Most companies and businesses today are well along in correcting their Year 2000 or Y2K problems, which could result from computer software mistakenly recognizing the digits "00" as the year 1900, not the year 2000.

Real estate is the exception to this general preparedness. Because it is not considered to be highly dependent on sophisticated technology, it has not attracted much attention as a source of Y2K problems. But the problems could be just as serious for companies that own, lease or manage real estate as for any other company.

In office buildings and other real estate facilities, the problem is largely found in embedded systems, or equipment controlled by a microchip. The relative risk to a company or other property owner is determined largely by the facility’s design, when it was designed, and its function. Industrial warehouses have few embedded chips. By contrast, office buildings, with many such chips, could be significantly affected by the millennium bug.

Impact

The impact is most likely to be evident in:

• Heating, ventilation, and air conditioning systems, which could shut down unless the embedded chips are upgraded or replaced.
• Utilities, including the supply of electricity, gas, water, water purification, power generators, and power distribution units. The loss of utility services in any building or property will cause the facility to shut down.
• Security systems, including building and access control, emergency alarms, data logging, communications with extinguisher systems, gate control, and surveillance and card readers that have not been upgraded or replaced with Year 2000 software. For example, you might not be able to drive into the parking facility where you work because of embedded-chip problems in access control systems.
• Communications equipment, including telecommunications, data transmission, PDX, voice mail, video conferencing, PCs, fax machines, and local area networks. Embedded chips could cause telecommunications systems to malfunction.

Other Y2K problems could surface. Leasing software could send erroneous bills to tenants.Imagine finding that you’re 100 years behind in your lease payments.

Action Plan

If you haven’t already begun to deal with the Y2K problem, start now. The following are steps that your company can take:

• Prioritize your problems. Deal with only those that are critical to your business and assign risk levels to the systems that need to be remediated or replaced.
• Inventory all embedded systems. This is a challenging and time-consuming process because most real estate owners and operators have little idea how many chips are in their facilities, or where, but it is essential to safety, security, and property protection.
• Develop contingency plans. If a system should fail, determine whether the business and its facilities can operate effectively without it.
• Delegate. Assign a senior executive to manage your organization’s Y2K preparedness.
• Check your vendors. Set Y2K standards for all of your company’s vendors.
• Go to manual. Determine whether systems such as HVAC and lighting have the capability to operate on a manual mode. Personnel must be trained and, if necessary, be prepared to switch to manual on December 31.
• Identify solutions. The solution may range from the replacement of the embedded micro-processor to the replacement of the entire system.
• Test all mission-critical solutions prior to Dec. 31. Testing can be as simple as just setting a clock forward on the heating and ventilation and determining whether it works or doesn’t work. Or it can be as complex as having to create new testing repair procedures as many of these systems may not have been looked at by manufacturers for Y2K compliance.

Above all, good communication is necessary to address supply chain issues and prepare your business for the Year 2000. Y2K problems and the potential impact on your business must be understood at the highest levels of management. And remember, not only do you have to fix your Y2K problems, you are also vulnerable to problems of other companies. Your company will be affected one way or another. Be prepared and ready!

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Published: July 9, 1999

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