WACUBO â Future Leaders Forum
WACUBO – Future Leaders Forum
Addressing Deferred Maintenance Through Effective Facilities Management David Kadamus, Chairman & Founder of Sightlines Kris Olsen, VP Campus Planning & Operations, Chapman University 2/09/2015
Overview The CBO must assume the role of the champion for successfully addressing deferred maintenance In terms of campus politics, funding and staying ahead of deferred maintenance—particularly during challenging times—is quite possibly the least embraced priority by other senior campus leaders Yet falling behind can create enormous challenges for generations of administrators and Boards to come What resources exist to assist the CBO with these challenges? How have campuses achieved some measure of success with getting a handle on deferred maintenance?
David Kadamus David Kadamus Executive Chairman & Founder Sightlines David Kadamus founded Sightlines in 2000 and is the main architect of the company’s Return on Physical Assets Process which measures and benchmarks the physical assets of colleges and universities. Prior to Sightlines, David was one of the founding partners of Facilities Resource Management (FRM). At FRM, he worked closely with more than 150 institutions developing standards for operations and facility planning that were adopted nationally. He created a methodology for measuring and managing the backlog in campus deferred maintenance. Additionally, he developed financial techniques for facilities management, capital project budgeting, and utility master planning. Before FRM, David served as a business officer at Hobart and William Smith Colleges. He has presented papers, served as faculty for NACUBO and the regions, conducted workshops, and written numerous articles on facilities management issues.
Sightlines – Guilford, CT Robust membership includes colleges, universities, consortia, and state systems – WWW.Sightlines.com Serving the Nation’s Leading Institutions:
• 19 of the Top 25 Colleges* • 17 of the Top 25 Universities* • Flagship Public Universities in 32 States
Sightlines is proud to announce that: •
450 colleges, universities, and K‐12 institutions are Sightlines clients, including over 300 ROPA members.
•
93% of ROPA members renewed in 2013
•
We have clients in 44 states, the District of Columbia, and Canada
•
57 institutions became Sightlines members in 2013
• 8 of the 12 Ivy Plus Institutions • 12 of the 14 Big 10 Institutions
Sightlines advises state systems in: • • • • • • • • • • • • • • • •
Alaska California Connecticut Hawaii Maine Massachusetts Minnesota Mississippi Missouri New Hampshire New Jersey New York Oregon Pennsylvania Texas West Virginia
Kris Olsen Kris Olsen Vice President Campus Planning & Operations Chapman University Kris Olsen’s career spans over three decades of design, development, construction and property management experience — employers and clients include Disney Imagineering, Marriott Corporation, and the InterContinental Hotels Group. Since joining the university in 2001, Kris has orchestrated more than 100 major building and renovation projects, including the restoration/adaptive reuse of many significant historic structures. The 2.5 million square feet of new construction projects include the Lastinger Athletic Complex, The Leatherby Libraries, The Fish Interfaith Center and the Dodge College state‐of‐the‐art Marion Knott Studios. Recently he directed Chapman’s Digital Media Arts Historic Adaptive Reuse, The Rinker Health Science Campus in Irvine and the currently under construction 1,100 seat Musco Center for the Arts. In addition to constructing new buildings, Kris has overseen the restoration of more than three dozen historic homes on the perimeter of the school.
Presentation Overview • • • • • •
Context: The Challenges Facing Higher Education National Trends A New Paradigm for the Future Core Concepts – Facilities Management The Chapman Program Conclusion: The CBO and Facility Leader Partnership
The Challenges in Higher Education
Questioning The Sustainability of Higher Education •
Higher education stakeholders are faced with…
Federal and state funding levels for higher education have fallen to historic lows with no near term vision for recovery.
Demographic shifts have led to level or declining enrollments in traditional students.
Affordability of education has expanded student debt, capped tuition growth, and increased dependency on Pell Grants.
Tuition dependency has grown, tuition discounting (privates) increasing, operating margins have fallen, and balance sheets have weakened.
Administrative and support costs have grown compared to education costs.
