Chapter 2: Restoration and Renewal Program

This chapter specifies the inspection program and systems required to identify and track restoration and capital renewal needs. Restoration and Renewal are asset replacement work or maintenance work that were not performed when it was scheduled. The University inspects, tracks, and estimates the cost of all restoration and renewal through its Integrated Capital Asset Management Program (ICAMP). Capital renewal is the deterioration of buildings and infrastructure over time. Normally, these are larger projects and involve whole system replacement or renewal.

The Facility Audit and Inspection Program identifies, quantifies (provides budget estimates), and prioritizes restoration projects, capital renewal, and replacement projects according to the urgency of need and significance to the University’s mission (RD - Project Categorization Flow Chart).

Facilities are physically inspected to identify restoration and capital renewal needs and/or projects. The  facility infrastructure and building components should be inspected and documented in accordance with the comprehensive list of items in the ICAMP (Login and password are available through UCOP)  Catalog.  Note that inspection costs of the Facility Audit and Inspection Program are not allowable as a restoration or renewal item. The costs of work, including construction inspection, designing, scheduling, and advertising, are allowable restoration or capital renewal items.

Each identified project shall be prioritized according to their adopted risk evaluation formula. Below is an ICAMP priority rating that is an excellent foundation for this criteria:

• Priority 1: Currently Critical (RED). These are needs and/or projects which require immediate action to return a facility to normal operation, stop accelerated deterioration, or correct a cited safety hazard, especially those conditions which potentially impact an entire Campus or pose a significant risk to health and safety. Examples of such conditions would be:
  • Campus impact: A Campus-wide chilled water system is in imminent danger of failing. Failure would make all buildings non-functional.
  • Health and Safety Impact: Previously undiscovered dry rot has compromised structural beams. The building cannot be safely used without immediate repair.
• Priority 2: Potentially Critical (YELLOW). These needs and/or projects could become critical within a year if not corrected. Situations in this category include intermittent interruptions, rapid deterioration, and potential safety hazards.
• Priority 3: Necessary, Not Yet Critical (GREEN). These needs and/or projects include conditions requiring attention to preclude predictable deterioration or potential downtime and the associated damage or higher costs if not addressed within the next 2-5 years. 

When determining a need and/or project priority, the impact upon the University’s mission and the potential for failure should be a consideration in prioritizing restoration and capital renewal needs. 

Upon completing the Facility Audit and Inspection Program procedure, categorize projects as restoration or capital renewal and replacement following the Project Categorization Flow Chart.

A restoration and capital renewal project should be limited to a specific work item or set of integrally related work items in (1) a single building, or group of buildings (2) a clearly identifiable component of a grounds area, or (3) a utilities system. The project should be accomplished under a single contract or work order. For administrative simplification, no restoration or renewal project should be smaller than $5,000. For planning, budgeting, and implementing purposes, similar work items of small value may be aggregated to make a reasonably sized project if the items are of equal priority. However, major work items in individual buildings, separately identifiable grounds areas, or utilities systems are considered separate projects and should not be aggregated unless specifically approved.

ICAMP, “deconstructs” state funded campus buildings into system and subsystems. Asset replacement needs (“opportunities”) are identified via inspection and tracked in ICAMP.  Each system is assigned a life cycle and a unit renewal cost based on the expected life cycle and components.  All space data in ICAMP is extracted directly from the University's official space inventory maintained in the Equipment, Facilities & Assets (EFA) database. When building systems are renewed and replaced (such as the complete replacement or renewal of a building HVAC system), ICAMP needs to be updated by the campus representative to reflect these capital investments.

Effective data management is important to the success of a Facility's OMP program. Three suggested OMP data management goals are:

1. Establish data collection systems to develop:
   • Uniform reporting formats.
   • Supervisory and management control reports.
   • Continual feedback of information between departments through communications and manuals.
   • Web-based, campus user interface.
2. Institute systems for reporting historical data and operating statistics.
3. Maintain trend lines and indices of operating effectiveness.

EFA is an information system that provides planning and management data on the existing physical plant. Specifically, EFA provides information on buildings, and rooms within buildings. EFA also serves as the Facility's official record of existing space.   Each campus maintains and updates its own inventory. Once each year, campuses provide their inventory to the UCOP where the data are merged into the Corporate Equipment Facilities and Assets System.

Currently there is not a State program dedicated to funding restoration, special repairs, or capital renewal. Renewal projects may be submitted for approval and funding under the “State Capital Improvements” program. 

External Financing. External Financing for restoration and capital renewal may be available for eligible Campuses. Repayment of this financing is through the Campus’s share of Federal Indirect Cost Recovery

Auxiliary Enterprises. Auxiliary enterprises and equivalent non-state-supported units are responsible for funding the operation and maintenance of facilities or portions of facilities they use. These units are also responsible for funding the maintenance (including restoration and renewal) of roads, grounds, and utility service systems outside their facilities but used exclusively or almost exclusively to serve their facilities. Funds from the unit's operating income or reserves, or other appropriate non-state sources, should be used to pay for restoration and renewal. Capital renewal funding guidelines for Auxiliary Enterprises are found in: Business and Finance Bulletin A-59, Costing and Working Capital for Auxiliary and Service Enterprises.

