Continued page 3

“The biggest challenge is the escalating cost of education, particularly wages, and the necessity to set fees that are reasonable for our clientele.

Fixed Price HVAC Maintenance & Repair

Perth SchoolCuts Costs

An Insiders Guide to Australian School Management Issue 1

As a member of the local executive of the Association of School Bursars and Administrators (ASBA), Lake Joondalup’s Chief Financial Offi cer, Stuart Holliday, is acutely aware that these challenges are common to the private school sector.

With 1320 students and more than 20 buildings on an 8.8Ha site, Perth’s Lake Joondalup Baptist College is an a-typical private school meeting market expectations for the best facilities while balancing costs against income.

Architect: The Buchan Group, Photographer: Silvertone

Schools, Aged Care

Australia’s HVAC LeaderUnderwrites Cost CentresBetween his many clients in aged care and education throughout Western Australia, Geoff Binns is responsible for a lot of “precious cargo”, a responsibility of which he is justifi ably proud.

Geoff, the Business Development Manager for AE Smith Service in WA, has been responsible for the rollout of heating, ventilation and air conditioning solutions to these sectors with astounding success.

“Since 2003 we have attracted several private school customers and the numbers are growing.” Geoff said.

“It’s a big responsibility, but a particularly gratifying one as we are helping these clients save massive amounts of money and at the same time hearing what’s important to them.”

The basic premise behind AE Smith’s solution is that it enables the school to fl atten the annual costs of repairs and maintenance for their heating, ventilation and air conditioning systems without sacrifi cing the safe, comfortable learning environment that teachers, students, and parents are accustomed to.

Because AE Smith takes total responsibility for the cost of breakdowns and repairs, the company is essentially underwriting the HVAC systems and thus has the best incentive of all to ensure that a rigorous preventative maintenance program is in place.

“Because we keep their systems running at optimum effi ciency they all see signifi cant savings in energy costs while keeping students and teachers comfortable,” Geoff said.

“In addition, this type of maintenance extends the life of the equipment, thus allowing deferral of capital costs.”

Since AE Smith pioneered the concept, its success has seen the rise of a few imitators purporting to offer fi xed price maintenance contracts, but Geoff says that there are signifi cant differences.

“A management team at a school or aged care facility needs to understand exactly what they are buying and what additional, hidden costs could be incurred. Particularly they need to be sure the contract does not give the provider any outs.

“AE Smith is unique in the air conditioning industry in that we totally underwrite the risk. We do not exclude fair wear and tear and do not hide behind third party insurance policies.

“Accordingly, we have a powerful vested interest in keeping the equipment fully operational as well as keeping the customer conscious of any possible risk. If it breaks down, it costs us money.”

Few companies are in a position to take this stance. However, Geoff only reinforces it by keeping the focus on helping the customer.

“In everything we do, we believe in helping people. The way we help is by

taking the time to hear what is really important to you. We accept personal responsibility to use our resources, to fi nd the right outcome.

Our expertise has helped many schools to reduce operating costs, defer capital expenditure and minimise breakdowns and repairs. We keep on top of fi nancial and physical risk, and provide best practice solutions by maintain a positive image in your community.

In a school setting, we deliver a single source solution for air conditioning and energy saving needs; ensuring that staff work and students learn in a safe, comfortable learning environment. We care about people’s welfare; believe in family values and do what they say they are going to do.

In a school setting we deliver a single source solution to your air conditioning and energy saving needs; ensuring your staff and students a safe, comfortable learning environment.”

Brisbane • Cairns • Gold Coast • Mackay • Melbourne • Perth • Sydney • Tasmania • Townsville

1300 313 313 email@aesmith.com.au www.aesmith.com.au

Continued from page 1

Lake Joondalup Shows The Way“While we maintain wage costs

as best we can, we are governed predominantly by external forces. We can do little to infl uence them. Therefore it’s vital to contain other costs.

“With the College being just over 20 years old, we have to continue with a building program while maintaining what we’ve already established, still keeping enough funds for our core business of education. It’s a diffi cult balancing act,” Stuart said.

But Stuart is one of a growing band of managers who have contained a signifi cant area of the school’s costs thanks to an innovative fixed price program for the maintenance and repair of the schools heating, ventilation and air conditioning systems (HVAC).

