Technical Due Diligence (TDD) in facilities management has emerged as a crucial process in the evaluation of facilities. Its significance has increased notably since the 2008 financial crisis, becoming a vital practice for consultants in the field. This article aims to provide an in-depth analysis, integrating insights from Nithin Bhandari of Embassy Services Pvt. Ltd., Aniket Sheth of SILA, and Wg Cdr Srikanth Balagandar of Pegasystems. Their contributions offer invaluable perspectives on intricate processes, emphasising its critical role in decision-making in real estate and facilities management.
Evolution and Importance
Initially, TDD was a relatively overlooked aspect of real estate operations. However, its importance has grown exponentially in recent years. Real estate operations, especially in the commercial sector, involve substantial investments, necessitating a thorough and disciplined approach. This process serves as a risk assessment tool, guiding investors on liabilities, obligations, contracts, operations, and other project aspects. It provides a non-judgmental overview of both the positive and negative elements of a project, aiding in informed decision-making.
Understanding Technical Due Diligence
TDD in real estate and facilities management is the process of analysing the technical aspects of a building or facility. This analysis includes examining a company’s technical assets, such as specialised equipment, production facilities, building structures, and overall operational functionality. It offers an independent, third-party assessment to highlight potential risks and threats associated with a project. This process is crucial for planning future costs associated with management, maintenance, and repair.
Scope and Process
The TDD process begins with a comprehensive risk assessment, including reviewing technical documentation, status inspections, and environmental impact analyses. The scope spans the entire lifecycle of a building, appraising its condition, compliance with rules and standards, reliability, maintenance level, and other relevant technical aspects.
Technical due diligence acts as a crucial risk assessment tool, guiding facilities management professionals about liabilities, contracts, and operations, offering a balanced view of a facility’s strengths and weaknesses.”
Structural Integrity Assessment
Nitin Bhandari emphasises the importance of focusing on historical records, non-destructive testing, and comprehensive visual inspections, particularly for older buildings. This approach is essential for detecting common structural concerns like foundation settling, corrosion, or deterioration.
Water seepage is identified as a significant threat, leading to structural decay. In-depth analyses and root cause analyses are conducted by experts to develop integrated solutions for these issues.
MEP Systems Evaluation
Aniketh Sheth describes the methods used to evaluate the condition and efficiency of MEP systems, including equipment lifecycle analysis, performance testing, thermographic inspections, and condition assessments. This comprehensive approach helps in understanding the operational backbone of a building and identifying areas for improvement.
The focus is also on the Mean Time Between Failure (MTBF) analysis, which aids in making informed decisions regarding CAPEX investments.
Compliance & Sustainability
Balagandar stresses the importance of compliance with local building codes and safety regulations. A rigorous review process is essential to stay updated with regulatory changes.
Sustainability plays a significant role in TDD, with an emphasis on evaluating a building’s potential for energy-efficient upgrades and the adoption of eco-friendly practices.
Role of Technology
Tools like Building Information Modelling (BIM) and 3D scanning offer detailed insights into the properties, allowing for more informed decision-making. The use of Building Management Systems (BMS) for real-time monitoring and performance analysis of MEP systems is also critical. Energy audits, thermographic imaging, and vibration analysis are some of the advanced methods employed.
Key Components of TDD
Condition Assessment: The physical state of the building, including structural integrity and safety standards, is critically evaluated. This includes reviewing maintenance practices and the reliability of MEP systems.
Regulatory Compliance: Ensuring the building complies with relevant laws and standards is a complex but vital task. Thorough inspections and collaborations with experts are necessary to address compliance issues.
Lifecycle Analysis: Analysing the property’s lifecycle, including occupancy, acquisitions, and practical limitations, is a crucial component of TDD.
Legal Documentation Review: Documents, including pre and post-approvals, are examined for potential legal challenges.
Stakeholders
The stakeholders include industrial companies, construction companies, FM companies, banking and investment firms, insurance companies, public bodies, and real estate companies. These stakeholders rely on TDD for informed decision-making and risk assessment.
Challenges & Best Practices
Conducting TDD is a complex process that requires meticulous planning and attention to detail. Teams conducting must be thorough in their research and maintain confidentiality. Effective communication with client-side facility management teams is crucial.
Impact on Facilities Management
TDD significantly impacts facilities management by providing detailed insights into the technical aspects of a building. It aids in identifying areas needing improvement, potential risks, and cost-effective solutions for maintenance and repair. Understanding the unique selling points (USPs) of a property enables better planning and execution of strategies for efficient building management.