8
Commentary Does Not Fairly Represent Facilities “Book value” does not represent replacement or market value of facilities assets Deprecation accounting does not fairly represent financial (“backlog”) or program risk
Capital Pressures on Colleges and Universities are Often Understated
9
Protect the Real Prize…
The average endowment
The average building replacement value
National Trends
11
Recent + Post-War Buildings Are Now Demanding Capital Constructed Space Since 1880
% of Total GSF Constructed
12.0%
10.0%
8.0%
Pre‐War 6.0%
4.0%
2.0%
0.0%
Post‐War 40%
Modern
Complex 27%
Capital Investment In Existing Space Higher annual capital budgets in private campuses drive greater total investment $7.00
Public
Private
$6.00
$/ GSF
$5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2007
2008
2009
2010
2011
Annual Capital
2012
2013
2007
One‐Time Capital
2008
2009
2010
Average
2011
2012
2013
The Result: Repair Backlogs are Rising Faster in Public Sector $120
Public
20%
Private
18% $100
16% 14%
$80
$/GSF
12% 10%
$60
$40
$83
$86
$88
$90
$93
$96
$99
8% $74
$74
$76
$78
$81
$82
$85 6% 4%
$20
2% 0%
$‐ 2007
2008
2009
2010
2011
2012
Backlog/GSF
2013
2007
2008
2009
Percentage Change of Backlog
2010
2011
2012
2013
Operating Expenditures Have Also Fallen $6.00
Public Average
Private Average $5.33
$5.22
$5.00 $0.22
$0.23
$0.24
$0.25
$0.27
$0.29
$0.29
$0.35
$0.35
$0.35
$0.36
$0.37
$0.32
$4.32
$4.39
$4.40
$4.42
$4.50
$4.55
$4.15
2007
2008
2009
2010
2011
2012
2013
$0.31
$/GSF
$4.00
$3.00
$2.00
$4.30
$4.49
$4.38
$4.52
$4.45
$4.59
$4.16
2007
2008
2009
2010
2011
2012
2013
$1.00
$0.00
Daily Service
Planned Maintenance
A New Paradigm for the Future
Our Options in the Future Will Remain Limited Number of high school graduates are declining in many states.
External resources are in decline (state support, debt, donors).
As tuition growth outpaces inflation the value of Higher Ed. Is questioned.
As buildings continue to age, the investment need will grow
A New Paradigm of MORE
•Manage •Opportunities & •Risks •Effectively
Getting MORE • The old approach of defining needs and then requesting money will not work • Problem is too big to address in total – must break it down in size and priority • How do we … – Lower Demands ‐ Space Management – Make the Problem “Smaller” – Building Portfolios – Sustain Impact of Finite Funding ‐ Create Multi Year Plans – Mitigate Risk ‐ Target Capital to Safety, Reliability and Program Issues – Increase Funding ‐ Invest in Operations to release savings that self‐funds stewardship
Policies that Create Lasting Change Need to Make A Stronger Case for New Money • Credible data and forecasting to build constituency and make the case for the allocation of new resources to “catch‐up” on campus needs. Will Create Great Impact by Recycling Operating Savings • Even if new funding is provided the problem will not be solved. Therefore incentives and policies need to be in place that assures that operating savings are recycled to slow annual deferrals. Define a Multi‐Year Plan With Discipline & Flexibility • Develop a top‐down, multi‐year, investment strategy that focuses on institutional priorities rather than project selection. Performance to this project investment “mix” is key to progress.
Core Concepts – Facilities Management
The Key Management Tools •
Given that Facilities Value are 4 to 5 times greater than endowments
•
The CBO Needs Tools to Understand the Age Profile of Facilities and those Implications Document the Backlog of Needs Set Annual Funding Goals and Plan for Periodic Cash Infusions Set Project Priorities, not to select investments but to define the rationale for the pace of investments and / or deferral by • Defining a multi‐year investment plan • Using the concept of Building Portfolios to focus investment priorities • Communicating expected outcomes • Tracking performance to outcome expectations – Target Savings Opportunities, Reallocating Resources to Fund Capital Needs – – – –
The Start – Understand the Key Relationships
Change the Conversation in Facilities Management
Space Profile Affects Operating Cost Campuses with higher utilization & greater building scale tend to have lower operating costs
Operating $ / Sq. Ft.
$8.00 $6.00 $4.00
Utilities Daily Serv.
