developing the capital plan is only half the battle [erappa 2017]

Developing the Capital Plan is Only Half the Battle

Ford Stryker & Kevan Will

© 2017 Sightlines, LLC. All Rights Reserved.2

Today’s Presenters

➢ Kevan Will; Senior Account Manager, Sightlines➢ 11+ years of tenure at Sightlines

➢ Has worked with over 100 campuses in 27 states➢ Sightlines Operational Lead for The Pennsylvania State University

➢ Graduated from Gettysburg College with a BA in Management

➢ H. Ford Stryker; (Retired as of 6/30/17) Associate Vice President for the Office of Physical Plant, The Pennsylvania Sate University

➢ 20 years of tenure at The Pennsylvania State University➢ 25+ years of service in the Navy as a Civil Engineer Corps Officer


•Introduction to Sightlines

•National Trends in Facilities in Higher Education

•About Penn State

•How Did Penn State Develop a Capital Plan Utilizing “Facilities Intelligence”?

•Executive Takeaways

•Questions & Comments

Agenda

Introduction to Sightlines

Leading provider of facilities

intelligence in higher education

helping them to identify ways to use

capital more strategically and identify

opportunities to improve operational

effectiveness and providing them with

tools for strategic planning, analyzing

and benchmarking.


Sightlines by the NumbersRobust Membership includes Colleges, Universities, Consortiums and State Systems

43States+DC

90%Memberretention

rate

360+ROPA

Members

450Colleges &Universities

170New members

since 2013

5Canadianprovinces

Sightlines has advised state systems in:

• Alaska• California• Florida• Hawaii• Maine

• Massachusetts• Minnesota• Mississippi• Missouri• Nebraska• Ohio

• New Hampshire• New Jersey• Pennsylvania• Texas• Washington


We Promote Integrated Campus Stewardship

Facilities intelligence that connects space, capital, and operating policies

Sightlines breaks through the organizational siloes and creates alignment from the “boardroom to the boiler room.”


National Trends in Facilities in Higher Education


2016 State of Facilities in Higher EducationComing Soon: 2017 State of Facilities Report

• Space growing faster than enrollment – with research universities being the exception.

• Construction vintage drives risk profile.• Steady investment levels with continued improvement

in annual capital funding.• Reliance on annual institutional capital growing for

both public and private institutions.• Facilities backlogs continue to rise.

http://www.sightlines.com/insight/state-of-facilities-2016/


Space Growing Faster than Enrollment

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Space and Enrollment TrendsNational Average

Space Enrollment


Space and Enrollment Growth – Public vs. Private

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Space and Enrollment - Public

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2007 2008 2009 2010 2011 2012 2013 2014 2015

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Space and Enrollment - Private


Space and Enrollment Growth by Constituent Group

-4%

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16%

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Comprehensive Institutions Research Institutions Small Institutions


An Accurate Prediction

“One side effect of this rapid growth has been the creation of anincreasingly large obligation for the future renewal and replacement ofthe physical plant.”

–Rick Biedenwig, 1980

Founder, Pacific Partners Consulting Group

Source: Before the Roof Caves In II: Published with assistance from APPA and Stanford University

0%

2%

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6%

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12%

Sightlines Database- Construction Age

Built pre-1951• Durable construction• Older but lasts longer


Campus Age Drives Overall Risk Profile

% o

f C

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stru

cted

Sp

ace

Pre-War Built 1951 - 1975• Lower quality • Needs more repairs

& renovation1975 - 1990• Quick flash

construction• Low quality

components

Built post-1991• Technically complex• Higher quality• More expensive to maintain

or repair

Modern

Post War Complex

15

Have We Shifted the Age Profile?

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Sightlines Database- Construction Age Sightlines Database- Renovation Age


Steady Investment Levels; Continued Improvement in Annual Capital Funding

$1.12 $1.19 $1.28 $1.21$1.60 $1.67 $1.71 $1.59 $1.73

$3.10

$3.83 $3.88$3.63 $3.09

$3.37 $3.35$2.99

$3.32

$0.00

$1.00

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2007 2008 2009 2010 2011 2012 2013 2014 2015

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Capital Investment into Existing Space

Annual Capital One-Time Capital Average


Reliance on Annual Institutional Capital Growing for Both Public and Private Institutions

$0.77 $0.93 $1.11 $1.00$1.39 $1.47 $1.49 $1.30 $1.48

$2.51

$3.37$3.66 $4.06 $3.28

$3.56 $3.43

$2.95

$3.39

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

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2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

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Public Institutions

$1.55 $1.53 $1.51 $1.51$1.88 $1.96 $2.01 $1.97 $2.06

$3.83$4.43

$4.19

$3.04$2.84

$3.12 $3.23 $3.05$3.22

$0.00

$1.00

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2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

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Private Institutions


Facilities Backlogs Continue to Rise

$81.72 $83.42 $87.19 $88.52 $90.73 $93.27 $95.31 $97.56 $100.07

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2007 2008 2009 2010 2011 2012 2013 2014 2015

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Backlog $/GSF


Facilities Backlogs Continue to Rise

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Public Institutions

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Private Institutions


About Penn State


Penn State Campus Profile

• University Park (UP) Campus Located in State College, PA

• 45,000 Students at UP• 95,000 Students at all locations• Sightlines Member since 2002


Penn State Campus Profile: All Locations

Type UoM University Park

Campuses Total incl. Hershey & all other locations

Land Acres 7,343 3,042 22,539

Paved Roads Miles 35 28 63

Paved Walkways Miles 60 21 71

# of Buildings Each 940 478 1710

Building Area GSF (Millions) 24.6 8.1 32.1

24 distinct locations in Pennsylvania including a major hospital. Each location is subject to local governance and local support structure.

University Park is almost it’s own city with 2 power plants, it’s own water supply and filtration plant, sewage treatment plant, 4 substations, etc.

394 Man. & Sup. Staff; 957 TS Employees; 101 Temporary TS Employees


How Did Penn State Develop a Capital Plan Utilizing “Facilities Intelligence”?


Before You Begin, Remember to:

• Ensure it is Easy to Understand• Keep Everything at Macro Level•Have Backup Data (Facilities Intelligence)• Forecasted Impacts• Sell the ‘Big Idea’


Two Key Capital Plan Components: Need & Money

• Need:• How much should you spend? • What is Capital – what’s in/what’s out? • Create ‘Keep Up, Catch Up’ model based on annual spending.

• Money:• How much money do you have? • Layer money together based on annual costs. • What can you get from the state? What can you borrow?• Create alternatives - if I spend this, what are the impacts?


University Capital Plan FY18-19 to FY22-23


Overview of the University Capital Plan


Education and General


Campus Renovation Age Profile


Capital Renewal Investment Target for Buildings

$-

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

$-

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Average Annual Obligations in

Current University Capital Plan 'Catch Up'

'Keep Up'


Backlog Projections – University Park


Backlog Projections – Commonwealth Campuses


Five-Year Capital Uses (Commitments), Schedule 1


Five-Year Capital Sources, Schedule 2


Education and General*


Strategic Philosophy of the University Capital Plan


Executive Takeaways: Key Steps to Developing a Sound Capital Plan


1. Keep it at “Macro” Level.

2. Demonstrate Impact of the Plan through Forecasting.

3. Have and Communicate a Consistent Message.

4. Work with Financial Team, All Stakeholders and Decision Makers.

Key Steps to Developing a Sound Capital Plan

39

Questions & Discussion