new strategies for attacking deferred maintenance december 2012
DESCRIPTION
Learn how national data trends show campus buildings are aging and campus backlogs are growing. And, that these trends will accelerate over the next ten years as building constructed in the 1960's turn 50 years old and capital funding from all sources continue to be limited. Furthermore, learn how the partnership between Sightlines, LLC and University of Massachusetts - Amherst that began in 2005 resulted in more refined documented building conditions, creation of portfolios of projects, and engaged campus leadership in a priority setting process to reach consensus on a multi-year capital plan through the Integrated Facilities Planning process.TRANSCRIPT
1
New Strategies for Attacking Deferred Maintenance
Presenters:Jim Kadamus, Vice President, SightlinesJuanita Holler, Associate Vice Chancellor of Facilities & Campus Services, University of Massachusetts - Amherst
December 5, 2012
2
A Few Housekeeping Items
Enter questions here at any point during the webinar
Please call us at (215) 983-7125 with technical questions – audio, video, etc.
3
Today’s Agenda
Trends in Higher Education and What They Mean for You – Jim Kadamus
Five Easy Steps to Reduce Facilities Risk – Jim Kadamus
UMass Amherst Experience – Juanita Holler
4
Trends in Higher Education Facilities and What They Mean for You
5
• Annually tracking $5.9 billion in operations budgets and $9.0 billion in capital projects
• Database of 345 campuses, 25,000 buildings and 1 billion GSF
Sightlines National Database345 campuses in 42 States – evenly split public and private
6
#1 Campuses are getting olderMore high risk space on campus
2007 2008 2009 2010 2011 20120%
10%
20%
30%
40%
50%
60%
70%
80%
41% 40% 39% 39% 38% 36%
19% 19% 20% 21% 22% 23%
(%) Square Footage over 25 years old(Renovation Age)
% of Space 25 to 50 % of Space Over 50
Ove
rall
Dat
abas
e
7
2005 2006 2007 2008 2009 2010 2011 2012$0
$1
$2
$3
$4
$5
$6
Annual Capital One-time Capital
#2 Capital investment moves up and down in cycles over timeRecurring capital remains steady; 2012 totals are equal to 2007 levels
Capital Investment in Existing Space - $/GSF
Ove
rall
Dat
abas
e
8
#3 Capital investment mix changed modestly since 2005Proportionately less investment in space as overall capital funding grows
Ove
rall
Dat
abas
e
14%
28%
14%
35%
9%
FY2005
17%
29%
17%
31%
7%
FY2012
13%
24%
14%
41%
8%
FY2002
Building Envelope Building Systems Infrastructure
Space Renewal Safety/Code
Total Project Spending Mix
9
#4 “Backlog of needs” are increasingBacklogs up about $11/GSF over last six years
Total Backlog $/GSF
2007 2008 2009 2010 2011 2012$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Ove
rall
Dat
abas
e
14% increase in total backlog since 2007
10
#5 Facilities operating budgets flat since 2008Operating budgets are flat; 2012 budgets are equivalent to 2007 levels
Ove
rall
Dat
abas
e
Daily Service Budget
11
Conclusions
• More buildings are crossing over into higher risk age profile and will increase campus backlog unless addressed
• Shrinking capital and operating budgets and increasing debt will make setting clear priorities for capital renewal critical
• Renovate or demolish decisions will become more common in next decade, especially for the +50 buildings
• Cuts in operating budgets will force campuses to find new ways to deploy staff without reducing levels of service and quality of campus appearance
• Campuses need data-driven strategies for documenting backlog of need, creating portfolios for investments and identifying highest priority projects
12
Five Easy Steps CFOs Can Take to Reduce Facilities Risk Exposure
13
Five steps to reduce facilities risk exposure
1. Understand your campus age profile.
2. Understand the cost of keeping-up (Annual Stewardship) and how much cost you are deferring into the future.
3. Understand your capital project mix – is it diverse and hitting all aspects of campus need?
4. Understand work order hot spots – this information can tell you where the greatest risks are on campus.
5. Understand energy consumption and costs to identify opportunities for savings.
14
FY01 FY06 FY11 FY160%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
47% 40%29%
14%
22% 40%53%
56%
15%
12% 10%
19%
16%8% 8% 11%
Shift in Campus Renovated Age Profile
Under 10 Years 10 to 25 Years 25 to 50 Years Over 50 Years
#1 Understand Age Profile of Campus – Past, Present and FutureYounger buildings have moved into older age categories since FY01
15
Old age results in higher riskCampus has more space that falls into the higher risk categories than peers
Buildings Under 10Little work .“Honeymoon” period.