$2.00 $‐
Low Density & Hi Density & Scale Scale Campus Size
2.2 Million GSF
2.1 Million GSF
Students
2900
6000
Buildings
158
46
Age Profile Impacts Capital Needs Space Mix By Age
5 Years Spending to Target
100% 80%
Campus A
60%
Campus B 0% 50% 100% 150%
40% 20% 0% Campus A
Backlog $/GSF
Campus B
Less than 10
10 to 25
25 to 50
Over 50
200%
Campus A Campus B
A balanced age profile diversifies risk
$‐
$50.00
$100.00
Coordinating Life Cycle & Modernization Shifts Cost Life Cycle $ Savings: $13
Years 1‐10
Years 11‐20
Years 21‐30
Years 31‐40
Years 41‐50
$28M
$14M
$7M
$2M
$(2M)
$12
Millions
$11 $10 $9 $8 $7 $6 $5 $4 FY14FY16FY18FY20FY22FY24FY26FY28FY30FY32FY34FY36FY38FY40FY42FY44FY46FY48FY50FY52FY54FY56FY58FY60FY62 All costs in 2014 dollars
Current Need
Need Post Life Cycle / Mod Coordination
Define an Annual Stewardship Target to Preserve Assets $80
$ in Millions
$70 Functional obsolescence churns space prior to life cycles & therefore capital needs are discounted
$60 $40.6
$50 $40
$74.7 $20.3
$30 $20 $29.9
$21.4
$10 $0 3% of Replacement Value Replacement Value of $2.5 billion
Life Cycle Need
Functional Obsolescence Target
$70.5 Million
$41.7 Million
The Annual Capital Budget Goal
Total Need
Envelope/Mech
Space/Program
Low Stewardship Funding Increases the Backlog of Need $4
$100
Stewardship Investment
Backlog of Need
$90 $80
$3 $/GSF
$70 $/GSF
$60
$2
$50 $40 $30
$1
$20 $10 $0 A
B
C
D
E
F
G
H
I
The Less you “Keep‐Up”
$0 A
B
C
D
E
The more you’ll have to “Catch‐Up”
F
G
H
I
Stewardship Avoids Costly Failures Example: The Cost of System Failure $35,000
By Investing in Maintenance: $30,000 $25,000
Systems Exceed Life Cycle Expectations
$20,000
Failures are Avoided
$15,000
Premiums for Repairs are Eliminated
$10,000
Program is not Interrupted
$5,000 $0 Planned
DM Failure
Construction
Reduced Life
Failure Mitigation
Temp Services
A $1 increase in stewardship funding reduces capital investment need by $3-4
The Chapman Program
What Our Experience Tells Us…
“Capital planning is more than just a project list.”
The Limitations of Traditional FCAs
Technical Assessment
Project Selection
Traditional Facilities Assessment
The Limitations of Traditional FCAs Fails to harness operating knowledge Technical Assessment
Does not tie to mission Ignores financial capacity Misses opportunities to optimize capital resources
Traditional Facilities Assessment
Project Selection
Tie Capital Plan to Mission, Operations, & Finance Step 1: Technical Assessment & Integrate Technical Needs Integrate operational perspective to target inspections and reduce overall capital needs Step 2: Create Building Portfolios Segment the backlog and tie projects to mission and institutional strategy Step 3: Develop Multi‐year Capital Plan Create outcome based strategies by portfolio Step 4: Project Section Pick projects that support mission, operations, and financial capacity
The Steps to Assess Campus Needs Technical Assessment
Step1: Integration of Capital Needs
Step 2: Create Building Portfolios
Step3: Develop Multi-year Capital Plan
Step 4: Project Selection
Review Existing • Existing Project Lists • Master Plans Materials • Infrastructure
Building Walkthroughs
• Document all Building Elements • Assess General Condition • Define Special Circumstances
Supervisor Interviews
• Understand Renovation vs. Repair • Segregate O&M, Dept’l & Capital • Reconcile Operations to Economic Condition
Verified Inventory of Facilities Needs
Identified Backlog of Need Total Backlog vs. Peers
