facilities investment analysis for small campuses
TRANSCRIPT
CenterUniversity of Missouri – ColumbiaUniversity of Missouri – Kansas CityUniversity of Missouri – St. LouisUniversity of Nebraska at KearneyUniversity of Nebraska at LincolnUniversity of Nebraska Medical CenterUniversity of New BrunswickUniversity of New HampshireUniversity of New HavenUniversity of North TexasUniversity of Northern IowaUniversity of Notre DameUniversity of OregonUniversity of PennsylvaniaUniversity of RedlandsUniversity of Rhode IslandUniversity of RochesterUniversity of San DiegoUniversity of San FranciscoUniversity of Southern MaineUniversity of Southern MississippiUniversity of St. ThomasUniversity of Tennessee, KnoxvilleUniversity of Texas at DallasUniversity of the PacificUniversity of the Sciences in
PhiladelphiaUniversity of ToledoUniversity of VermontVanderbilt UniversityVassar CollegeVirginia Commonwealth UniversityVirginia Department of General
ServicesVirginia State UniversityWagner CollegeWake Forest UniversityWashburn UniversityWashington University in St. LouisWellesley CollegeWesleyan UniversityWest Chester UniversityWest Liberty UniversityWest Virginia Institute of TechnologyWest Virginia School of Osteopathic
Facilities Investment Analysis for Small CampusesMay 6, 2015
Small Campus Solutions Presenters
Bill Devers, Account [email protected]
Nate Webb, Associate Director 503-946-6684 [email protected]
Today’s Agenda
Sightlines Overview
Key Challenges in Facilities Management
Sightlines Small Campus Solutions
Is There an Opportunity to Work Together?
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Sightlines Overview
Sightlines is a Facility Advisory Firm
Document trends, provide consistent measurement, credible benchmarking and track progress to goals.
Identify ways to use capital more strategically and identify opportunities to improve operational effectiveness.
Separate fact from fiction on key issues – operational performance, annual funding needs, and project backlogs.
Analytical Rigor, Common Vocabulary, Consistent Methodology, Common Platform
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Comprehensive Facilities Intelligence Solutions
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Who We ServeRobust membership and growing database provides experience and perspective
Partners to the Nation’s Leading Institutions:
• 14 of the Top 20 Colleges*• 15 of the Top 20 Universities*• 34 Flagship State Universities• 13 of the 14 Big 10 Institutions• 8 of the 12 Ivy Plus Institutions• 8 of 13 Selective Liberal Arts Colleges
Serving state systems in:• Alaska• California• Connecticut• Hawaii• Maine• Massachusetts• Minnesota
• Missouri• New Hampshire• New Jersey• Oregon• Pennsylvania• Texas• West Virginia
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Key Challenges in Facilities Management
The Sustainability of Higher Education is being threatenedHigher education stakeholders are faced with…
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 increasing, operating margins have fallen, and balance sheets have weakened.
Administrative and support costs have grown compared to education costs.
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Protect the Real Prize…
The average
endowment
The average building
replacement value
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Waves of Construction Hitting Major Life CyclesFirst wave of buildings are now 50 years old; second wave nears 20 years old
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05
101520253035404550
Tota
l GSF
of D
atab
ase
(Mill
ions
)
Constructed Space Sightlines Database (1880-Present) = 1 billion GSF
GSF Constructed (5 Year Cohorts)
Pre-
War Built before 1951
Durable constructionOlder but typically lasts longer Po
st-W
ar Built between 1951 and 1975Lower-quality constructionAlready needing more repairs and renovations
Mod
ern Built between 1975 and
1990Quick-flash constructionLow-quality building components
Com
plex
Built in 1991 and newerTechnically complex spacesHigher-quality, more expensive to maintain & repair
Facilities Backlogs Continue to Rise
$77 $79 $80 $82 $84 $87 $90 $92
0%
5%
10%
15%
20%
25%
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2007 2008 2009 2010 2011 2012 2013 2014
$/G
SF
Backlog $/GSF
Backlog/GSF Percentage Change of Backlog
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We need a conversation regarding facilities that:> Treats physical plant like a core business and not an auxiliary;> Uses concepts of endowment management to contextualize
investment decisions;> Aligns capital investment with institutional mission and finance;> Uses predictive analysis to focus on outcomes and not inputs.> Lets you tell your “facilities story” as effective as possible.
