Russ Katherman (State of Montana)

Russ Katherman reflects on a career in facilities and asset management and the evolution of the field. From reactive maintenance to more strategic, data-driven decision-making, Russ shares lessons learned over time and insights on balancing budgets, priorities, and long-term planning. His perspective highlights how asset management continues to grow as a key driver of smarter, more sustainable decisions.

Transcript

SPEAKER_00 0:05

Hello and welcome to telling your asset management story. Ruth Katlerman has spent much of his career working in facilities and asset management, helping organizations understand the true value of buildings and infrastructure they depend on every day. Over the years, he's seen how the field has evolved from reactive maintenance to more strategic data-driven decision making. In this episode, we are going to talk about Renton's journey into the profession, the lessons he's learned along the way, and how the leaders of the day are balancing budgets, priorities, and long-term planning.

SPEAKER_02 0:35

Remotes. Thanks so much for joining us on this episode of Telling Your Asset Management Story. I know our audience is going to learn a lot from you, your journey, and your experience at the state of Montana. So thanks for joining us.

SPEAKER_01 0:47

Oh man, thanks for the opportunity. Really, uh really looking forward to it.

SPEAKER_02 0:51

Awesome. So we always start with um a little bit of your asset management journey, your your backstory or your origin story, if you will. So can you can you just give our audience a bit of an understanding about how you ended up where you are at the state of Montana, Russ, throughout your career and the journey that brought you there?

SPEAKER_01 1:08

Sure, sure. Uh I thought a fair bit about that. And it actually goes back to as far back as my grandfather, he was in the boiler and heating industry, and then my dad worked uh facilities maintenance for a while. So growing up, I was always around buildings and facilities and got into it uh pretty early. Uh, did some residential home construction and uh went to school, got a degree in mechanical engineering, and uh got my license, worked for a private firm for a while, uh, worked for the federal government for a while, and uh and now worked for the state of Montana for nearly 30 years in the design and construction project management group.

SPEAKER_02 1:51

So that's awesome. That's that's really neat that it that the family lineage because we always like to joke that it that there's not a lot of people running around five or six years old going, I want to be in facility management or facility asset management, but maybe you were the first one that I've ever met that was because your father and your grandfather were in the space. That's really pretty cool.

SPEAKER_01 2:10

Yeah, I've told people I kind of look at myself as a bit of a facilities nerd. It's just something that's always had a keen interest.

SPEAKER_02 2:18

That's great. Well, and I mean, I and I'm sure, I'm sure being around uh the the work that your your your your dad and your grandfather were doing probably gave you a a unique perspective that that that's helped throughout the career. What what's what what one thing did you learn from watching your watching your dad and your grandfather in the business that that's you that you know that you've brought through your career?

SPEAKER_01 2:40

Uh great question. I really tried to focus on a couple things that they early on, I think influenced me was the there's a ton of knowledge of a lot of folks out in the field, the hands-on experience. And initially I kind of thought, well, it's a lot of book learning and things, and there's tons of that, of course, but it's uh one of the things my my dad always said is never discount the information you get from the folks who who deal with the building from from day to day like like he did. So I dragged that into my project management, design and construction um experience.

SPEAKER_02 3:20

No, that's that's awesome. You're I mean that's what well that what great wisdom to share, right? Because the folks that are on the tools in the buildings every day are gonna have so much more knowledge than than you know, like again, we we we have that same kind of approach, like we're gonna show up for a day or two in a building. There's no way we're gonna be able to see or or or know everything that the folks that have been in there for 20 years, you know, hands-on tools and and in there. That that's that's an awesome wisdom to have shared that that uh um you know to bring throughout your to bring throughout your career. So no, that's great. So um can you give us a little bit of background on the portfolio that you that you're uh that you're involved in in Russ, in terms of size, types of buildings. I mean, it's a statewide portfolio, so there's probably tons of different types of buildings and challenges. So just help our audience understand your perspective uh from from that.