10‐Year Need $93M $100
$140 $120
$80 $70
$44
$100
$60 $/GSF
Total Backlog in $ Millions
$90
$50 $40 $30 $20
$49
$80 $60 $40 $20
$10
$0
$‐ Total 10‐Year Need Deferred Maintenance Full and Partial Renovations
Peer avg.: $73/GSF
The Process of Creating Building Portfolios Why Not all Buildings are Created Equal
How Portfolios to Reflect Campus Priorities Who Create Constituencies with a Common Understanding
• Developing a portfolio approach will allow for a focused investment approach based on the Institutional Strategic Direction
• Building Age • Building Condition • Building Location • Institutional focus • Academic requirements • Student needs
• Institutional Priorities • Building Needs • Future Campus Direction • Project Sequencing
• Historical Significance • Safety/Code requirements • Recruitment/Retention • Transitional Space • Adaptive Reuse
Need by Building & Portfolio
NAV Index
University Advancement
100%‐ 85%
Capital Upkeep
Pralle‐Sodaro Marion Knott Studios Lastinger Athletic Complex Hutton Sports Center
85%‐ 70%
Glass Residence Hall Facilities Warehouse
Repair/ Maintain
ETC
Hashinger Science Center
70%‐ 50%
Argyros Forum
Systematic Renovation
Wilkinson Hall Morlan South Davis Community Center
Below 50%
Davis Apartments D Davis Apartments B Crean Hall
Transitional
Roosevelt Hall Memorial Hall
$0
$50
$100
$150
0‐3 years
$200 $/GSF 4‐7 years
$250
8‐10 years
$300
$350
Identifying Future Funding $14.0 $12.0
Projected 10 Year Funding: $78M
$ in Millions
$10.0 $8.0 $6.0 $4.0 $2.0 $0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Annual Stewardship
Asset Reinvestment
Projected AS
Projected AR
Define Project Investment Plan Technical Assessment
Step1: Integration of Capital Needs
Row Labels Capital Upkeep Asset Preservation Program Improvement Safety/Code Repair and Maintain Asset Preservation Program Improvement Safety/Code Systemic Renovation Asset Preservation Program Improvement Reliability Safety/Code Transitional Asset Preservation Program Improvement Grand Total
Step 2: Create Building Portfolios
Step3: Develop Multi-year Capital Plan
A $ 8,638,000 $ 2,943,000 $ 4,391,000 $ 1,304,000 $ 1,316,000 $ 35,000 $ 1,148,000 $ 133,000 $ 4,465,000 $ 823,000 $ 2,627,000 $ 310,000 $ 705,000 $ 8,268,000
B $ 8,164,000 $ 2,164,000 $ 5,005,000 $ 995,000 $ 10,237,000 $ 2,658,000 $ 7,302,000 $ 277,000 $ 14,328,000 $ 7,812,000 $ 5,659,000
Step 4: Project Selection
C $ 10,400,000 $ 5,301,000 $ 4,948,000 $ 151,000 $ 3,874,000 $ 3,839,000 $ 28,000 $ 7,000 $ 5,554,000 $ 4,655,000 $ 432,000
$ 857,000 $ 467,000 $ 12,500,000 $ 4,201,000 $ 109,000 $ 8,268,000 $ 12,500,000 $ 4,092,000 $ 22,687,000 $ 45,229,000 $ 24,029,000
Grand Total $ 27,202,000 $ 10,408,000 $ 14,344,000 $ 2,450,000 $ 15,427,000 $ 6,532,000 $ 8,478,000 $ 417,000 $ 24,347,000 $ 13,290,000 $ 8,718,000 $ 310,000 $ 2,029,000 $ 24,969,000 $ 109,000 $ 24,860,000 $ 91,945,000
78 Million Plan 43% 59% 100%
41% 97% 100%
64% 89% 100% 100%
100% 100% 77%
Our Next Steps • Protect the capital budget to renew and maintain the Capital Upkeep and the Repair & Maintenance Portfolios. • Coordinate Major Renovation and New Construction in Capital Plan • “Just In Time” reserve / repair program to manage issues in the “Transitional” Portfolio until the renovations occur • Track progress annually to illustrate accomplishments and to communicate the remaining challenges. • Remain proactive with the community advising them of work in advance to build confidence and constituency for the program.
