Using Risk Assessment Codes to Rank Order Facility Projects

Fred Fanning, CFM, PMP, LEED Green Associate

U.S. Department of Energy, 3 Chandler Court, Fredericksburg, VA 22405

fredefanning@gmail.com

ABSTRACT

It is the author’s experience that facility professionals do not get all the
resources they need to perform preventive maintenance, as well as
facility improvement projects. This often results in a backlog of work.
There is a way that facility professionals can rank order facility
improvement projects so that the most important ones are presented to
management with a better chance of approval. This is done by
identifying the risks associated with each project and recommended
those with the highest risk. After high­risk projects effort can be
placed on medium risk and then low risk. Usually resources run out
before all medium risks are done, but using this method will ensure
high­risk projects are done. In this paper, the author explains a process
he has used for over twenty years with very good success that can be
easily explained to budget staff and senior leaders.

INTRODUCTION

“Facility professionals typically are responsible for the oversight, operation, and
maintenance of the buildings and grounds, as well as service contracts” (Finance,
2013). Facility maintenance consists of preventive maintenance, planned and
unplanned replacement maintenance, planned minor works, breakdown maintenance,
and unplanned property services. The author will refer to all the maintenance except
preventive maintenance as facility improvement projects. Facilities maintenance
normally requires a 2­4 percent of the building replacement cost be reinvested each
year in maintenance to keep the facility fully operational. Unfortunately, most
facilities reinvest less than 2 percent of the building replacement cost, which creates a
backlog of maintenance that grows each year (Predicting, 2012). Preventive
maintenance costs run the same each year with an increase for inflation; however,
many of the facility improvement projects have a high one­time cost and are known
as capital projects (Operations, 2013). These capital projects are required to compete
with other projects outside of facilities but within the organization. It is essential that
all projects are competitive. Facility professional often think some funded projects do
not seem as important as facility projects that were not funded.
Capital projects compete against each other and those that make the best case are
funded. To get their projects funded facility professionals must submit the best
project packages they can. These packages must provide a clear description of the
project, its cost in current and future dollars, and justification for funding. Putting the
best packages forward gives the facility projects a better chance of being funded.
Unfortunately, the reality is that many facility professionals are never taught how to
prepare project packages and that results in facility packages not getting funded.

The author is a trained and certified facility professional. Over the years, he has
developed a process that leads to effective project packages that get funded. One of
the essential elements of any project package is a clear description of any safety risks
posed by the work of the project. Projects with a safety risk should be funded before
projects that don’t have any risk to them. Facility professionals must be able to
identify projects that have a safety risk and rank order them so that the most
dangerous projects are funded first. It is essential for a facility professional to have a
complete list of all capital work that needs to be done. From this list, each project
must be analyzed to determine the hazard of injury, illnesses, or environmental
damage. The results of this analysis will be provided on the list of facility projects.

RISK ASSESSMENT CODE

Risk Management is a five­step process used to identify and assess hazards as well as
controlling or eliminating them. There are five steps in the basic risk management
process:

x Step 1­Identify Hazards

x Step 2­Assess Hazards
x Step 3­Develop Controls and Make Decisions
x Step 4­Implement Controls
x Step 5­Supervise and Evaluate

Steps 1 and 2 describe the risk assessment process. Hazards are assessed in terms of
hazard severity and probability and assigned a risk assessment code (RAC). Hazards
should be corrected on a worst first basis using the RAC to determine the risk
(Fanning, 2003).

To determine the RAC, the facility professional would first identify the hazard
severity category, as described in Table 1 below. Each level of severity is identified
by a category, a description, and a definition of the result of being exposed to the risk.
The best practice is to pick the most common severity category that might occur and
not use a worst or best­case description.
 Category: I
Description: Catastrophic
Definition: Loss of ability to accomplish the duties or failure of duties by
organization. Death or permanent total disability of a person. Loss of equipment or
major damage to environmental.
Category: II
Description: Critical
Definition: Significantly (severely) degraded capability to conduct duties of
organization. Permanent partial disability, temporary total disability exceeding three
months. Major damage to equipment or environmental.
Category: III
Description: Marginal
Definition: Degraded capability of organization to perform duties. Lost day due to
injury or illness not exceeding three months. Minor damage to equipment or
environment.
Category: IV
Description: Negligible
Definition: Little or no adverse impact organization to perform duties. First aid or
minor medical treatment. Slight damage to equipment or environment.
Table 1, Hazard Severity Categories (adapted from U.S. Army Field Manual
100­14)

After determining the hazard severity category the facility professional must
determine the probability category using the definitions in Table 2 on the next page.
The best practice is to pick the most common severity category that might occur and
not use a worst or best­case description.

After determining the severity and probability categories the facility professional can
determine the risk assessment code by using Table 3 on the page 5. Take the hazard
severity category from table 1 (I, II, III, and IV), put a finger on it in the left column
of Table 3. Run that finger across the row until it is in the column of the probability
level (A, B, C, D, E) that finger is on the number compares severity and probability.