SPEAKER_01 4:10

Oh, I appreciate that. They uh I don't know how others all the other states are structured. We we do share a lot through our association connections and that, but in Montana, we are centralized with the architecture and engineering office where I'm the the administrator, and we do uh facilities kind of for all the state agencies. So we've done everything. We got as usual, you might expect there's always something going on on a university campus. Um could be anywhere around the states. We put in a lot of miles and uh a lot of academic buildings, a lot of uh facility support buildings for them, their heating plants, those kinds of things. And then for other other departments, you get a wide variety of uh care facilities, whether it's for our uh public health department, um you get uh veterans care facilities. We do right now we're in the midst of about a $400 million overhaul and rebuild of a lot of uh new and expanded facilities for the the Department of Corrections. So it's it's one of the rewarding parts of working at state facilities is you get this huge variety, uh you're not not in like a spot where you're doing only offices or you're doing only classrooms. Um we're doing things right now. Well, for instance, there's a in Montana is folks might be familiar with a lot of wildfires, right? And they bring in a lot of crews to help fight these forest fires, and our our natural resources folks have facilities, and we're in the middle of building some what we call the bunk houses. And uh so they're seasonal firefighters when uh folks fly in from out of state uh to help fight these fires, try to give them a nice place to stay. So it's it's a huge variety of things that uh it makes it very rewarding. Um just we're getting ready to start a repair to the copper dome on the Capitol. We're we just finished.

SPEAKER_02 6:22

Oh wow, that that'd be a really neat one.

SPEAKER_01 6:25

Yeah, we just finished our new State Heritage Uh Center, the new state uh history museum, and uh it's it's getting rave reviews, I'm happy to say. Haven't only had one complaint so far. We didn't put enough plug-in outlets in the cafe. And I I told the person that's gonna be a good idea.

SPEAKER_02 6:46

I think I think I don't think there's enough.

SPEAKER_01 6:48

Yeah, I said I told them I said, well, the idea is now for you to sit in the cafe, you're supposed to go over here to the exhibits.

SPEAKER_02 6:56

So right, yeah. Well, in in today's day and age, there's never enough outlets for everybody to plug in their phone, right? So that's probably the uh that's probably a pretty common uh common complaint for a lot of projects. Just out of curiosity, Russ, with with such a diverse portfolio, both geographically and and building type, what's the what do you find the biggest, you know, before we get into your overall asset management challenges we talked about just next, what what how like how do you balance all those different building types and and and and um stakeholder requirements and things like that? Like just just managing that diverse of a portfolio. What what what are the what are the biggest challenges and and how do you address them with your right?

SPEAKER_01 7:36

It is it is a challenge. Uh one of the benefits we have, uh we've got a lot of uh AE firms in the state with a great depth of knowledge and background, and they work out of state too. So we're just a little over a million in population, so uh they've got to work um in other places, and uh they're able to bring a lot of that information back to us. The the agencies help a ton, so they they help us, of course, with how they want to function, and then we try to balance all of that with everybody knows with the budget. There's never enough budget, and it's never delivered fast enough. So it's uh it is a it is a challenge, but I would say we I got a good team and uh very experienced, but it it helps them in their careers too to be able to dive into things that they're not familiar with.

SPEAKER_02 8:33

Absolutely. Yeah, I imagine after a few years with your team, you're probably have seen dozens of different kinds of buildings. So from an experience perspective, that's awesome for somebody, maybe somebody maybe newer in their career who's just kind of getting their feet wet to be able to get into all these different types of buildings. That'd be that'd be that'd be amazing.

SPEAKER_01 8:51

Yeah, there's always a new challenge. It's always you you might think you understand a particular building type, but invariably something comes up that you hadn't experienced before. And that's that's part of what makes it enjoyable, frankly.

SPEAKER_02 9:06

And you sort of mentioned we, I mean, we sort of talked about the challenges of the diverse portfolio, but kind of turning our attention to the you know the the asset management side of things for for your portfolio, um what are the what are beyond the beyond the complexity, um but what are the other top, you know, top three challenges or something that you know, two, three, four, whatever that you're facing as it relates to you know managing and maintaining and improving uh your portfolio?