Conclusion
45
The CBO and Facility Leader Partnership – The CBO is the linchpin to gate keep competing demands: • President • Faculty • Buildings and Asset Management – The CBO needs to create processes that encourage collaboration: • No “Washington Monuments” – The multi‐year plan that is credible and creates confidence in the process • Stop “New Capital Requests” – Proper stewardship Funding and Contingency management • No “Failures” – Incentives that anticipates needs, drives proactive management, reduces operating costs • Creation of Constituency to Drive effective Change – “MORE”
Questions / Discussion
47
Addressing Deferred Maintenance Through Effective Facilities Management David Kadamus, Chairman & Founder of Sightlines Kris Olsen, VP Campus Planning & Operations, Chapman University 2/09/2015
Overview The CBO must assume the role of the champion for successfully addressing deferred maintenance In terms of campus politics, funding and staying ahead of deferred maintenance—particularly during challenging times—is quite possibly the least embraced priority by other senior campus leaders Yet falling behind can create enormous challenges for generations of administrators and Boards to come What resources exist to assist the CBO with these challenges? How have campuses achieved some measure of success with getting a handle on deferred maintenance?
David Kadamus David Kadamus Executive Chairman & Founder Sightlines David Kadamus founded Sightlines in 2000 and is the main architect of the company’s Return on Physical Assets Process which measures and benchmarks the physical assets of colleges and universities. Prior to Sightlines, David was one of the founding partners of Facilities Resource Management (FRM). At FRM, he worked closely with more than 150 institutions developing standards for operations and facility planning that were adopted nationally. He created a methodology for measuring and managing the backlog in campus deferred maintenance. Additionally, he developed financial techniques for facilities management, capital project budgeting, and utility master planning. Before FRM, David served as a business officer at Hobart and William Smith Colleges. He has presented papers, served as faculty for NACUBO and the regions, conducted workshops, and written numerous articles on facilities management issues.
Sightlines – Guilford, CT Robust membership includes colleges, universities, consortia, and state systems – WWW.Sightlines.com Serving the Nation’s Leading Institutions:
• 19 of the Top 25 Colleges* • 17 of the Top 25 Universities* • Flagship Public Universities in 32 States
Sightlines is proud to announce that: •
450 colleges, universities, and K‐12 institutions are Sightlines clients, including over 300 ROPA members.
•
93% of ROPA members renewed in 2013
•
We have clients in 44 states, the District of Columbia, and Canada
•
57 institutions became Sightlines members in 2013
• 8 of the 12 Ivy Plus Institutions • 12 of the 14 Big 10 Institutions
Sightlines advises state systems in: • • • • • • • • • • • • • • • •
Alaska California Connecticut Hawaii Maine Massachusetts Minnesota Mississippi Missouri New Hampshire New Jersey New York Oregon Pennsylvania Texas West Virginia
Kris Olsen Kris Olsen Vice President Campus Planning & Operations Chapman University Kris Olsen’s career spans over three decades of design, development, construction and property management experience — employers and clients include Disney Imagineering, Marriott Corporation, and the InterContinental Hotels Group. Since joining the university in 2001, Kris has orchestrated more than 100 major building and renovation projects, including the restoration/adaptive reuse of many significant historic structures. The 2.5 million square feet of new construction projects include the Lastinger Athletic Complex, The Leatherby Libraries, The Fish Interfaith Center and the Dodge College state‐of‐the‐art Marion Knott Studios. Recently he directed Chapman’s Digital Media Arts Historic Adaptive Reuse, The Rinker Health Science Campus in Irvine and the currently under construction 1,100 seat Musco Center for the Arts. In addition to constructing new buildings, Kris has overseen the restoration of more than three dozen historic homes on the perimeter of the school.
Presentation Overview • • • • • •
Context: The Challenges Facing Higher Education National Trends A New Paradigm for the Future Core Concepts – Facilities Management The Chapman Program Conclusion: The CBO and Facility Leader Partnership
The Challenges in Higher Education
Questioning The Sustainability of Higher Education •
Higher education stakeholders are faced with…
Federal and state funding levels for higher education have fallen to historic lows with no near term vision for recovery.
Demographic shifts have led to level or declining enrollments in traditional students.
Affordability of education has expanded student debt, capped tuition growth, and increased dependency on Pell Grants.
Tuition dependency has grown, tuition discounting (privates) increasing, operating margins have fallen, and balance sheets have weakened.
Administrative and support costs have grown compared to education costs.