Under the contract with AE Smith, a contract that has been in place for more than fi ve years, Stuart knows in advance what his costs will be for the year.

“They come in and service all units on a pre-determined schedule. It is in their interests to do it properly because if anything goes wrong it’s basically at their cost,” Stuart said.

“They are literally underwriting the risk.”

Although the school tests the market every three years when the contract is due for renewal, to date there has been no reason to change.

“It’s not just about the price, but also about the relationships between their staff and ours and the service we get if something does go wrong,” Stuart said.

“The service people that come out to the college are very good in terms of fitting in with the school. They’re mindful of the students; keep out of the way and basically fi t in with the school environment very well. In fact one of the service people has been with us from day one.”

The strength of the relationship and the school’s trust in service levels was

Disclaimer Notice: Neither AE Smith & Son Pty Ltd, nor Newslett er House Pty Ltd, nor the publishers and editors of articles in this issue, accept any form of liability, be it contractual, tortious or otherwise, for the contents of this newslett er or for any consequences arising from its use or any reliance placed upon it. All the information contained in this publication has been provided to us by various parties. We do not accept any responsibility to any person for its accuracy and do no more than pass it on. All interested parties should make and rely upon their own enquires in order to determine whether or not this information is in fact accurate. Published for AE Smith by Newslett er House www.newslett erhouse.com

has the resources to keep the school up to date with any revisions to standards.

“Revisions in a school environment are always ongoing. Apart from legislative changes there are those driven by insurers and even societal expectations and here AE Smith is very good. When legislative changes come in they will always advise us and often pre-empt them.”

Stuart believes that quite apart from the money saved by the school with the help of AE Smith, there’s a very real advantage in terms of peace of mind.

“We have 20 significant buildings and a number of smaller rooms. The College is 21 years old and because it’s a comparatively new school we have had a lot of growth so there’s a lot of individual air conditioning units and not a lot of big group units. There’s a lot to look after and in the newer buildings they are quite comprehensive and complicated systems.

“Under our contract we simply do not have to worry and we have very few problems,” Stuart said.

underscored when it came time for a major $200,000, two month retrofi t of the HVAC in the school’s auditorium. The school went straight to AE Smith as the preferred supplier rather than going to tender.

“We knew what we would get as a result of our experience with them. We’d previously had jobs done by AE Smith Project Manager Brian Webber and had a good relationship.

“In this case they carried out most of the work between 5pm and 8am as well as weekends. In terms of working around the client they’re fantastic.”

Stuart said that AE Smith’s preparedness to undertake the project as an open book contract meant that the school was confi dent of a professional job at the right price.

“Brian would show me their costs and we knew what we were paying up front. Even with extras he’d show me the costs with their 10% added and we always had the opportunity to go direct.”

A very powerful advantage of the contractual arrangement with AE Smith is the re-assurance that the national fi rm

Private Schools Look To Overcome UncertaintiesAustralian private schools are facing a period of cost uncertainty, increasingly looking for solutions that harness unhinged operating costs that often fl uctuate from month to month. One such solution changes variable costs to fi xed costs while still ensuring a safe, comfortable learning environment.

Pioneered by AE Smith, Australia’s largest privately owned HVAC specialists, the maintenance program reduces operating costs, enables the deferment of capital expenditure and minimises breakdowns and repairs.

By ensuring that an individual school’s equipment is operating at optimum effi ciency, the program also adds to the greening of the school. US studies have shown that green schools can reduce their energy usage by as much as 33%1.

The funding uncertainty faced by private schools relates to a number of issues and was highlighted in the 2012 IBISWorld report, Private Schools in Australia.

The report cited the current Federal review of funding for private schools as the most significant issue facing the industry. The current Schools Assistance Bill only provides funding at current levels until the end of this year.

Low projected growth in the school age population in coming years is another major factor in the cost equation for an industry that is already under pressure as a result of the demand placed on facilities by increased enrolments.

In the 10 years to 2009 private school enrolments grew 1.9% per annum compared with a 0.1% growth in public school enrolments. IBISWorld predicts a doubling of growth in the next fi ve years compared to the previous fi ve.