SPEAKER_01 9:30

Sure. No uh appreciate that question. It's it's been a um a series of improvements uh that we've tried to implement over the last 20 years or so. And I would say we we started with a tremendous lack of information about the older facilities. Just no one had really done facility assessments, we didn't know current status. All our and over time, we were successful at getting some statute changes to do two things uh mandate facility assessments on a continuing cycle, which that was a huge plus. Um our agency folks weren't always excited about that because it just it's one of those things that added to their their workload, right? And so I I get it, I understand. That's totally fair. Um, and then the other the other thing that we were able to uh work from a couple of other state models was get some uh re annual funding for deferred maintenance. And our I don't know if our statute's totally unique in this regard. So we get a percentage of replacement value, like very similar to say Utah and I think a couple of the other states. Uh but one of the things that uh collaboratively with the legislature that worked out was they put a a restriction in the statute that we we have to fund major repair projects, what we call them deferred maintenance uh projects, to the tune of 0.6% of the replacement value of the portfolio. And that's primary. So if that doesn't get funded, then the legislature put a restriction on itself that it cannot fund new square footage.

SPEAKER_02 11:29

So that's awesome. Wow, that's amazing.

SPEAKER_01 11:33

I don't know if that's a wrinkle that unique to Montana, but but we like it. Um again, as a facility guy, yeah, I have nothing worse than building something and then not having the funding to maintain it.

SPEAKER_02 11:47

So absolutely. Yeah, I don't I I mean I it there could be there could be another state out there that has something like that, but I haven't heard of one. And the fact the fact that one, it's indexed to growth, right? Because that's the problem with a lot of a lot of places, is like they they redline your funding and you keep building new stuff and you don't have the money to maintain it, let alone renew it when it when it gets old. Um and the fact that they the fact that they've handcuffed themselves that if they don't fund it, they can't build new. Because let's be honest, everybody wants to build new. Nobody wants to fix anything, right? Because there's no where's the where's the fun in that? Nobody shows up with a ribbon cutting for a new roof or a new boiler. But but that that's that's excellent. And when did that get put in place, Russ? Is that something that's recent or has that been in there for a long time?

SPEAKER_01 12:32

Or I want to I want to say it was our we're a uh biennial every other year as the legislature meets. It's a citizen legislature. And um, so I want to say it was 20 2015, I think. Uh it's very fairly new.

SPEAKER_02 12:50

Wow, that's excellent.

SPEAKER_01 12:51

Yeah, 2017, I think. Uh but I I could check for you if anybody had a follower. No, no, that's interesting.

SPEAKER_02 12:59

It's been in place for at least four or five cycles. Yeah, four or five cycles, right? Interesting. And I guess was there was there what what was the impetus for it? Was there something that occurred across the portfolio or what was the driver to get to get them to change? Because I I guarantee you, at everybody at every university or every state or every municipality would love to know how to get something like that in place. So I'm just curious what the story was there.

SPEAKER_01 13:23

Yeah, it was interesting to have so much legislative buy-in, frankly, because there were because for many, many sessions, new buildings would get authorized. But then, as it as you know, the capital projects take a while to complete, and then the operation and maintenance funding would come into the budget, and then that legislature that that saw the operation and maintenance increase to the budget was like, Well, wait a second, we didn't have any say in the building getting built. So they actually put the restriction on them on themselves, and it was many sessions of buildings getting approved, and then a subsequent legislature being given the bill, basically, and saying, and they finally said, Okay, they said, enough of this. Uh, if we're gonna approve a new building, then that same legislature has to also appropriate the operation and maintenance money for and it's set up when we get a certificate of occupancy, that's when that OM money kicks in. So they they again restricted themselves because of many years of new square footage being added to the portfolio and no way to pay for it.

