Don't panic, but don't wait: Addressing the Y2K issue

Are we tired of all the hype yet? Hardly a day goes by without hearing the doom and gloom scenarios related to the Year 2000 problem, or Y2K as it's known in the vernacular. Planes falling out of the sky. Bank and brokerage accounts zeroing-out. And anything run on software or dependent on embedded chips - which is just about everything these days - malfunctioning and creating havoc. Although this makes for interesting conversation, reports of the coming Armageddon may be largely exaggerated. With that caveat, property owners still need to be aware of the myriad building systems that could be impacted on Jan. 1, 2000, as well as take the necessary steps to ensure that building operations continue unimpeded. Certainly there is no need for panic, but the time to act is now.

Technically, the Y2K problem is caused by the inability of computer programs to recognize the final two digits of the year (00 in this case) as referencing the year 2000 as opposed to 1900. But beyond the technicalities, the Y2K problem is really an operational issue that needs to be addressed in a systematic approach. The first step must be a thorough review of all building systems. Any system that references a calendar is a potential problem. In our own due diligence, we have identified 26 different building systems that could be at risk, including all security and alarm systems, mechanical equipment, environmental control systems and telecommunications systems, just to name a few. And be sure not to forget to inventory equipment and systems owned by tenants that the landlord is responsible to maintain as stipulated by a lease.

Next, assess the potential for problems within each system. At this juncture, it may be prudent to use the resources of an engineering consulting firm to help you navigate through the technical aspects of each system. Partnering with an engineering expert will enable you to manage the entire process and avoid getting overwhelmed by the technical details of every system. The manufacturers should also be able to provide valuable information regarding each system and how to make it Y2K compliant cost-effectively.

Once you determine which systems may have Y2K problems, prioritize which ones should be addressed first, and budget what it will cost to remedy each system. In many cases equipment has a manual override, which will allow normal operations to be maintained and will buy you time to develop more cost-effective solutions. In other instances, new software or a new embedded microprocessor will be required. Be sure to check your supplier's website for Y2K information; many of them are now beginning to offer free software upgrade packages. Whatever the case, it is important that you begin the process now. Consider how each vendor will be inundated with similar requests as the millennium approaches. If you wait, will the parts still be available next year? If the parts are available, will the costs be inflated? Are you willing to take that chance?

Do not forget to test each critical system, especially if it does not have an override. Also, be sure to have a contingency plan in place. Although these safety measures may inflate short-term costs, view them as an insurance policy or a risk management feature. The additional costs you incur for preparedness could pale in comparison to your ultimate costs should some systems fail on Jan. 1, 2000.

Throughout the whole process, do not lose sight of your primary goal of maximizing the performance of the real estate. Not every building system needs to be upgraded to Cadillac status. Certainly, it may be more prudent to upgrade some systems at the same time as you are making them Y2K compliant. In other instances it will be more prudent to look for simpler, more cost-effective solutions. These decisions will be made like any other operational issue, based on cashflow availability and how these upgrades will impact the ultimate investment goals of the owner and the tenants' operating expense levels.

We all have a tendency to procrastinate, especially when faced with a task that appears particularly daunting and intimidating. Although the Y2K issue can impact many building systems, the solutions to making many of these critical building systems Y2K compliant may be surprisingly simple. Regardless of the solutions, it is important that you begin addressing the issue sooner rather than later, and a good place to start is with BOMA's informational booklet titled Meeting the Year 2000 Challenge , which provides some basic information and an excellent template for developing a Y2K plan. [For more information on BOMA's Y2K booklet, call (800) 426-6292.] Gather the facts about your buildings. Don't succumb to the alarmist's point of view. Prepare budgets so there are no surprises. And develop a written plan with timetables and specific goals. In the end, this logical approach will enable your building to transition into the year 2000 seamlessly.

1. Complete a thorough review of all building systems

2. Assess the potential problems within each system (you may need to discuss with engineering consulting firm)

3. Once you've determined which systems may have Y2K problems, prioritize which ones should be addressed first and budget what it will cost to remedy each system

4. Do not forget to test each critical system, especially if it does not have an override.

5. Also, be sure to have a contingency plan in place.

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