8
Commentary Does Not Fairly Represent Facilities “Book value” does not represent replacement or market value of facilities assets Deprecation accounting does not fairly represent financial (“backlog”) or program risk
Capital Pressures on Colleges and Universities are Often Understated
9
Protect the Real Prize…
The average endowment
The average building replacement value
National Trends
11
Recent + Post-War Buildings Are Now Demanding Capital Constructed Space Since 1880
% of Total GSF Constructed
12.0%
10.0%
8.0%
Pre‐War 6.0%
4.0%
2.0%
0.0%
Post‐War 40%
Modern
Complex 27%
Capital Investment In Existing Space Higher annual capital budgets in private campuses drive greater total investment $7.00
Public
Private
$6.00
$/ GSF
$5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2007
2008
2009
2010
2011
Annual Capital
2012
2013
2007
One‐Time Capital
2008
2009
2010
Average
2011
2012
2013
The Result: Repair Backlogs are Rising Faster in Public Sector $120
Public
20%
Private
18% $100
16% 14%
$80
$/GSF
12% 10%
$60
$40
$83
$86
$88
$90
$93
$96
$99
8% $74
$74
$76
$78
$81
$82
$85 6% 4%
$20
2% 0%
$‐ 2007
2008
2009
2010
2011
2012
Backlog/GSF
2013
2007
2008
2009
Percentage Change of Backlog
2010
2011
2012
2013
Operating Expenditures Have Also Fallen $6.00
Public Average
Private Average $5.33
$5.22
$5.00 $0.22
$0.23
$0.24
$0.25
$0.27
$0.29
$0.29
$0.35
$0.35
$0.35
$0.36
$0.37
$0.32
$4.32
$4.39
$4.40
$4.42
$4.50
$4.55
$4.15
2007
2008
2009
2010
2011
2012
2013
$0.31
$/GSF
$4.00
$3.00
$2.00
$4.30
$4.49
$4.38
$4.52
$4.45
$4.59
$4.16
2007
2008
2009
2010
2011
2012
2013
$1.00
$0.00
Daily Service
Planned Maintenance
A New Paradigm for the Future
Our Options in the Future Will Remain Limited Number of high school graduates are declining in many states.
External resources are in decline (state support, debt, donors).
As tuition growth outpaces inflation the value of Higher Ed. Is questioned.
As buildings continue to age, the investment need will grow
A New Paradigm of MORE
•Manage •Opportunities & •Risks •Effectively
Getting MORE • The old approach of defining needs and then requesting money will not work • Problem is too big to address in total – must break it down in size and priority • How do we … – Lower Demands ‐ Space Management – Make the Problem “Smaller” – Building Portfolios – Sustain Impact of Finite Funding ‐ Create Multi Year Plans – Mitigate Risk ‐ Target Capital to Safety, Reliability and Program Issues – Increase Funding ‐ Invest in Operations to release savings that self‐funds stewardship
Policies that Create Lasting Change Need to Make A Stronger Case for New Money • Credible data and forecasting to build constituency and make the case for the allocation of new resources to “catch‐up” on campus needs. Will Create Great Impact by Recycling Operating Savings • Even if new funding is provided the problem will not be solved. Therefore incentives and policies need to be in place that assures that operating savings are recycled to slow annual deferrals. Define a Multi‐Year Plan With Discipline & Flexibility • Develop a top‐down, multi‐year, investment strategy that focuses on institutional priorities rather than project selection. Performance to this project investment “mix” is key to progress.
Core Concepts – Facilities Management
The Key Management Tools •
Given that Facilities Value are 4 to 5 times greater than endowments
•
The CBO Needs Tools to Understand the Age Profile of Facilities and those Implications Document the Backlog of Needs Set Annual Funding Goals and Plan for Periodic Cash Infusions Set Project Priorities, not to select investments but to define the rationale for the pace of investments and / or deferral by • Defining a multi‐year investment plan • Using the concept of Building Portfolios to focus investment priorities • Communicating expected outcomes • Tracking performance to outcome expectations – Target Savings Opportunities, Reallocating Resources to Fund Capital Needs – – – –
The Start – Understand the Key Relationships
Change the Conversation in Facilities Management
Space Profile Affects Operating Cost Campuses with higher utilization & greater building scale tend to have lower operating costs
Operating $ / Sq. Ft.
$8.00 $6.00 $4.00
Utilities Daily Serv.