SPEAKER_02 14:40

Wow, that is that's really that's great. I mean, like I said, I I I mean everybody deals with that all the time, but this, like I said, this is your your your legislature's the first one that I've seen kind of tackle it in a in a meaningful way that they can't, you know, that where where they can't kind of get out of it, you know, there's it doesn't sound like there's a loophole there. If they don't, they can't build new, which is which is which is huge. So that's that's that's excellent. And and uh like I said, if and and after some other people hear this, you might get some phone calls going, hey, how can I, you know, can I get my guys to talk to your guys? Because I want them to think that way too.

SPEAKER_01 15:15

So um be happy to do it.

SPEAKER_02 15:17

Yeah, yeah, that would be awesome. That's great.

SPEAKER_01 15:20

It's it's still it's working out well for us for sure.

SPEAKER_02 15:25

Absolutely. No, I like I said, I I know so many organizations where they just redline ONM, right? OM's been redlined for 10 years, and you know, our portfolio is 30% bigger, and you know, and and not only that, but the new builds are more complicated, so they tend to need more maintenance and more preventative maintenance and more other things like that. So it it's it's it's it's almost a double winemy, and not only do we have more square footage, but we have more complex square footage, and and we have no more time, money, or or people to to address it. So that's a positive.

SPEAKER_01 15:54

100% agree.

SPEAKER_02 15:55

And any other challenges, Russ, that you that you've seen? I mean, that sounds like a great victory over a challenge, but anything else that you're that you're tackling or or facing today?

SPEAKER_01 16:05

Yeah, a couple of different things. So this may and maybe it's just me getting older and grumpier. Um, but I we see uh a lot of a lot of the design concerns, design issues and things where um they're they're not really detailed or fleshed out. And I don't know if it's just like I say, me looking at something and saying, well, sounding like my grandfather when I was a kid, we didn't have this problem because we did this, this, and this. And then you review a set of plans now, and it and it just seems like the level, the depth of fleshing out the constructibility issues uh doesn't seem to be there. Um of course, then we end up with a lot of change orders and things in construction, as uh I'm sure anybody who might watch this is familiar with. And uh so I think that's a challenge. I would say design quality. Um but that's I've heard that theme for a long time as well. But uh so part of that I think is just me getting grumpier.

SPEAKER_02 17:18

So uh, you've seen so much, you've seen so many different buildings and things, I'm sure.

SPEAKER_01 17:26

Yeah, there's so much experience out there that that I think um folks at that similar to my stage of the uh in the my career is trying to look now and say, how can I can how can I mentor some folks? How can how can I point out some things for for them to to look through? And there's time challenges involved with that. But that's another area where I'd really like to dive into is trying to pass along some of these uh experiences, both good and bad, to to help folks watch out for things and help them advance in their careers.

SPEAKER_02 18:10

Right. No, that's awesome. Yeah, I think certainly, certainly um a lot of folks that we talk about uh have challenges with just finding people, right? Finding good people that are willing to, you know, willing to work hard and and willing to kind of um put in the time to be mentored and to learn and to and to grow. So that's that's that's awesome that uh that you're focusing on that uh within within your team as well. Um looking looking to the to the future, Russ, beyond you know, kind of beyond what we're what you're facing today, how do you see facility and infrastructure asset management evolving over the next uh five to ten years? Put on put on your uh uh prediction hat and uh and and look into your crystal ball and let us know what you see.

SPEAKER_01 18:51

Oh wow, that's that'd be very interesting. A couple of things I you know at times you you kind of do wonder where your profession is going and and where facilities are are headed. The the the volume of information is so uh so astounding to me, and the complexity, like you mentioned, is really ramping up. And I kind of wonder who is gonna be able to maintain and operate these facilities if we make them too difficult just from a complexity standpoint. Um I'm also I'm fascinated by AI, um, but I have my concerns that folks are gonna rely on it too much. Um there's maybe I go back to that experience with my uh my dad and my grandfather is never discount the experience of the person in the field, right? And that how much knowledge and experience that is in dealing with things. And uh I just I have concerns that we're gonna rely on the machine too much. So and that's where I I appreciate all the advances. Uh you know, designers are starting to use it more, our our uh contractors are starting to use it more, and um you know my my hope is somebody's there to to check the output and really dive into that. So the workforce, I can see big challenges. I'm hoping. We're always trying to encourage folks to get into trades. So we're we're always we're you know, anything specialized, the the electricians and the like are always pretty thin and hard to get as an example.