We Need a New ConversationLanguage that Drives Effective Policies
How to make this change?Create common vocabulary for facilities management that can be
articulated from the boiler room to the board room.
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Introducing ROPA+
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A Vocabulary for MeasurementThe Return on Physical Assets – ROPASM
Asset Value Change
The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs”
AnnualStewardship
The accumulated backlog of repair /modernization needs and the definition of resource capacity to correct them “Catch-Up Costs”
Asset Reinvestment
The effectiveness of the facilities operating budget, staffing, supervision, and energy management
OperationalEffectiveness
The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery
Service
Operations Success
A Vocabulary for MeasurementSmall Campus Solutions
Asset Value Change
The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs”
AnnualStewardship
The accumulated backlog of repair /modernization needs and the definition of resource capacity to correct them “Catch-Up Costs”
Asset Reinvestment
Focusing on Your Most Pressing Questions...
How does our physical profile affect our investment needs?
How much should we invest in facilities annually?
Have our historical investments levels been on target?
How have we performed relative to our peers?
How can we manage facilities risks most effectively?
How do we demonstrate a credible investment plan to institutional leadership?
Core Concepts of Small Campus Solutions
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The ProcessDisciplined Methodology + Past Performance = Facilities Intelligence
• Sightlines collects and assembles data to quantify, verify, and qualify facility performance.Measure
• Through the benchmarking process, institutions have the capability to create custom comparisons that help them understand context and performance.
Benchmark
• Sightlines synthesizes an institution's verified data to provide expert insight and perspective and develop strategic directions for change.
Analyze &Interpret
• Sightlines continues to support each campus through our Member Portal, national thought leadership, educational webinars, and ongoing campus consultation.
Membership
Sightlines Member PortalIt’s time to get more from your data
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More SupportInformed with live notification to your data
More AccessCreate customizeddashboard featuring the metrics most important to youSeamlessly benchmark against 300 member institutions
More ContextMy Story feature presents Sightlines key findings as an easy to digest narrative
Data to Knowledge: Typical Timeline8 – 10 week process, 5 years of data collected
Five years of historical data collected for trending purposes
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Base Data Collection Process• Review data
needs• Collect data
Data Processing & Analysis• Process data• Analyze data
Data Qualification• 2 hour meeting
Data Revisions
Presentation• Create
presentation• Dry run• Revise
presentation• Deliver 1 hour
presentation
How Our Solution Answers Your Questions…
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Focusing on Your Most Pressing Questions...
How does our physical profile affect our investment needs?
How much should we invest in facilities annually?
Have our historical investments levels been on target?
How have we performed relative to our peers?
How can we manage facilities risks most effectively?
How do we demonstrate a credible investment plan to institutional leadership?
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
GSF
Constructed Space at Institution Since Start
How Does Age Profile Affect Investment Profile?We plot your space (e.g. 52% of space built in eras of low quality construction)
Pre-
War Built before 1951
Durable constructionOlder but typically lasts longer
Post
-War Built between 1951 and
1975Lower-quality constructionAlready needing more repairs and renovations
Mod
ern Built between 1975 and
1990Quick-flash constructionLow-quality building components\ C
ompl
ex Built in 1991 and newerTechnically complex spacesHigher-quality, more expensive to maintain & repair
How Does Age Profile Affect Investment Profile?Greater risk than peers; more space in 25-50 means higher operating costs
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10%19%
28%22%
49%29%
13%
30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
My Campus FY14 Peers FY14
Under 10 10 to 25 25 to 50 50 and Above
Buildings Under 10Little work .“Honeymoon” period.