$2.00 $‐
Low Density & Hi Density & Scale Scale Campus Size
2.2 Million GSF
2.1 Million GSF
Students
2900
6000
Buildings
158
46
Age Profile Impacts Capital Needs Space Mix By Age
5 Years Spending to Target
100% 80%
Campus A
60%
Campus B 0% 50% 100% 150%
40% 20% 0% Campus A
Backlog $/GSF
Campus B
Less than 10
10 to 25
25 to 50
Over 50
200%
Campus A Campus B
A balanced age profile diversifies risk
$‐
$50.00
$100.00
Coordinating Life Cycle & Modernization Shifts Cost Life Cycle $ Savings: $13
Years 1‐10
Years 11‐20
Years 21‐30
Years 31‐40
Years 41‐50
$28M
$14M
$7M
$2M
$(2M)
$12
Millions
$11 $10 $9 $8 $7 $6 $5 $4 FY14FY16FY18FY20FY22FY24FY26FY28FY30FY32FY34FY36FY38FY40FY42FY44FY46FY48FY50FY52FY54FY56FY58FY60FY62 All costs in 2014 dollars
Current Need
Need Post Life Cycle / Mod Coordination
Define an Annual Stewardship Target to Preserve Assets $80
$ in Millions
$70 Functional obsolescence churns space prior to life cycles & therefore capital needs are discounted
$60 $40.6
$50 $40
$74.7 $20.3
$30 $20 $29.9
$21.4
$10 $0 3% of Replacement Value Replacement Value of $2.5 billion
Life Cycle Need
Functional Obsolescence Target
$70.5 Million
$41.7 Million
The Annual Capital Budget Goal
Total Need
Envelope/Mech
Space/Program
Low Stewardship Funding Increases the Backlog of Need $4
$100
Stewardship Investment
Backlog of Need
$90 $80
$3 $/GSF
$70 $/GSF
$60
$2
$50 $40 $30
$1
$20 $10 $0 A
B
C
D
E
F
G
H
I
The Less you “Keep‐Up”
$0 A
B
C
D
E
The more you’ll have to “Catch‐Up”
F
G
H
I
Stewardship Avoids Costly Failures Example: The Cost of System Failure $35,000
By Investing in Maintenance: $30,000 $25,000
Systems Exceed Life Cycle Expectations
$20,000
Failures are Avoided
$15,000
Premiums for Repairs are Eliminated
$10,000
Program is not Interrupted
$5,000 $0 Planned
DM Failure
Construction
Reduced Life
Failure Mitigation
Temp Services
A $1 increase in stewardship funding reduces capital investment need by $3-4
The Chapman Program
What Our Experience Tells Us…
“Capital planning is more than just a project list.”
The Limitations of Traditional FCAs
Technical Assessment
Project Selection
Traditional Facilities Assessment
The Limitations of Traditional FCAs Fails to harness operating knowledge Technical Assessment
Does not tie to mission Ignores financial capacity Misses opportunities to optimize capital resources
Traditional Facilities Assessment
Project Selection
Tie Capital Plan to Mission, Operations, & Finance Step 1: Technical Assessment & Integrate Technical Needs Integrate operational perspective to target inspections and reduce overall capital needs Step 2: Create Building Portfolios Segment the backlog and tie projects to mission and institutional strategy Step 3: Develop Multi‐year Capital Plan Create outcome based strategies by portfolio Step 4: Project Section Pick projects that support mission, operations, and financial capacity
The Steps to Assess Campus Needs Technical Assessment
Step1: Integration of Capital Needs
Step 2: Create Building Portfolios
Step3: Develop Multi-year Capital Plan
Step 4: Project Selection
Review Existing • Existing Project Lists • Master Plans Materials • Infrastructure
Building Walkthroughs
• Document all Building Elements • Assess General Condition • Define Special Circumstances
Supervisor Interviews
• Understand Renovation vs. Repair • Segregate O&M, Dept’l & Capital • Reconcile Operations to Economic Condition
Verified Inventory of Facilities Needs
Identified Backlog of Need Total Backlog vs. Peers
10‐Year Need $93M $100
$140 $120
$80 $70
$44
$100
$60 $/GSF
Total Backlog in $ Millions
$90
$50 $40 $30 $20
$49
$80 $60 $40 $20
$10
$0
$‐ Total 10‐Year Need Deferred Maintenance Full and Partial Renovations
Peer avg.: $73/GSF
The Process of Creating Building Portfolios Why Not all Buildings are Created Equal