SPEAKER_02 20:45

So well, and those are certainly a lot of careers that aren't going to be impacted by AI as much because I just don't think that you're gonna see AI installing cable in a building anytime soon, right? So um, so there's there's the the the dual benefit of the current need for the trades as well as the long-term, you know, perhaps a less exposure to disruption by AI.

SPEAKER_01 21:09

Yeah. I would add one more piece to that. The sustainability component is is super. And um, you know, I I think my curiosity there is as much as we try to do go through the third-party certifications and uh get those different levels uh for our facilities, what uh what's the operation and maintenance going to be like uh 10, 15, you know, 15, 20, 30 years from now with some of these building components? And uh some of them I don't see changing, but some of them I can see great benefit uh to uh to the facilities, to the folks living in the facilities, and I really hope that we can uh continue to advance. The the interior environment and make that where folks are more productive and there's more collaboration. There's transitions, for instance, I neither thought I would see. Going reflecting back, going to school, we were always isolated. You learn on your own. You had a little bit of group effort or group project. But now doing classroom buildings and sitting in these design sessions with faculty and even other students, and how they teach and how students learn in so much more of a collaborative environment is pretty amazing, really.

SPEAKER_02 22:48

No, it's it's it's true. It's it's and I mean I love the fact that you brought up the the the indoor the like the the in the indoor environment because so much of the goals and objectives of the different departments uh and agencies within the state, um, the facilities play such a major role in their ability to deliver whatever their program is, whether it's school or healthcare or office environment or or whatever the case is. And so I love that that you're thinking about them and optimizing for them to achieve those goals and objectives through the facility, because too oftentimes it's it's I mean, not for facilities folks, right, but for organizations, a lot of times the facilities are an afterthought, right? They're not they're not really thought of as part of the strategy. But as soon as you start to have those conversations about how do we maximize the productivity of X, whether that's a student or a or a researcher or a or a healer or or an office worker, all of a sudden that's a whole different perspective on the facilities. So that that's awesome that that that you're talking in that language, both inside your department and presumably up to the legislature in the state.

SPEAKER_01 23:55

Yeah, one of the other things we're trying to do is encourage along those lines of uh mission space and and how agencies operate, function, do their uh their main objectives. And you're right, a lot of times facilities are an afterthought. Is we've been we've we've got to put in statute this last session that for a new bill, similar to the funding in the OM, one of the things we were struggling with was uh strategic mission. Like where where is your department going, or where is this, where is this program headed? So that to exactly your point is how does your how do your current facilities help you or hurt you? And strategically, where do you where do you see your department going? And we we made it a six-year, so they don't have to project out too far, but it was uh far enough that it covered three legislative sessions. So we could have a change in administration, a change in executives, a change in uh you know our legislators through the elections, of course. Um through all the and we have term limits, so all of those impacts is we wanted a duration that was just long enough to say, yeah, you know, how are you thinking strategically about where your department, where your program, where your institution is is headed. And um I think we've got good progress on that so far.

SPEAKER_02 25:29

That wow, that that's that's I mean to to to yeah, I I'm I'm fascinated by how much um focus or or attention the the facilities in the built environment get at your legislat at the legislative level. That's amazing. I like again, I see, I see so many people fighting to just get a momentary ear or a thought. I'm just wondering what is it, what is the secret solid that you've that you've been able, that you or the state or your team or or the legislature has has sort of come across because I know so many organizations again, whether it's a university or a state government or whatever, they struggle to get facilities even thought of or on the agenda or anything like this. It sounds like over and over again you've been able to, you know, have the legislature look to facilities as a strategic asset. Is there is there any secret to it or what what what could others try to repeat and learn from your experience?

