursue improvements, such as reliability-centered maintenance, to optimize operations, reduce energy costs and extend asset life.

Step 3 requires facilities managers to document their deferred maintenance CAPEX needs. Aging infrastructure makes ongoing capital investment critical. Key CAPEX metrics typically include:

  • Deferred maintenance. This encompasses assets past their useful life.
  • Age of Plant (AoP). AoP tracks deferred maintenance by comparing physical depreciation to expense.
  • Facility condition index (FCI). An FCI expresses deferred maintenance as a ratio of replacement needs to total building replacement value. Recommendations are an FCI: 0.05 for critical facilities and an FCI: 0.10 for less critical facilities.
  • Net asset value. This metric measures the “percent good” of facilities, reflecting asset health and maintenance quality.

Step 4 is to organize metrics by risk and criticality. Risk-ranking systems help to prioritize investments and communicate needs to leadership. 

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Mark Mochel, CHFM, PMP, ACABE, a strategic account executive at Brightly, a Siemens company.

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