This growth puts demand on facilities at a time when fees cannot continue to rise, particularly following 2010 when the average fee increase for private schools in Australia was 6% .

Another pressure point for private schools has been the need to increase the levels of non-teaching staff in order to

comply with the higher degree of reporting required by the Federal Government. If the levels do not meet the government’s standards, the schools will not be to be eligible for funding. Non-teaching jobs grew 2.8% per annum in the fi ve years to 2012 compared to a growth of just 2.1% in teaching staff.

The need to control fi xed costs while also developing new funding sources fi rst hit home to the private schools sector when private sources of funding fell 0.8% in the fi ve years to 2010/11, a fi gure signifi cantly impacted by a sharp drop in 2008/9 in response to a weakening economy, a decline in wealth and the lower consumer sentiment brought on by the Global Financial Crisis.

A review of the current Socio-Economic Status funding model in 2010/11 spurred private schools to diversify their revenue sources to insulate them against potentially lower government support.

Increasingly they started operating as businesses, developing fund raising ventures and introducing a higher level of fi duciary scrutiny to costs. As wages that make up 62% of total expenditure could not be controlled, there was a strong need to look at the remaining 38%.

According to AE Smith’s Business Development Manager in Western Australia, Geoff Binns, schools have warmly welcomed the savings afforded with their help.

“For 10 years we have helped a growing number of private schools that have reduced operating costs, deferred capital expenditure, and minimised breakdowns and repairs because of our help,” Geoff said.

“The way we help is unique in the air conditioning industry because we turn your variable costs to fi xed costs while underwriting the risk ourselves. We do not exclude fair wear and tear and do not hide behind third party insurance policies to protect ourselves in the event the equipment fails.

“Instead, at AE Smith we have a powerful vested interest to keep the equipment operational because if it breaks down, it costs us money.

“For school administrators the benefi ts are many. Not only do they know in advance what their costs will be for the year, but they can look towards increased savings in energy costs from equipment running at optimum effi ciency.”

Architect: The Buchan Group, Photographer: Silvertone

(1) “Greening America’s Schools - Costs & Benefi ts”, sponsored by U.S. Green Building Council

Continued from page 1

Lake Joondalup Shows The Way“While we maintain wage costs

as best we can, we are governed predominantly by external forces. We can do little to infl uence them. Therefore it’s vital to contain other costs.

“With the College being just over 20 years old, we have to continue with a building program while maintaining what we’ve already established, still keeping enough funds for our core business of education. It’s a diffi cult balancing act,” Stuart said.

But Stuart is one of a growing band of managers who have contained a signifi cant area of the school’s costs thanks to an innovative fixed price program for the maintenance and repair of the schools heating, ventilation and air conditioning systems (HVAC).

Under the contract with AE Smith, a contract that has been in place for more than fi ve years, Stuart knows in advance what his costs will be for the year.

“They come in and service all units on a pre-determined schedule. It is in their interests to do it properly because if anything goes wrong it’s basically at their cost,” Stuart said.

“They are literally underwriting the risk.”

Although the school tests the market every three years when the contract is due for renewal, to date there has been no reason to change.

“It’s not just about the price, but also about the relationships between their staff and ours and the service we get if something does go wrong,” Stuart said.

“The service people that come out to the college are very good in terms of fitting in with the school. They’re mindful of the students; keep out of the way and basically fi t in with the school environment very well. In fact one of the service people has been with us from day one.”

The strength of the relationship and the school’s trust in service levels was

Disclaimer Notice: Neither AE Smith & Son Pty Ltd, nor Newslett er House Pty Ltd, nor the publishers and editors of articles in this issue, accept any form of liability, be it contractual, tortious or otherwise, for the contents of this newslett er or for any consequences arising from its use or any reliance placed upon it. All the information contained in this publication has been provided to us by various parties. We do not accept any responsibility to any person for its accuracy and do no more than pass it on. All interested parties should make and rely upon their own enquires in order to determine whether or not this information is in fact accurate. Published for AE Smith by Newslett er House www.newslett erhouse.com

has the resources to keep the school up to date with any revisions to standards.

“Revisions in a school environment are always ongoing. Apart from legislative changes there are those driven by insurers and even societal expectations and here AE Smith is very good. When legislative changes come in they will always advise us and often pre-empt them.”

