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Sightlines LLC FY2012 Facilities MB&A Maine System Date: June 27, 2013 Presented by: Jim Kadamus

Abilene Christian University Adelphi University

Alcorn State University American University

Amherst College Arizona State University

Armstrong Atlantic State University Asnuntuck Community College

Augustana College (IL) Babson College

Bellarmine Preparatory School Bentley University

Berea College Berkshire Community College

Berkshire School Bethel University

Bloomsburg University of Pennsylvania Boston College

Bowdoin College Bowling Green State University

Brandeis University Bristol Community College (MA)

Brown University Bryant University

Bryn Mawr College Bucknell University

Bunker Hill Community College (MA) Cabrini College

California Institute of the Arts California University of Pennsylvania

Calvin College Cape Cod Community College (MA)

Capital Community College Carleton College

Carnegie Mellon University Case Western Reserve University

Central Connecticut State University Champlain College

Chapman University Charter Oak State College

Cheyney University of Pennsylvania Cincinnati State Technical and Community College

Claremont McKenna College Claremont Graduate University

Clarion University of Pennsylvania Clemson University

Cleveland State University Colgate University

College of Mount St. Joseph College of Saint Benedict

Columbus State Community College Connecticut College

Cornell University Cuyahoga Community College

Dalhousie University Davidson College

Delta State University Drew University

Drexel University Duke University

Duquesne University Earlham College

East Stroudsburg University of Pennsylvania Eastern Connecticut State University

Eastern Oregon University Eckerd College

Edinboro University of Pennsylvania Emerson College

Emma Willard School Fairfield University

Fitchburg State University Florida Institute of Technology

Florida State University Framingham State University

Franklin & Marshall College Franklin University

Franklin W. Olin College of Engineering Fuller Road Management Corporation

Gallaudet University Gateway Community College

George Mason University Georgia Institute of Technology

Gettysburg College Gonzaga University

Goucher College Greenfield Community College (MA)

Grinnell College Gustavus Adolphus College

Hamilton College Hamline University Hampshire College

Harper College Harvey Mudd College

Holyoke Community College Housatonic Community College

Illinois Institute of Technology Indiana University

Indiana University of Pennsylvania Indiana University - Purdue University Indianapolis

Iowa State University Ithaca College

Jackson State University Kansas State University Keck Graduate Institute

Keene State College Kent State University

Kutztown University of Pennsylvania Lakeland Community College

LaSalle University Le Moyne College

Lebanon Valley College Lewis & Clark College

Lock Haven University of Pennsylvania Long Island University Brooklyn Campus

Long Island University C.W. Post Loyola Marymount University Loyola University in Maryland

Macalester College Manchester College

Manchester Community College Mansfield University of Pennsylvania

Massachusetts Bay Community College (MA) Massachusetts College of Art and Design

Massachusetts Institute of Technology Massasoit Community College (MA)

Miami University Michigan State University

Middlebury College Middlesex Community College (CT)

Middlesex Community College (MA) Millersville University of Pennsylvania

Mississippi State University Mississippi University for Women Mississippi Valley State University

Missouri University of Science and Technology Montana State University (Bozeman)

Mount Holyoke College Mount Wachusett Community College

Naugatuck Community College New Mexico State University

New York University North Shore Community College (MA)

Northeastern University Northern Arizona University

Northern Essex Community College (MA) Northwestern Connecticut Community College

Northwestern University Norwalk Community College

Nova Southeastern University Ohio University - Athens

Oregon Institute of Technology Oregon State University

Otis College of Art & Design Owens State Community College

Pace University Pacific Lutheran University Phillips Academy Andover

Pitzer College Plymouth State University

Polytechnic Institute of NYU Pomona College

Portland State University Potomac State College

Princeton University Purdue University

Quinebaug Valley Community College Quinsigamond Community College (MA)

Rensselaer Polytechnic Institute Rider University

Roger Williams University Roxbury Community College

Rutgers University Saint Louis University

Saint Mary’s College (IN) Saint Mary’s College of California

Scripps College Seattle Pacific University

Seattle University Shippensburg University of Pennsylvania

Siena College Sinclair Community College

Slippery Rock University of Pennsylvania Smith College

Southern Connecticut State University Southern Methodist University

Southern Oregon University Springfield Technical Community College

St. Lawrence University Stevens Institute of Technology

SUNY – Purchase College Swarthmore College Syracuse University

Temple University Texas A&M University

The Catholic University of America The College of Saint Rose

The College of Wooster The Johns Hopkins University

The Lawrenceville School The New School

The Ohio State University The Peddie School

The Pennsylvania State University The Richard Stockton College of New Jersey

The Sage Colleges The University of Alabama

The University of Alabama at Birmingham The University of Dayton The University of Maine

The University of Mississippi The University of Rhode Island, Kingston

Thomas Jefferson University Three Rivers Community College

Towson University Trinity University

Tufts University Tunxis Community College

University of Alaska Anchorage University of Alaska Fairbanks

University of Alaska Southeast University of Arizona

University of Arkansas University of California – Davis University of California – Irvine