Low Risk
Buildings 10 to 25Lower cost space renewal updates.
Medium Risk
Buildings 25 to 50Life Cycles are coming due in envelope and mechanical
systems.Higher Risk
Buildings over 50Life cycles of major building components are past due. Failures
are possible.Highest risk
Highest RiskHighest Risk
Highest Risk
Medium Risk Medium RiskMedium Risk
Low Risk Low RiskLow Risk
Higher Risk Higher RiskHigher Risk
My Campus
16
3% Replacement Value Life Cycle Need(Equilibrium)
Functional Obsolescence(Target)
$0.00
$5,000,000.00
$10,000,000.00
$15,000,000.00
$20,000,000.00
$25,000,000.00
$30,000,000.00
$35,000,000.00
$31,130,202.1
$11,604,541.3 $8,703,405.9
$15,234,112.9
$7,617,056.4
Envelope/Mechanical Space/Program
$ in
Mill
ions
FY2011 Stewardship Targets
#2 Defining Stewardship Investment Targets
Straight Line Deprecation Sightlines Recommendation
Total $ in Millions $31.1 $26.8 $16.3% of Replacement 3% 2.59% 1.57%
Setting a yearly goal to arrest the rate of facility depreciation
Replacement Value: $1.04 B
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Understand Rates of Deferrals
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11$0.0
$2,000,000.0
$4,000,000.0
$6,000,000.0
$8,000,000.0
$10,000,000.0
$12,000,000.0
$14,000,000.0
$16,000,000.0
$18,000,000.0
Stewardship Spending Mix
Envelope/Mechanical Space/Programming
$ in
Million
s
11 Year Target Total Actual 11 Year Investment $-
$10,000,000.0
$20,000,000.0
$30,000,000.0
$40,000,000.0
$50,000,000.0
$60,000,000.0
$70,000,000.0
$80,000,000.0
Envelope/Mechanical Target vs. Actuals
11 Year Target Total Actual 11 Year Investment
$-
$10,000,000.0
$20,000,000.0
$30,000,000.0
$40,000,000.0
$50,000,000.0
$60,000,000.0
$70,000,000.0
$80,000,000.0
Space/Programming Target vs. Actuals
$24.8 Million
$21.7 Million
$8.5 Million
$7.7 Million
$9.5 Million
$5.8 Million
Annual Stewardship Target
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FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY20110.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
FMB&A: Equilibrium Need FS: Depreciation Expense FMB&A: Stewardship Actual Investement
Annual Stewardship Spending vs. Depreciation Expense
Annual Stewardship not keeping up with rate of depreciation expense%
of T
otal
Rep
lace
men
t Val
ueAnnual Stewardship Compared to Depreciation
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#3 Making Sure Capital Project Mix is DiverseProject mix adjusts over time to meet campus needs
My Campus
20
#4 Utilizing work order data to identify hot spots
ELECTRICAL MOBILE 2 C1-MOBILE M.M. O'BRIEN-M BLDG SHIRREFF HALL MORRIS 5247 ELIZA RITCHIE-HSE10 25 50 100
$-
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
$350,000.00
$400,000.00
$450,000.00
$500,000.00
Total FY11 Daily Service Work Order Cost by Building & Age CategoryTupper Building
$436,0001380 Work Orders
Dentistry$380,000
953 Work Orders
Central Services$372,000
519 Work Orders
Library$260,000
652 Work Orders
Strategically “resetting” high cost buildings can reduce “corrective” ops. costs
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Opportunity to release operational FTEs Buildings between 25-50 yrs. old take longer to service
Age CategoryAverage hours/ DS
Work OrderLess than 10 4.10
10-25 3.7025-50 5.25
Over 50 4.31
Age CategoryTotal Daily Service
Work OrdersLess than 10 1,295.00
10-25 2,060.00 25-50 8,774.00
Over 50 4,797.00
Reduce average work order time in 25-50 yr. old buildings by 1 hour.