Stuart believes that quite apart from the money saved by the school with the help of AE Smith, there’s a very real advantage in terms of peace of mind.

“We have 20 significant buildings and a number of smaller rooms. The College is 21 years old and because it’s a comparatively new school we have had a lot of growth so there’s a lot of individual air conditioning units and not a lot of big group units. There’s a lot to look after and in the newer buildings they are quite comprehensive and complicated systems.

“Under our contract we simply do not have to worry and we have very few problems,” Stuart said.

underscored when it came time for a major $200,000, two month retrofi t of the HVAC in the school’s auditorium. The school went straight to AE Smith as the preferred supplier rather than going to tender.

“We knew what we would get as a result of our experience with them. We’d previously had jobs done by AE Smith Project Manager Brian Webber and had a good relationship.

“In this case they carried out most of the work between 5pm and 8am as well as weekends. In terms of working around the client they’re fantastic.”

Stuart said that AE Smith’s preparedness to undertake the project as an open book contract meant that the school was confi dent of a professional job at the right price.

“Brian would show me their costs and we knew what we were paying up front. Even with extras he’d show me the costs with their 10% added and we always had the opportunity to go direct.”

A very powerful advantage of the contractual arrangement with AE Smith is the re-assurance that the national fi rm

Private Schools Look To Overcome UncertaintiesAustralian private schools are facing a period of cost uncertainty, increasingly looking for solutions that harness unhinged operating costs that often fl uctuate from month to month. One such solution changes variable costs to fi xed costs while still ensuring a safe, comfortable learning environment.

Pioneered by AE Smith, Australia’s largest privately owned HVAC specialists, the maintenance program reduces operating costs, enables the deferment of capital expenditure and minimises breakdowns and repairs.

By ensuring that an individual school’s equipment is operating at optimum effi ciency, the program also adds to the greening of the school. US studies have shown that green schools can reduce their energy usage by as much as 33%1.

The funding uncertainty faced by private schools relates to a number of issues and was highlighted in the 2012 IBISWorld report, Private Schools in Australia.

The report cited the current Federal review of funding for private schools as the most significant issue facing the industry. The current Schools Assistance Bill only provides funding at current levels until the end of this year.

Low projected growth in the school age population in coming years is another major factor in the cost equation for an industry that is already under pressure as a result of the demand placed on facilities by increased enrolments.

In the 10 years to 2009 private school enrolments grew 1.9% per annum compared with a 0.1% growth in public school enrolments. IBISWorld predicts a doubling of growth in the next fi ve years compared to the previous fi ve.

This growth puts demand on facilities at a time when fees cannot continue to rise, particularly following 2010 when the average fee increase for private schools in Australia was 6% .

Another pressure point for private schools has been the need to increase the levels of non-teaching staff in order to

comply with the higher degree of reporting required by the Federal Government. If the levels do not meet the government’s standards, the schools will not be to be eligible for funding. Non-teaching jobs grew 2.8% per annum in the fi ve years to 2012 compared to a growth of just 2.1% in teaching staff.

The need to control fi xed costs while also developing new funding sources fi rst hit home to the private schools sector when private sources of funding fell 0.8% in the fi ve years to 2010/11, a fi gure signifi cantly impacted by a sharp drop in 2008/9 in response to a weakening economy, a decline in wealth and the lower consumer sentiment brought on by the Global Financial Crisis.

A review of the current Socio-Economic Status funding model in 2010/11 spurred private schools to diversify their revenue sources to insulate them against potentially lower government support.

Increasingly they started operating as businesses, developing fund raising ventures and introducing a higher level of fi duciary scrutiny to costs. As wages that make up 62% of total expenditure could not be controlled, there was a strong need to look at the remaining 38%.

According to AE Smith’s Business Development Manager in Western Australia, Geoff Binns, schools have warmly welcomed the savings afforded with their help.

“For 10 years we have helped a growing number of private schools that have reduced operating costs, deferred capital expenditure, and minimised breakdowns and repairs because of our help,” Geoff said.

“The way we help is unique in the air conditioning industry because we turn your variable costs to fi xed costs while underwriting the risk ourselves. We do not exclude fair wear and tear and do not hide behind third party insurance policies to protect ourselves in the event the equipment fails.