University of California San Francisco Medical Center University of Chicago

University of Cincinnati University of Colorado at Boulder

University of Denver University of Hartford

University of Idaho University of Illinois at Urbana-Champaign

University of Kentucky University of Maine at Augusta

University of Maine at Farmington University of Maine at Fort Kent University of Maine at Machias

University of Maine at Presque Isle University of Maryland

University of Massachusetts Amherst University of Massachusetts Dartmouth

University of Massachusetts Lowell University of Michigan

University of Minnesota University of Mississippi Medical Center

University of Missouri University of Missouri - Kansas City

University of Missouri - St. Louis University of Nebraska at Kearney

University of New Hampshire University of New Haven University of North Texas University of Notre Dame

University of Oregon University of Pennsylvania

University of Portland University of Redlands

University of Rochester University of San Diego

University of San Francisco University of Southern Maine

University of Southern Mississippi University of St. Thomas (TX)

University of Tennessee, Knoxville University of Toledo

University of the Pacific University of the Sciences in Philadelphia

University of Vermont Upper Iowa University

Utica College Vassar College

Virginia Commonwealth University Virginia Department of General Services

Virginia State University Wagner College

Washburn University Wellesley College

Wesleyan University West Chester University of Pennsylvania

West Virginia Health Sciences Center West Virginia University

Western Connecticut State University Western Oregon University

Westfield State University Wheaton College (MA)

Whitworth University Widener University

Williams College Williston Northampton School

Worcester State College Xavier University

Yeshiva University Youngstown State University

Make sure institution is listed – Slide Master

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Asset Reinvestment

The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery

The effectiveness of the facilities operating budget, staffing, supervision, and energy management

The accumulated backlog of repair and modernization needs and the definition of resource capacity to correct them “Catch-Up Costs”

The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs”

A vocabulary for measurement The Return on Physical Assets – ROPASM

Annual Stewardship

Operational Effectiveness

Service

Asset Value Change Operations Success

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Sightlines profile: 41 states, DC, Nova Scotia Database with over 3380 campuses, 45,000 buildings and 1.2 billion GSF of space

Common facilities vocabulary

Consistent analytical methodology

Context through benchmarking

State System Comparisons

Connecticut State University System

Mississippi Institutions of Higher Learning

Oregon University System

Pennsylvania State System of Higher Education

University of Alaska System

University of Missouri System

University System of New Hampshire

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Core Observations in FY2012

• The Maine System has aging campuses with more space in high risk

categories than peers. This means that life cycles of many building components are at or past their useful life.

• In addition the System’s, buildings are on average smaller than peers; a greater number of smaller facilities makes space more difficult and costly to maintain on a daily basis and increases capital demands. Density of users on campus are below peer averages.

• Investment into facilities is below target levels but increasing in recent years due to funding secured in prior years, but spent recently.

• Backlog across all campuses is high and growing over time, 20% since FY06 reaching $770M in FY2012.

• Operating costs are the lowest since FY2008. Resources are limited. Service process is low compared to peers.

• Energy reduction continues to be a highlight within the system, yielding cost and carbon avoidance.

Maine System Core Observations FY2012

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Physical Profile

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18% 20% 19%

10% 11% 13%

43% 39% 32%

29% 30% 36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Maine System 2006 Maine System 2009 Maine System 2012

Campus Age Distribution over time

Under 10 10 to 25 25 to 50 Over 50

Maine System age profile ,68% of space over 25 years old Space over 50 years old (highest risk) grown from 29% in 2006 to 36% in 2012

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18% 20% 19%

10% 11% 13%

43% 39% 32%

29% 30% 36%

0%

10%

20%

30%

40%

50%

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70%

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90%

100%

Maine System 2006 Maine System 2009 Maine System 2012

Campus Age Distribution over time

Under 10 10 to 25 25 to 50 Over 50

Maine System age profile ,68% of space over 25 years old Space over 50 years old (highest risk) grown from 29% in 2006 to 36% in 2012

Highest Risk

High Risk

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Maine System % of space over 50 is growing Public institutions average 17% of space over 50 in FY12

29% 28% 29%

30%

33% 35% 36%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2006 2007 2008 2009 2010 2011 2012

Maine System Percent of Space Over 50

FY12 Public University Average

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Total Project Spending

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$20.8 $18.5 $25.7

$32.8

$14.6 $17.7

$29.9

$26.0

$44.6

$45.8

$8.9

$4.9

$18.0

$4.7

$1.5

$3.4

$5.9

$1.0

$1.6

$0.8 $5.6

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

2006 2007 2008 2009 2010 2011 2012

$ in

Mill

ion

s

Maine System Investment Profile

Existing Space New Space Non-Facilities/ Non- Construction Fees

Maine System total project spending $325M spent in last 7 years; 48% into existing facilities