8774 work orders/1 hour= 8774 hours released!
8774 hours/2080 hours (1 FTE)=
4.2 Maintenance FTEs
22
#5 Monitor Energy Cost and Consumption
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY110
5
10
15
20
25
30
35
40
45Energy Unit Cost Trends VS. Peers
UVM Fossil Unit CostUVM Electric Unit CostPeer Fossil Unit CostPeer Electric Unit Cost
$/M
MBT
UFY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY110
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000Energy Consumption Trends VS. Peers
UVM Fossil ConsumptionUVM Electric ConsumptionPeer Fossil ConsumptionPeer Electric Consumption
BTU
/GSF
Campus
Campus Campus
Campus
23
UMass Amherst’s Experience
24
University of Mass. - Amherst Background Information
• Flagship public institution• 10.4 M GSF• Located in Amherst, MA• Sightlines member since 2004
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Campus Overview - 2005
Campus was aging Energy Consumption was Increasing
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Campus Overview 2005
13%
17%
41%
13%
17%
FY00-FY05 Investment
Bldg. EnvelopeBldg. SystemsSpaceCodeInfrastructure
Space-heavy project spending
27
Steps towards a solutionThe Integrated Facilities Plan process
Identify the needs
Segment the needs
Develop a strategy
Track progress towards strategy
Reassess plan
progress & goals
28
Findings of Initial Report
Identified Needs$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
Original Needs Identified - 2006
Building Needs InfrastructureNew Construction
61%24%
15%
Existing Needs
A: 1-3 years B: 4-6 years C: 7-10 years
Over $2 billion in needs Over 60% of the needs were near-term
29
Findings of Initial Report – continued
Cooling
HeatingHVAC
Plumbing
Electrica
l
Mechanica
l
Exterio
r Shell
Interior S
hell
Safety/Code
$0
$100
$200
$300
$400
$500
$600
Identified Needs by System and Timeframe
A: 1-3 Years B: 4-6 Years C: 7-10 Years
30
Segmenting the campus with the Building Portfolio Approach
Total Project Inventory$2,280 M
New Space$571 M
Building Needs$1,627 M
Transitional Facilities
$196 M
Building Renovation
$581 M
Repurpose$40 M
Maintain$812 M
Non-housing facilities$602 M
Housing facilities$208 M
Site & Infrastructure
Needs$80.4 M
Note: data shows current FY11 data
Campus is too complex to be managed with a single strategy
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Reassessing our Building Portfolio Designations
20%
17%
34%
2%0.21%
25%
2%FY11 Building Investments by Portfolio
Maintain Maintain (Housing) Building Renovation Transitional Repurpose InfrastructureNew Space
Building Portfolio FY11 Investment ($/GSF)Maintain $3.58
Maintain ( Housing) $4.30
Building Renovation $14.89
Transitional $1.54
Repurpose $1.29
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Using the inventory to make strategic decisions
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Using the Net Asset Value (NAV) to identify opportunities
0 5 10 15 20 25 30 35 40 45 500%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NAV – Maintain Portfolio Investment Strategy
“Catch Up” Stage: Buildings require more significant repairs; major building components are in jeopardy of complete failure; large-scale capital infusions or renovations are inevitable
“Keep Up” Stage: Primarily new or recently renovated buildings w/ sporadic building repair & life cycle needs
Balanced Profile Stage: Buildings are beginning to show their age and may require more significant investment and renovation on a case-by-case basis
Replacement Value – Deferred MaintenanceReplacement ValueNet Asset Value =
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Descriptive text goes here
Bartlett Hall Operating Costs
FY08 FY09 FY10 FY08-FY10 Average
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$415,154 $413,619 $371,394 $400,055
$378,523
$117,815
$23,674
$173,337
Bartlett Hall Annual Operating Costs$ in Thousands
Other CostsMaintenance & Cus-todial Costs
$573$395$531$794
FY08, FY09, FY10
FY08-FY10 AverageIncluded in Analysis
Building Maintenance 60,888$ Contract Administration 787$ Contract Oversight 166,880$ Custodial 339,167$ Pest Control 308$ Utilities 5,362$
Total Included 573,393$
Excluded in AnalysisAlterations 14,525$ Moving Services 566$
Total Excluded 15,091$
Grand Total All Expenses 588,484$
Understanding operating costs of old vs. new space…
35
Descriptive text goes here
FY08-FY10 Average$0
$1
$2
$3
$4
$5
$6
$5.04
$1.32
Bartlett Hall & Alfond HallFY08-FY10 Average Annual Operating Costs - $/GSF
Bartlett HallAlfond Hall
$/GS
FBartlett Hall Operating CostsFY08, FY09, FY10
Numbers to RememberOperating Costs
Bartlett Hall: $5.04/GSFNew Facility: $1.32/GSF
Understanding operating costs of old vs. new space…
36
Descriptive text goes here
Determine 10-Year total needs for the existing building vs. New Construction
Renovate Existing or Demolish and Build New?
