RICS Draft Guidance Note: Planned preventative maintenance of commercial and residential property, 1st edition

Planned Preventative Maintenance, RICS guidance note, 1st edition

6 The report

After undertaking the site inspection and reviewing the agreed technical documents supplied by the building owner, occupier or property manager, RICS members should collate all of the information into an easily readable document.

Before reporting, RICS members may have to research particular materials, maintenance requirements and life expectancy from product information included with the O&M manuals, or with the manufacturers.

The client may require a meeting to review the draft PPM report. The meeting should be used to agree any changes to the report, including aligning it with service charge budgets if applicable to the instruction. RICS members should be mindful that changes in costs, priorities and timings do not degrade or alter their professional opinion and advice. They should not agree to changes if they do not believe it is correct to do so, and should document any proposed or enacted changes. A separate version of the report can be delivered to advise on the most appropriate investment priority where there are insufficient funds or the client is unwilling to undertake the works recommended in the PPM survey. Such a report should be clearly indicated as constrained by the client's requirements and the original retained as a record of advice.

6.1 PPM schedule

The most appropriate way to illustrate condition, defects and costs is with a PPM schedule. This document should be created as a spreadsheet, as this makes it possible to insert, alter or omit costs and see the effect on overall cost planning. A PPM schedule consists of a series of columns that should cover the following.

Reference

Location (of the building element/defect)

Description of the building element/sub-element

Condition description/defect

Year 1

Year 2

Year 3

...

               
               

 

In addition, the following columns may be added, subject to the client's instructions and surveyor's recommendations:

  • condition category risk/priority code
  • general comments
  • budget allocation and
  • photo reference (identification of defect/observation in a photo).

The PPM schedule should summarise the condition and give appropriate cost recommendations. Any unknown variables (such as tenant liabilities) concerned with the building condition should be given an estimated budget until more accurate information is available. Being risk-averse often means that cost estimates are based on a worst-case scenario. In most cases, as the PPM report is used to develop a schedule of works and as outstanding issues are resolved, the cost estimate may be reduced. If additional defects or maintenance obligations become apparent, extra costs may be introduced into the report. Any extra costs should be fully justified and evidenced.

Some clients may request an electronic version of the PPM schedule to help them manage the works over the PPM period. The client should be made aware that any direct adjustments, including delaying or omitting works, should only be taken with appropriate professional advice.

6.1.1 Condition ratings

When assessing the condition of the individual construction elements, sub-elements or components, RICS members should succinctly rate the condition. The following are some suggested examples.

  • Good: Item currently in good condition and with no outstanding repair or maintenance requirements. Works of a cyclical nature may be applicable, for example periodic cleaning or decoration.
  • Fair: Item is in serviceable and generally acceptable condition, but may exhibit signs of age-related wear and tear, weathering or superficial damage. Repair or renewal may be required.
  • Poor: Item is reaching the end of its designed or intended service life, or is excessively weathered or damaged. Repair or renewal will be necessary within the timescales of this schedule.
  • Hazardous: Item is in a dangerous condition and imminent works are required to rectify the problem, or to comply with health and safety or other statutory regulations.

6.1.2 Timeframe

The timing of works captured in a PPM schedule is critical to its beneficial use, as it allows clients and their advisors to forecast and undertake works without a detrimental impact on building performance. It is recognised that definitions of appropriate timeframes may vary between instructions; however, RICS members should consider the following:

  • urgent: to be undertaken directly following survey
  • immediate: within one year
  • short term: one to two years
  • medium term: three to five years and
  • long term: six to ten years.

To ensure clarity in the reporting process, the timeframes should be explicitly defined or indicated in the report to avoid any doubt. Urgent items should be reported directly to the client/duty holder following the survey.

6.1.3 Risk/priority ratings

RICS members should assess the risk posed by a defect and its impact or consequence if left untreated. There is no set format for this, but observations and defects may be colour coded to indicate their level of risk or urgency. The following ratings are examples of what could be used:

  • 1: urgent
  • 2: essential
  • 3: desirable
  • 4: cyclical and
  • 5: statutory.

6.2 Report layout and contents

To introduce the PPM schedule, an executive summary may be used to outline key information about the property and principle observations.

RICS members should undertake post-survey reflection when composing the report to ensure that the report is clear and there is consistency in the reporting of cost. This is particularly important where 'bulk' PPMs (multiple PPM surveys under one client instruction) are undertaken.