Maine System Annual Average - $47.5M 48%

46%

6%

7-Year Capital Investment Distribution

Significant Projects from FY2012: • Bailey Hall Reno USM •Stewart Art Complex UM •Alfond Arena Reno & Upgrades UM •Sports Center Renovations UMFK

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Balanced mix of spending between space and systems Gap between Maine System and peers has grown since 2006; but better than 2010

13%

32%

13%

31%

11%

Maine System FY06-12 Investment Mix

14%

28%

21%

29%

8%

Peer Systems FY06-12

Building Envelope

Building Systems

Infrastructure

Space Renewal

Safety/Code

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2006 2007 2008 2009 2010 2011 2012

$/G

SF

Total Project Spending into Existing Space

UM System Peer Group Average

$1.34

$1.70

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Setting Investment goals to maintain System

Annual Stewardship

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$72.6

$27.1 $20.3

$30.9

$15.5

$-

$10

$20

$30

$40

$50

$60

$70

$80

3% Replacement Value Life Cycle Need Target

$ in

Mill

ion

s

Envelope/Mechanical Space/ Program

FY2012 Stewardship Targets

Defining Stewardship Investment Targets

Depreciation Model Sightlines Recommendation

$58.0 M $35.7 M

Maine System Replacement Value: $2.4B

Meeting targets enables System to maintain Net Asset Value

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Chasing a moving target to stabilize backlog Funding below target need results in growth in backlog

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2006 2007 2008 2009 2010 2011 2012 2013

Mill

ion

s

Annual Stewardship Asset Reinvestment Target Need Life Cycle Need

Decreasing Backlog

Stabilizing Backlog

Increasing Backlog

*Spending into existing space

Target Need

Life Cycle Need

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How long can the system face failures? Maine System is in a period where projects are a result of component failures

Investment Strategy

100%- 85%

85%- 70%

70%- 50%

Below 50%

Capital Upkeep Stage: Primarily new or recently renovated buildings with sporadic building repair & life cycle needs; “You pick the projects”

Repair and Maintain Stage: Buildings are beginning to show their age and may require more significant investment on a case-by-case basis

Systemic Renovation Stage: Buildings may require more significant repairs; large capital infusions; “The projects pick you”

Transitional/Gut Renovation/Demo Stage: Major buildings components are in jeopardy of failure. Reliability issues are widespread throughout the building.

NAV of Index

NAV Index = (Replacement Value-Building Needs)

Replacement Value X 100

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY06 FY07 FY08 FY09 FY10 FY11 FY12

Peer Average Maine System Average

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Campus Operations

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Facilities Operating Actuals PM increases at Orono and Southern due to improved tracking to work order system

$3.52 $3.77 $4.34 $4.34 $4.45 $4.33 $4.07 $4.03

$0.11 $0.12

$0.17 $0.12 $0.10 $0.14 $0.29 $0.32

$2.03 $2.12

$2.44 $2.52 $2.03 $2.04

$1.86 $2.32

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

2006 2007 2008 2009 2010 2011 2012 Peer 2012Daily Service Planned Maintenance Utilities

Maine System Facilities Operating Actuals

$/G

SF

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Energy consumption decreasing over time 17% drop from 2006 to 2012; mostly in fossil fuels

-

20,000

40,000

60,000

80,000

100,000

120,000

2006 2007 2008 2009 2010 2011 2012

Maine System Composite Energy Consumption

BTU

/GSF

Fossil Electric

By decreasing consumption the Maine System has avoided on average approximately

$611,000 each year from FY08 to FY12

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Service Process scores compared to peer systems Room for improvement by implementing new Integrated Work Management System

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Maine B C D E F G H

Service Process Index vs. Peer Systems

Organizational Structure

Centralization of Request

Scheduling Process

Work Request Capabilities

Performance Measurement

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Concluding Comments

• Recognizing the fiscal situation in Maine, strategic planning for the future is critical.

Without a significant capital infusion buildings will continue to deteriorate. • Strategic project selection is more critical than ever in times of budget cuts.

Step 1: Consistently document the backlog of need across all campuses Step 2: Use the backlog data to identify and address buildings with the highest need and highest program value. Look at when life cycles of buildings are coming due to plan for investment. Step 3:Eliminate buildings with high need and low program value to open the door to cost savings

• A case for additional Annual Stewardship funding will be necessary. Without a dependable source of “keep up” funding the new spaces will depreciate at a faster rate, growing the backlog and risk profile over time.

Asset Value Change

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Concluding Comments

• Facilities operating costs shifted to a more proactive approach in FY2012 with

increases toward planned maintenance. Daily service levels are stable. • Implement the new Integrated Work Management System to improve productivity

of facilities operations. As capabilities of the work order system increase, have procedures in place for who, what, and how information will be tracked. Use performance metrics to monitor resources and maximizing efficiencies on campus.

• Develop strategy for energy reduction across the System. Savings from this effort

should be recycled back in to restore the System’s decreasing operating budget.

Operations Success

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Questions & Discussion