How Portfolios to Reflect Campus Priorities Who Create Constituencies with a Common Understanding
• Developing a portfolio approach will allow for a focused investment approach based on the Institutional Strategic Direction
• Building Age • Building Condition • Building Location • Institutional focus • Academic requirements • Student needs
• Institutional Priorities • Building Needs • Future Campus Direction • Project Sequencing
• Historical Significance • Safety/Code requirements • Recruitment/Retention • Transitional Space • Adaptive Reuse
Need by Building & Portfolio
NAV Index
University Advancement
100%‐ 85%
Capital Upkeep
Pralle‐Sodaro Marion Knott Studios Lastinger Athletic Complex Hutton Sports Center
85%‐ 70%
Glass Residence Hall Facilities Warehouse
Repair/ Maintain
ETC
Hashinger Science Center
70%‐ 50%
Argyros Forum
Systematic Renovation
Wilkinson Hall Morlan South Davis Community Center
Below 50%
Davis Apartments D Davis Apartments B Crean Hall
Transitional
Roosevelt Hall Memorial Hall
$0
$50
$100
$150
0‐3 years
$200 $/GSF 4‐7 years
$250
8‐10 years
$300
$350
Identifying Future Funding $14.0 $12.0
Projected 10 Year Funding: $78M
$ in Millions
$10.0 $8.0 $6.0 $4.0 $2.0 $0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Annual Stewardship
Asset Reinvestment
Projected AS
Projected AR
Define Project Investment Plan Technical Assessment
Step1: Integration of Capital Needs
Row Labels Capital Upkeep Asset Preservation Program Improvement Safety/Code Repair and Maintain Asset Preservation Program Improvement Safety/Code Systemic Renovation Asset Preservation Program Improvement Reliability Safety/Code Transitional Asset Preservation Program Improvement Grand Total
Step 2: Create Building Portfolios
Step3: Develop Multi-year Capital Plan
A $ 8,638,000 $ 2,943,000 $ 4,391,000 $ 1,304,000 $ 1,316,000 $ 35,000 $ 1,148,000 $ 133,000 $ 4,465,000 $ 823,000 $ 2,627,000 $ 310,000 $ 705,000 $ 8,268,000
B $ 8,164,000 $ 2,164,000 $ 5,005,000 $ 995,000 $ 10,237,000 $ 2,658,000 $ 7,302,000 $ 277,000 $ 14,328,000 $ 7,812,000 $ 5,659,000
Step 4: Project Selection
C $ 10,400,000 $ 5,301,000 $ 4,948,000 $ 151,000 $ 3,874,000 $ 3,839,000 $ 28,000 $ 7,000 $ 5,554,000 $ 4,655,000 $ 432,000
$ 857,000 $ 467,000 $ 12,500,000 $ 4,201,000 $ 109,000 $ 8,268,000 $ 12,500,000 $ 4,092,000 $ 22,687,000 $ 45,229,000 $ 24,029,000
Grand Total $ 27,202,000 $ 10,408,000 $ 14,344,000 $ 2,450,000 $ 15,427,000 $ 6,532,000 $ 8,478,000 $ 417,000 $ 24,347,000 $ 13,290,000 $ 8,718,000 $ 310,000 $ 2,029,000 $ 24,969,000 $ 109,000 $ 24,860,000 $ 91,945,000
78 Million Plan 43% 59% 100%
41% 97% 100%
64% 89% 100% 100%
100% 100% 77%
Our Next Steps • Protect the capital budget to renew and maintain the Capital Upkeep and the Repair & Maintenance Portfolios. • Coordinate Major Renovation and New Construction in Capital Plan • “Just In Time” reserve / repair program to manage issues in the “Transitional” Portfolio until the renovations occur • Track progress annually to illustrate accomplishments and to communicate the remaining challenges. • Remain proactive with the community advising them of work in advance to build confidence and constituency for the program.
Conclusion
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The CBO and Facility Leader Partnership – The CBO is the linchpin to gate keep competing demands: • President • Faculty • Buildings and Asset Management – The CBO needs to create processes that encourage collaboration: • No “Washington Monuments” – The multi‐year plan that is credible and creates confidence in the process • Stop “New Capital Requests” – Proper stewardship Funding and Contingency management • No “Failures” – Incentives that anticipates needs, drives proactive management, reduces operating costs • Creation of Constituency to Drive effective Change – “MORE”
Questions / Discussion
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