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Your Property Condition Assessment Is Worthless

The Case for Adding Building Data to PCAs

There are some services that are so commonplace that they become standardized. This standardization often stifles innovation because every service provider is just replicating each others’ offerings. In real estate, this seems to be the case with property inspections or more specifically for commercial buildings the Property Condition Assessment (or PCA). These reports are done by certified engineers or architects and can be one of the main pieces of information when evaluating the value of a property—so much so that they are often required by lenders and investors.

PCAs are comprehensive in so far as they document every aspect of a property. But while these often hundred page plus reports meticulously categorize the physical qualities of a building (structure, pavement, facades, roof, etc.), they say very little about one of the most important parts of a building’s day-to-day operations: the mechanical systems. PCAs generally report the condition or complicated equipment like AC units or boilers with generic terms like “good” or “fair.” They often reference a supporting document called the Replacement Reserve Schedule for specs on when each unit should be replaced but these schedules are mostly financial and just depreciate the values asset over a predetermined lifespan.

With all the information that is being collected in buildings, it is amazing that these comprehensive reports have so little actual use data. “Most of what gets noted on a PCA is sight based,” said Shannon Smith of PointGuard, a facilities management software platform. “If you were trying to understand the condition or a building why wouldn’t you use the data from its performance?” Obviously, there are plenty of savvy investors, owners and managers that look at building data before making their assumptions but the PCA is supposed to be a comprehensive understanding of a building for even the least sophisticated decision makers and it falls very short of that.

It is easy to criticize, I know. Just saying, “we need to add data to PCA” doesn’t reflect the complexity of what it means to add this layer to an already complicated process. Plus, everyone has different ideas on what data is important and useful data can easily get buried under piles of unusable info. Smith has spent a lot of time thinking about this as he has built his platform. “When it comes to displaying building data it has to be intuitive. You need to have a way to triage all of the data in a way that can show the maintenance team exactly where they might need to turn a wrench,” he said.

But, according to Shannon one of the biggest problem with the way assess a building is that we are focusing on the wrong things. “We believe that the purpose of a building is to keep its occupants comfortable and healthy,” he explained. “That means that what we should focus on is how each component of a building is achieving that goal.” Pointguard’s approach is to give every piece of equipment a comfort score and a health score. That way they can look at the effects of the performance of each unit on the building’s comfort or health. “Giving a score lets managers know how their building is performing and what changes would cause the greatest impact.”

Understanding every part of a complicated system like a building is tough. PCAs we designed in order to bring order in the way we understand the condition of a building. They were meant to be a way to understand the future risk of a building for lenders and investors. In that respect, they have done a lot of good for the industry. But these reports could do a lot more. The

As our philosophy on the most important aspects of a building’s performance changes, we need our evaluation techniques to evolve with it. PCAs should include analytics like use-based replacement schedules or unit comfort scores in order to give a comprehensive assessment of a building’s future maintenance and upgrade costs. But I have already seen a shift towards data-driven analytics in building management. The savvy operator knows that there is much more to a building than what neatly fits onto the pages of a PCA. It is only one piece of the puzzle and, much like energy usage alone, doesn’t tell the whole story. It is only when all of these factors are put together and analyzed holistically that the condition of a property can truly be assessed.

Editor and Co-Founder

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