Bartlett Hall
GSF 113,748
FY11-FY20 Capital Needs $52.9 M
FY11-FY20 Stewardship Needs $3.5 M
Immediate Funding to Address Reliability Needs $5.7 M
FY11-FY20 Operating Cost $5.7 M
Swing Space Funding TBD
Total Associated Costs $67.7 M
New Facility*
GSF 113,748
Demolition of Existing Bartlett Hall** $2.7 M
Planning/Relocation costs TBD
New Construction $51.2 M
FY13-FY20 Stewardship Needs $6.5 M
FY13-FY20 Operating Cost $1.2 M
Total Associated Costs $58.9M
*Opening of new facility assumed for 2013. Operating Costs based on $/GSF costs for Alfond Hall.**Demolition estimated at $23/GSF (based on University Apartments demolition cost).
New Facility
Bartlett Hall
$- $20,000,000 $40,000,000 $60,000,000 $80,000,000
$53,854,740
$52,872,454
$6,501,761
$3,446,295
$1,199,365
$5,733,930 $5,672,212
Total 10-Year Costs$ in Millions
Capital Requirements
Reliability Needs
Stewardship Needs
Operating Costs
It is less expensive to demolish Bartlett Hall and construct a new facility than to renovate the
existing facility.
•Non-quantifiable factors:• Current building configuration• Program needs• Funding options (donors for new space vs.
University/state funding for renovations)
Bartlett Hall
37
Progress towards reduction of needs
Original IFP Dec. 06 Udpate
April 09 Update
Fall 09 Update
FY09 ROPA Analysis
January 2010
Update
June 2010 Update
January 2011
Update
June 2011 Update
$0
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$3,000,000,000
$1,478,629,837 $1,548,439,772
$1,973,885,193 $1,894,502,002 $1,831,108,985 $1,886,683,763 $1,792,271,617 $1,704,496,420 $1,626,790,660
$117,958,018 $121,231,686
$125,513,498 $107,164,736 $105,051,379 $105,512,965
$82,479,217 $85,285,462
$80,446,368
$639,913,000 $639,913,000
$456,809,974 $434,170,465 $434,170,465 $427,461,911
$409,674,173 $603,198,644 $571,383,434
IFP Identified Needs by Update Stage
Building Needs Infrastructure New Space
Lowest existing needs since 12/2006
18% decrease in building needs
38
Progress with project selection
13%
17%
41%
13%
17%
FY00-FY05 Investment
Bldg. Envelope Bldg. SystemsSpace CodeInfrastructure
Space-heavy project spending
11%
26%
29%
12%
22%
FY06-FY11 Investment
Bldg. Envelope Bldg. SystemsSpace CodeInfrastructure
Balanced spending mix
39
The keys to success
• Understanding key metrics and how UMA compared with peers
• A comprehensive list of identified needs
Knowing where we were
• Making decisions about the future of specific buildings
• Creating investment strategies by building portfolioCreating A Plan
• Regular review of successes and failures• Adjust as necessary – flexibility is important
Monitoring the Plan