SPEAKER_01 26:32

Oh, great, great question. I've uh been curious how other states deal with it and and our association involvement's really helped enlighten that some. So I think a a couple of things uh over the years, and it's been a pretty deep dive, even for my predecessor, and I go back, I think at least 15 legislative sessions, so almost 30 years, and each one is very is has its own unique personality. But underlying all that, there's there's always been an interest in the facilities, the cost of facilities, and I'm this is me speculating here, that it's connected to um being a fairly fiscally conservative state, and there are a fair number of folks uh in the the executive branch and the legislative branch over the years who've taken a keen eye to these costs, and so they're and they've been able to pass that along, that that level of interest, and so we've always had a good rapport uh with with a lot of our elected officials with the cost of facilities, how much gets built, and the like. So yeah, I don't know if there's a big secret sauce to it, uh, but I think staying involved. Um we stay close, we stay closely connected with the with the budget office. Uh we stay very connected um with our uh legislative group. There's uh uh what's known as the long-range uh planning committee, and it's made up of some uh some senators and some representatives, and they look at everything and that's would be in that capacity. So they look at long-range IT procurement, uh, they look at long-range building planning, which is which is my area, and uh they've always had a just a key a very uh very good eye and level of involvement and and interest in how much money they're appropriating for facilities.

SPEAKER_02 28:50

Thanks so much for all the insights, Ruts. Just to wrap things up a little bit, you mentioned the Industry Association a couple of times, and that's actually where we had a chance to meet is through the National Association of State Facility Administrators or NASPA. Um, can you can you just share for our audience as we as we close things out a little bit here, um, what would you tell to to another uh state facility person uh or somebody else in another in another sector that that has an industry association or peer group that they can get involved in? What what would how would you how would you encourage them to get involved?

SPEAKER_01 29:22

Oh man, thanks so much for that. Um it's has been a huge benefit, reward, however you want to classify it, to my entire career to be involved with NASFA. Um early on when I first came to work for for Montana, I remember the first association meeting I went to in uh 1997 and been involved ever since and continually just want to encourage any state. If you're not a member, please check it out. There's a ton of experience. And the the thing I that was that caught me that was so different early on than some of the other conferences and things I would go to was the the connection with uh with folks was so much deeper that we would we would sit and go through problems and and then even follow up afterward. Hey, I met you at the conference, you you mentioned you have this solution for this problem, and we're dealing with something similar, and it just it kept snowballing from there, and uh, you know, just trying to share solutions, come up with great ideas. What are you know, how do you deal with this security issue or your real estate issue or this deferred maintenance problem? You know, so it's not all about um just design and construction. I've picked up so much from other other fields and other other areas of interest from leasing to you know fleet management, just learning some of those things has really helped my understanding of how my my niche, my area of state government can help someone else. And uh so I think it's just been incredibly rewarding uh throughout my whole career to be affiliated with the association. I would just say get get involved at some level in whatever association helps you out, and just dive in. Don't don't take don't go to just the conferences and and do that, but but you know, talk to the and talk to the the folks who sponsor it, talk to the vendors. You know, don't just go by the booth and wave and say hi, but get get to know folks a little bit. And there's so much information there that I think um we can glean from each other. And it's just fantastic for facilities and where we're headed.

SPEAKER_02 32:01

No, that's that's awesome. And and thank thanks for that insight. Uh Russ, thanks so much for sharing all the uh all the the insights and and and the unique uh environment that that you have in Montana around the the focus on facilities and your ability to get uh time and focus from the legislature. I think that'll be hugely valuable for a lot of folks. And I wouldn't be surprised if you get a few calls from folks going, hey, I want some of them. How can I how can I get them? So thank you very much, sir. If we don't have a chance before, we'll definitely see you at the NASPA conference in in Austin. And thanks for joining us on this episode of the Mustam story.

SPEAKER_01 32:36

Thank you guys so much.

SPEAKER_00 32:42

Right, thanks again for taking the time to share your story. Your perspectives really underscore how asset management has grown into a strategic discipline, one that helps organizations make smarter, more sustainable decisions about the spaces they operate. It's been great hearing about your experiences and the lessons you've picked up along the way. Thanks for joining us on telling your asset management story.