The quickest way to rate a building’s capital position is to add up its capital bill and compare it with something: floor area, value, a benchmark. More cost, worse building. It is simple, it looks objective, and it is the way many systems have done it.
We think it is the wrong way, and the reasons say something about what a rating is for.
Cost measures size first
A large building has larger capital needs than a small one in almost every case. A building in an expensive market has higher costs than one elsewhere. Dividing by floor area or value helps, but only partly, because costs do not scale neatly with either. A rating built on cost ends up describing scale and market as much as the building.
Cost also carries every uncertainty in the estimates beneath it. Planning allowances are ranges. Prices move. A rating built on a total inherits all of that noise.
The index most public owners use
The most widely used condition rating among public and institutional owners is a cost ratio. The Facility Condition Index, published by the US National Association of College and University Business Officers in 1991, divides the cost of deferred maintenance and renewal by the building’s current replacement value. It is simple, comparable across a portfolio and easy to explain to a finance committee.
| Source | Good | Fair | Poor | Critical |
|---|---|---|---|---|
| Classic scheme used by many institutions (APPA) | Under 5% | 5% to 10% | Over 10% | |
| International Facility Management Association scale | 0 to 5% | 5% to 10% | 10% to 30% | Over 30% |
| Some current software defaults | Under 10% | 10% to 30% | 30% to 60% | Over 60% |
Designing Buildings; published institutional assessments. The variation in bands is itself part of the problem.
The FCI has real strengths, and its weaknesses are the ones this paper describes. It depends entirely on the replacement value in the denominator, which drifts if it is not re-indexed and differs with method. It weighs a deferred handrail and a deferred fire panel by their cost, not their consequence. And the bands are not agreed: the same building can be good on one published scale and fair on another. A rating built on judgement rather than cost avoids all three.
The judgement is the signal
What actually distinguishes one building’s capital position from another is the judgement in its register. How much of the programme is work the building cannot defer? How firm is the evidence? Is there a single finding, a structural question, a facade issue, that could reshape everything? How much falls in the near term for good reason? How much is driven by compliance obligations? Is the burden spread or concentrated in one system?
A rating should tell you what kind of decade a building faces. The size of the bill is one input. The shape of the judgement is the answer.
How the MR Index reads it
The MR Index is built on three of those questions, asked of every element in the completed register: does it need attention, how serious is it, and how soon. Read across the whole building, the answers place it on a band from MR 1, minimal requirements, to MR 5, major intervention. No costs, floor areas or rates take part, so the rating does not drift as prices move and can be recalculated from any stored register. The score is calculated by code, not guessed, and it describes condition, not the building’s quality or attractiveness.
A prime building in a strong location can score MR 4 and still be an excellent acquisition. A modest building can score MR 2 and still be a poor one. The rating is a decision aid, not a verdict.
Two buildings, one total
Two buildings each carry a ten-year capital requirement of three million dollars. In the first, the requirement is spread across roof, plant, lifts and finishes, mostly in years six to ten, supported by records and with few unknowns. In the second, half of it sits in a single facade question that cannot be resolved without investigation, most of it falls in the first five years, and a material share is driven by compliance.
A cost-based rating scores them the same. The MR Index separates them because it never looks at the totals. In the first building, most elements needing attention are planned renewals late in the decade. In the second, an essential facade element needs a check now and important elements need works within five years. Consequence and timing put the second building in a heavier band, and resolving the facade question will move it. That is the information an owner or buyer needs, and it comes from the register’s judgement rather than its total.
Costs still matter
None of this means costs are unimportant. They remain in the register, line by line, with their basis visible, because owners need to plan and fund the work. They are there to plan and fund the work, not to grade the building. Moyne Ross does not publish cost tables, which go stale, and a capital plan is not a reinstatement valuation or a quantity surveyor’s estimate.
the overall rating should rest on judgement about what the building needs, how serious it is and how soon, rather than on the dollar total.
Sources
Named sources consulted for this paper. Consequential claims link to their source in the text. Reviewed 3 November 2026; next review by 3 November 2027.
- Facility condition index (FCI), Designing Buildings. Accessed 3 November 2026.
Questions
How does the MR Index rate a building without using costs?
For each element it reads whether attention is needed, how serious it is and how soon. Read across the whole building, those judgements set the band from MR 1 to MR 5; the size of the bill plays no part.
Does a high MR Index score mean a building is a bad investment?
No. It describes condition, not asset quality or attractiveness. A building that needs a lot of attention can be well worth taking on if that is understood and priced.