As an example if the hazard severity category was a II and the probability category
was B the number would be 2. The RAC would be II­B­2.

This RAC means that an accident from this hazard could cause a critical situation that
could significantly degrade the organization’s ability to conduct or perform its
mission. The result could be a permanent partial disability, temporary total disability
of a person that exceed three months’ time away from work. The result could also be
major damage to equipment or systems. This event is likely to occur several times in
an operation or during the service life of a piece of equipment. The result may occur
at a high rate, but experienced intermittently with regular intervals, and generally
often. An employee could experience the event several times in a career. Exposure to
all the employees of an organization is at high rate but experienced intermittently.
 Level: A
Probability: Frequent, occurs very often, continuously experienced
Single item: Occurs very often in service life of equipment.
Fleet or inventory of items: Occurs continuously during a specific operation or
over a service life.
Individual employee: Occurs very often in a career.
All employees exposed: Occurs continuously during a specific operation.
Level: B
Probability: Likely, occurs several times
Single item: Occurs several times in service life of equipment.
Fleet or inventory of items: Occurs at a high rate, but experienced intermittently.
Individual employee: Occurs several times in career.
All employees exposed: Occurs at a high rate but experienced intermittently.
Level: C
Probability: Occasional, occurs sporadically
Single item: Occurs some time in service life of equipment.
Fleet or inventory of items: Occurs several times in specific operation or over a
service life.
Individual employee: Occurs some time in career.
All employees exposed: Occurs sporadically.
Level: D
Probability: Seldom, remotely possible, could occur at some time.
Single item: Occurs in service life of equipment, but only remotely possible
Fleet or inventory of items: Occurs as isolated incident in a specific operation or
sometime in service life, but usually does not occur.
Individual employee: Occurs as isolated incident during a career.
All employees exposed: Occurs rarely within exposed population as isolated
incidents.
Level: E
Probability: Unlikely. Can assume will not occur, but not impossible.
Single item: Occurrence not impossible, but can assume will almost never occur
Fleet or inventory of items: Occurs very rarely (almost never or improbable) in a
specific operation or the service life.
Individual employee: Occurrence not impossible, but may assume will not occur in
career.
All employees exposed: Occurs very rarely, but not impossible.
Table 2, Accident Probability Category (adapted from U.S. Army Field Manual
100­14)
 Accident Probability
Hazard A B C D E
Severity
I 1 1 2 3 5
II 1 2 3 4 5
III 2 3 4 5 5
IV 3 4 5 5 5
Table 3, Risk Assessment Code Matrix (adapted from U.S. Army Field Manual
100­14)

PRIORITIZING WORK

The definition of the RAC is included in each project package sent to the budget staff
and management for consideration. The definition of the RAC is the justification of
why the project must be done.

When a justification says “could cause a critical situation that could significantly
degrade the organization’s ability to conduct or perform its mission” people respond
to that. Just as the response to “could result in a permanent partial disability,
temporary total disability of a person that exceed 3 months’ time away from work”
will get people’s attention. That is why the author recommends the best practice of
picking the most common severity category that might occur and not using a worst or
best­case description. Using a worst­case description will look like the facility
professional is exaggerating the risk. If budget staff and management think the risk is
exaggerated, they won’t consider it fairly. Using a best­case description will probably
not convince anyone to fund the project, and if the risk comes to fruition the facility
professional will look foolish.

The work that is not funded in one year should be updated and referred again the
following year. The author has experienced that some projects must be referred for
funding three or four times to get approved. In many cases, as high­risk projects are
worked off the list others can rise in importance. For the projects that do not receive
funding the risk being lower means that if it comes to fruition less damage will be
done.

SUMMARY

Not all facility maintenance projects are equal. It is important to recognize

that the funding provided for such projects is never fully realized. This means
not all projects will get done requiring the facility professional to find a
process to ensure that the projects with safety risk are identified. This is best
done with a risk assessment code. This code allows facility professionals to
rank order projects based on a comparison of severity and probability. The
description of the risk assessment code is included in the justification for the
project improving the chances of it being funded. When the justification
includes the risk the project poses to the organization it will garner more
attention. This attention is what the author believes will help get the project
funded. The author has used this process successfully for over twenty years
and believes it will work for others.

REFERENCES

Fanning, Fred, Basic Safety Administration: A Handbook for the New Safety
Specialist, American Society of Safety Engineers, Des Plaines, USA, 2003.
Finance and Business Manual, version 2.0, International Facility Management
Association, Houston, USA, 2013.
Field Manual 100­14, Risk Management, Department of the Army, Washington, DC
1998.
Predicting Outcomes of Investments in Maintenance and Repair of Federal Facilities,
National Academies Press, Washington, DC, 2012.
Operations and Maintenance Manual, version 2.0, International Facility Management
Association, Houston, USA, 2013.