Building and Infrastructure Failure Risks

Tennessee Valley Authority's (TVA) Facilities Management (FM) business unit is responsible for managing TVA's facilities portfolio and providing services across TVA, such as building maintenance and grounds and property management. Within FM, Facilities Programs and Projects manages efforts for facility renovations, upgrades, major repairs, energy efficiency, sustainability, and other facilities' needs. These efforts include TVA's Facilities Asset Preservation (FAP) Program, which was designed "to ensure core facility related assets are maintained in a condition to satisfy their intended operational capabilities." The FAP team is responsible for gathering asset information, identifying deficiencies, recommending corrective actions, and implementation planning for approved projects.TVA's facilities asset portfolio includes over 34 million square feet of gross space in about 3,446 structures, and a small number of these properties are not in use. From 2009 to 2011, FM identified 19 underutilized properties. Two of these properties, former coal plants, were decommissioned in 2011. A third property, part of TVA's Muscle Shoals reservation, is being mitigated under an extensive redevelopment project, which includes the November 2012 TVA Board of Directors approval of the possible sale of 1,000 acres of the Muscle Shoals property. In addition, TVA established the Challenged Properties Program (CPP) in March 2012 to develop strategies for proper handling of underutilized or vacant properties.Because of the importance of proper maintenance to the safe, efficient, and effective operation of assets, we initiated this audit to evaluate TVA's efforts to identify and mitigate risks associated with its buildings and infrastructure. As of July 2011, TVA's Enterprise Risk Management identified the risk of building and infrastructure failures among other safety risks and the FAP Program as the primary strategy to mitigate these risks.In summary, our audit disclosed FM's FAP Program was adequately designed to identify and mitigate the risks of building and infrastructure failures, and FM's processes for remediating identified risks are reasonably effective. However, we found TVA's risk exposure from building failures is elevated because the identified risks exclude underutilized properties, and FAP funding has not been adequate to address the risks in the long term. We also identified opportunities to improve some FAP Program and related FM processes.