“Instead, at AE Smith we have a powerful vested interest to keep the equipment operational because if it breaks down, it costs us money.

“For school administrators the benefi ts are many. Not only do they know in advance what their costs will be for the year, but they can look towards increased savings in energy costs from equipment running at optimum effi ciency.”

Architect: The Buchan Group, Photographer: Silvertone

(1) “Greening America’s Schools - Costs & Benefi ts”, sponsored by U.S. Green Building Council

Continued page 3

“The biggest challenge is the escalating cost of education, particularly wages, and the necessity to set fees that are reasonable for our clientele.

Fixed Price HVAC Maintenance & Repair

Perth SchoolCuts Costs

An Insiders Guide to Australian School Management Issue 1

As a member of the local executive of the Association of School Bursars and Administrators (ASBA), Lake Joondalup’s Chief Financial Offi cer, Stuart Holliday, is acutely aware that these challenges are common to the private school sector.

With 1320 students and more than 20 buildings on an 8.8Ha site, Perth’s Lake Joondalup Baptist College is an a-typical private school meeting market expectations for the best facilities while balancing costs against income.

Architect: The Buchan Group, Photographer: Silvertone

Schools, Aged Care

Australia’s HVAC LeaderUnderwrites Cost CentresBetween his many clients in aged care and education throughout Western Australia, Geoff Binns is responsible for a lot of “precious cargo”, a responsibility of which he is justifi ably proud.

Geoff, the Business Development Manager for AE Smith Service in WA, has been responsible for the rollout of heating, ventilation and air conditioning solutions to these sectors with astounding success.

“Since 2003 we have attracted several private school customers and the numbers are growing.” Geoff said.

“It’s a big responsibility, but a particularly gratifying one as we are helping these clients save massive amounts of money and at the same time hearing what’s important to them.”

The basic premise behind AE Smith’s solution is that it enables the school to fl atten the annual costs of repairs and maintenance for their heating, ventilation and air conditioning systems without sacrifi cing the safe, comfortable learning environment that teachers, students, and parents are accustomed to.

Because AE Smith takes total responsibility for the cost of breakdowns and repairs, the company is essentially underwriting the HVAC systems and thus has the best incentive of all to ensure that a rigorous preventative maintenance program is in place.

“Because we keep their systems running at optimum effi ciency they all see signifi cant savings in energy costs while keeping students and teachers comfortable,” Geoff said.

“In addition, this type of maintenance extends the life of the equipment, thus allowing deferral of capital costs.”

Since AE Smith pioneered the concept, its success has seen the rise of a few imitators purporting to offer fi xed price maintenance contracts, but Geoff says that there are signifi cant differences.

“A management team at a school or aged care facility needs to understand exactly what they are buying and what additional, hidden costs could be incurred. Particularly they need to be sure the contract does not give the provider any outs.

“AE Smith is unique in the air conditioning industry in that we totally underwrite the risk. We do not exclude fair wear and tear and do not hide behind third party insurance policies.

“Accordingly, we have a powerful vested interest in keeping the equipment fully operational as well as keeping the customer conscious of any possible risk. If it breaks down, it costs us money.”

Few companies are in a position to take this stance. However, Geoff only reinforces it by keeping the focus on helping the customer.

“In everything we do, we believe in helping people. The way we help is by

taking the time to hear what is really important to you. We accept personal responsibility to use our resources, to fi nd the right outcome.

Our expertise has helped many schools to reduce operating costs, defer capital expenditure and minimise breakdowns and repairs. We keep on top of fi nancial and physical risk, and provide best practice solutions by maintain a positive image in your community.

In a school setting, we deliver a single source solution for air conditioning and energy saving needs; ensuring that staff work and students learn in a safe, comfortable learning environment. We care about people’s welfare; believe in family values and do what they say they are going to do.

In a school setting we deliver a single source solution to your air conditioning and energy saving needs; ensuring your staff and students a safe, comfortable learning environment.”

Brisbane • Cairns • Gold Coast • Mackay • Melbourne • Perth • Sydney • Tasmania • Townsville

1300 313 313 email@aesmith.com.au www.aesmith.com.au