Low Risk
Buildings 10 to 25Lower cost space renewal updates
and initial signs of program pressures Medium Risk
Buildings 25 to 50Life cycles are coming due in envelope and
mechanical systems. Functional obsolescence prevalent.
Higher Risk
Buildings over 50Life cycles of major building components are past due. Failures are possible. Core modernization cycles are
missed.Highest risk
Highest Risk
Highest Risk
$5.4
$2.0$1.5
$2.5
$0.9
$0
$1
$2
$3
$4
$5
$6
3% Replacement Value Life Cycle Need Target Need
$ in
Mill
ions
Envelope/Mechanical Space/Program
How Much Should We Invest in Facilities Annually?Using the Sightlines model to develop annual targets
Depreciation Model Sightlines Recommendation
Replacement Value: $180 million
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FY2014 Target: $2.4M
Have Our Historical Investment Levels Been On Target?Total project spending falls short of target; backlog is growing
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2006 2007 2008 2009 2010 2011 2012
Mill
ions
Annual Institutional Capital One-time Capital Target Need Equilibrium Need
Decreasing Backlog
Increasing Backlog
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Stabilizing Backlog
How Have We Performed Relative to Peers?
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Backlog Rising Faster than Peers
Key Takeaways – Value of Discovery
Understand cause and effect relationships between space profile and capital needs
Establish a baseline of historical performance and see where your campus is trending
Benchmark to similar peer institutions for context and validation
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$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Tota
l Dol
lars
(Mill
ions
)
Projected Capital Demands($ in Millions)
Renewal Needs High Risk Backlog Need Low Risk Backlog Need
How Can We Manage Risk Most Effectively?10 year life cycle needs + backlog + infrastructure & modernization
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$37.5
$24.0
$2.3
$20
$0
$10
$20
$30
$40
$50
$60
$70
Total 10 YearNeed
10 YearFunding
Tota
l Dol
lars
(Mill
ions
)
10 Year Total Capital Requirement
Average funding: $2.0M
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Tota
l Dol
lars
(Mill
ions
)
Projected Capital Demands($ in Millions)
Renewal Needs High Risk Backlog Need Low Risk Backlog Need
How Can We Manage Risk Most Effectively?10 year life cycle needs + backlog + infrastructure & modernization
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$37.5
$24.0
$2.3
$20
$0
$10
$20
$30
$40
$50
$60
$70
Total 10 YearNeed
10 YearFunding
Tota
l Dol
lars
(Mill
ions
)
10 Year Total Capital Requirement
$4M$2M $0.5M
How Do We Demonstrate a Credible Investment Plan?
Investment Needs
Historical Performance
Peer ContextPredictive Analytics
Performance Measurement
Sightlines Value / ROI for our membersMake the case for lasting policy change on campus…
3535
Make data-driven decisions based on facts
Credible, third party analysis and benchmarking
Accurately assess deferred maintenance backlogs and predict future life cycles within one cohesive framework
Optimize capital investments by setting priorities and managing future risks
Align facilities annual investment with mission, strategy and finance
Set goals and track capital performance
Confidently present a sound facilities strategy to Senior Leadership and Board of Trustees to help Change the Conversation
“We are excited that more institutions like Champlain will have access to the expertise Sightlines has provided. Our new President was ‘blown away’ by the rigor of the analysis and the level of alignment it has created between our Board and administration when it comes to physical plant.”
David Provost – Senior Vice PresidentChamplain College – 700,000 GSF, 2,900 students
Proven Value to Our Members
Questions and Discussion
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1. Building Inventory
2. Capital Projects (5 years: FY10-FY14)
3. Planned/Preventative Maintenance (5 years: FY10-FY14)1. In-house: labor and materials from work order or financial system
2. Outsourced: $ value of contracts
4. Deferred Maintenance Study
5. Prediction (Sightlines will pre-populate the online tool)
Sightlines Data Checklist