As funding becomes available from certain funding sources, the UCOP will issue specific instructions and formats for submitting requests for appropriation of these funds.  

The information in this article applies to defects and deficiencies associated with all facilities owned by or under the control of the University. The purpose of this section is to encourage timely reporting of defects or deficiencies and to provide guidance in determining responsibility for design and construction defects or deficiencies. See "Recovery for Construction and Design Deficiencies in University Buildings," UC, UCL, letter to chancellors and laboratory directors, Berkeley, CA, April 17, 1975. To maximize the University's chances of recovery when contractors or architects refuse to accept responsibility for defects, UCL should be contacted early, before action is taken to correct the defect. If the defects are not reported, or reports are delayed, then the chances for recovery are lessened. Two main factors account for the delays or failures to report defects or deficiencies to Counsel:

1. Problems are observed but are not considered serious and therefore are not reported. In some cases, remedial work is undertaken which alters conditions and compromises legal recovery efforts.
2. Defects are observed and are recognized as being serious but are not reported because of the erroneous assumption that the University has no further rights since the guarantee period or statute of limitations period has expired.

Initial Evaluation. Discuss defects and deficiencies among staff, and as soon as possible, contact UCL for advice. The following steps should then be taken:

• Using technically competent Facility personnel or outside experts, evaluate and document the extent and seriousness of the defect.
• Have UCL prepare suitable demand letters.

Note that some defects present an emergency where remedial measures must be accomplished immediately. The Facility administrator must decide how to proceed to protect life and property; however, if recovery is to be affected, the procedures listed in this section should be followed as closely as possible.

Responsibility Refusal by Design Professional or Contractor. If a building deficiency is determined to be serious, and neither the design professional nor the contractor accepts responsibility for its correction, UCL should be contacted and provided with an adequate background statement of the problem. The objective of the background information is to get an overview of the problem early enough to maximize the effective alternatives available. An adequate background statement includes the following information:

1. A brief description of the nature and scope of the deficiency.
2. A concise summary of the design history of the problem: i.e., the specific program given to the design professional, whether any design recommendations for the deficient areas were vetoed for budget or other reasons, what the construction documents required, what the contractor installed, the extent of the design professional's approval of shop drawing submittals, substitution requests, and field changes, and the installation made.
3. A copy of all specification provisions and pertinent drawings applicable to the deficiency (including any applicable general or special guarantee provision) and a brief explanation in layman's terms of technical portions of the construction documents transmitted.
4. A concise statement of the construction history of the defect including the approximate time of installation, when the deficiency first developed, a brief outline summary of any pertinent correspondence, job meetings, minutes, and inspector's reports bearing on the problem (with full copies of such documents attached), the date of project acceptance, and the duration of any guarantee applicable to the deficiency.
5. A description of the extent of any corrective action attempted indicating what it was, who recommended it, who performed it, and when.
6. A description of the present condition of the deficiency.
7. A description and statement of estimated cost for corrections which will probably be required.
8. An expression of Facility opinion as to the responsibility for and cause of the defect coupled with a brief statement of the facts supporting that conclusion. 

Expressing Opinion on Responsible Cause. The initial expression of opinion as to who is responsible for a defect or deficiency should be made by Facility personnel if they have the technical competence. In cases when employment of an outside expert is necessary to augment Facility capabilities, UCL should have an advance opportunity to evaluate the potential forensic ability of such an expert. If such an expert is not retained by or at the request of Counsel, the expert's report on the problem probably cannot be kept confidential in the event of litigation, and the expert may be subject to being deposed as a witness.

Preservation and Documentation of Evidence. If litigation is a possibility, evidence of building defects or deficiencies must be preserved or documented and safeguarded. If not, there should be no expectation of recovery of damages by a lawsuit. Preserve and document evidence by:

• Retaining defective material.
• Taking photographs.
• Having a competent person examine the defect and express a technical opinion as to its cause.
• Retaining relevant correspondence and documents.

Confidentiality of Evidence. Parties to a lawsuit have broad rights to examine the files of their opponents. Most communications including memoranda to file which are not sent from a University employee to University Counsel may be inspected and used as evidence to oppose the University's case. To prevent this evidence from being revealed, follow these guidelines:

• Take care not to make any damaging admissions or reveal any weaknesses in the potential case.
• Evaluation of the University's prospects for recovery in potential litigation shall be made only by UCL.
• With the exception of item 8 in the background statement, avoid writing memoranda that contain admissions that may be against the University's interest, which include allocation of responsibility or explanations of or reasons for defects or deficiencies, or which comment on consultants' reports. When such memoranda are necessary, draft copies shall be sent to UCL for comment and for transmittal at Counsel's option.

The deficient past performance of a design professional should be considered going forward.