6.2.1 Executive summary

An executive summary is a succinct attempt to highlight the principal observations, going into sufficient detail to elaborate upon the causes and effects of the defects. The executive summary can be issued as a covering document for the cost matrix and PPM schedule.

The executive summary may include:

  • the nature of the property, its construction age and design
  • the adequacy of the key construction elements, building envelope (documentation reviewed) and services
  • compliance with statutory requirements:
    • building permits, regulations or codes
    • operating permits
    • fire and life safety
    • accessibility
    • deleterious materials
  • principle areas of concern
  • areas requiring further investigation or statutory inspection, and
  • summary of estimated costs, remedial works or recommended actions.

6.2.2 Full condition report

As an optional addition to the PPM schedule and if instructed by the client to write a full condition report, RICS members should commence with an introduction, followed by the main body or discussion, with a short conclusion used to sum up the findings. The introduction should frame or contextualise the survey by referring to the date and basis of the client instruction, and should touch upon any specific limitations that may have influenced the survey procedure or outcome.

The report should also include a brief description of the property and its location, before summarising the principal observations element by element. It can be used to detail the positive aspects of the property, but should also critically appraise the defects, seeking to offer a simple explanation of the science behind them. It is the first opportunity for the surveyor to express, in writing, the consequences of defects or abnormalities and begin to give the client an understanding of the options or evidence to make an informed decision.

The report should have a clear conclusion that is objective and reflects the outcome of the site survey. This is another opportunity to reiterate the principal findings, concerns and recommendations relating to the main body of the report and PPM schedule.

6.3 Cost data

The preparation of cost advice should be evidence-based, and although the PPM schedule will indicate a numerical figure, RICS members should be able to provide, if required, the methodology behind it. Component or elemental costs are generated by calculating the quantity, multiplying this by the rate and apportioning the relevant unit.

The PPM survey and review of the technical documents should include taking some check measurements or dimensions to generate the approximate quantities used to calculate costs. The rates can be taken from price books; online cost data sites; in-house cost databases that are derived from historic project costs; or from costs obtained by consulting professionals, colleagues and contractors. Where cloud-based software with online cost databases is used, RICS members should check that cost information is up to date and relevant to the specific situation. If the costs are challenged, RICS members should be able to explain how they have been calculated.

Costs are either 'day one', which are effectively present-day costs, or they can be indexed to allow for inflation based on documented forecasts to indicate what they will be in the short, medium and long terms. If challenged, RICS members should be able to explain the source of the index and how the cost projection has been made.

RICS members should have consideration of preliminaries, overheads, associated access costs, consultants' fees, and contingency within the cost items and how this is shown in the schedule.

RICS members should be risk-averse with cost estimates and recognise any limitations in how these have been calculated. According to the client instruction, how the costs have been generated should be documented in the PPM report. The report may include a statement similar to the following:

'Budget estimates have been assessed relative to the limited time available to report. They are "day one" costs subject to market conditions and future inflation. They are exclusive of professional fees, asbestos removal and VAT. Where prices have been estimated per m², this has been done based on plans received (where applicable) or approximate times required to perform tasks. The prices are budget estimates and are subject to a full brief and feasibility study to ascertain all relevant options and costs, including contractors' preliminaries, OHP, access, etc.'

6.3.1 Service charge code

It should be recognised that a large part of the market for PPMs is covered by the service charge. In some leases, the service charge can only be used to recover the cost of repairs and like-for-like replacements of building elements that are out of repair, or beyond economic repair; improvements or upgrades cannot be recovered. RICS members are expected to be familiar with local service charge codes, but ultimate responsibility for implementing service charges lies with the property managers charged with managing the asset.

6.4 Updating existing PPM reports

PPM reports should be updated regularly at intervals appropriate to the asset size, complexity and condition. Ideally, updates should be undertaken on an annual basis and the report should be submitted, where possible, with sufficient time for its content to be discussed in advance of the deadline for setting the budget. If not undertaken annually, larger, more complex assets and assets in poor condition may require updates at more frequent intervals.

Updates should not seek to extend the maintenance period beyond its original timeframe. They should report against the maintenance period captured in the original client instruction to ensure the surveyor is not overly focused on identifying new items beyond the horizon of the original reporting, as doing so may result in a risk that items will be missed.

Updates should not be undertaken for historic reports that are more than three years old. In such situations, new PPM surveys should be undertaken.

RICS members should not update reports prepared by other firms, to avoid inconsistency as well as potential liability and copyright issues. Updates should involve re-inspecting the property; it is not sufficient to update the report based on a meeting with the building management or maintenance team. The basis for the update should be clearly stated in the report.