Reduce Costs And Risk In Nonprofit Facility Planning

Reduce Cost and Risk in Facility Planning for Nonprofits Sam Frank Synthesis Partnership August 25, 2010 Use Twitter Hashtag #npweb Special Thanks To Our Sponsors

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Facility Planning for Nonprofits Reduce Costs & Risks, Improve Quality Sam Frank Synthesis Partnership Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Take-aways •  Where the money is •  A sequence of steps that will minimize surprises •  What an architectural program and budget are, and why you need them before hiring an architect •  How to hire an architect •  Additional resources Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Facility Planning Fundamentals Control over costs Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Preparation Integrated Planning Financial Model Fundraising Budget(s) Architectural Program / Exhibit Brief RFQ/P Feasibility Study Business Data •  Capital •  Operating Case Statement Operations Requirements Visitor Mission Identity Experience Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 © 2010 Synthesis Partnership. All rights reserved Design SYNTHESIS PA R T N E R S H I P

Programming and Budgeting Architectural Program Specifies intentions •  Quantitative definition •  Qualitative definition •  Foundation for budget Why develop before hiring the architect? Incorporate into RFP and contract Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Programming and Budgeting Architectural Program Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Programming and Budgeting Project Budget Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Programming and Budgeting Budgets, Estimates & Costs Budgets Hard costs Not just construction Acquisition Projects affect operating budgets Construction A budget is what you can spend Soft costs Should change only if you decide to do so Fees Furnishings and Equipment Estimates What someone else says a project will cost Other costs Conceptual ($/s.f.) Contingency Design-based (unit cost takeoffs) Inflation Borrowing Bids Ongoing costs An actual commitment to deliver Plant reinvestment Firm or variable Operating expenses Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Programming and Budgeting Budgets, Estimates & Costs Budgets Hard costs Not just construction Acquisition Projects affect operating budgets Construction A budget is what you can spend Soft costs •  Should change only if you decide to Fees Furnishings and Equipment Estimates What someone else says a project will cost Other costs •  Conceptual ($/s.f.) Contingency •  Design-based (unit cost takeoffs) Inflation Borrowing Bids Ongoing costs An actual commitment to deliver Plant reinvestment •  Firm or variable Operating expenses Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Design and Construction Phases of the Design Process Pre-Design Services Conceptual Design Schematic Design Design Development Contract Documents (drawing & specifications) Bidding or Negotiation Construction Administration Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Selecting Architect/Construction Co. Project Delivery Methods Conventional Architect + General Contractor Finished drawings “Hard” bid or negotiated price Design-Build One source of responsibility/fewer change orders One-stop shopping “Fast-tracking” Fewer disputes Better for simpler projects Construction Management Agent At Risk Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Selecting Architect/Construction Co. Selection Process for Architects Assemble a list of architects that can deliver the product you need Develop and issue a Request for Interest & Qualifications Develop a client-friendly contract Develop a Request for Proposal (RFP) Select three to six architects & designers to (visit &) interview Select 1 to 3 to receive RFP (includes program, budget & contract) Negotiate contract with selected firm Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Contracts Client-friendly contract Standard contracts •  Created to protect provider •  Many pitfalls: some obvious, some subtle Client-friendly contract •  Responsibility for program & budget •  Services •  Standards & expectations •  Work product Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Financial Modeling Purposes View the big picture Test options & strategies Evaluate the impact of decisions Reduce uncertainty & risk Maintain control over operating & capital budgets Areas of Interest Operating budget Capital budgets or new programs Debt capacity and financing Cash flow Relationships among the above Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Financial Modeling Components Typical Model Variables Capital Costs Acquisition costs Furnishing, Fixtures & Equipment Legal costs Design costs Construction costs Contingency Borrowing Inflation Endowment Needs General endowment Program-specific fund Maintenance fund Campaign Costs and Revenues Administrative costs of campaign Projected campaign revenues Operating Costs and Revenues Existing operating budget inflation Program cost increases Staffing increases Marketing and development costs Overhead cost increases Cost reductions from new efficiencies New operating revenues Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Financial Modeling Dynamic Financial Modeling Simple financial models have limited power to explore the seemingly endless variety of what ifs that arise when a board begins to strategize about the future. A dynamic model can open up many possibilities: •  Explore complex financial systems, build and test scenarios in real time •  Consider more options more thoroughly •  See the consequences of ideas as they are raised •  Integrate diverse planning efforts •  Reduce risk •  Make better decisions •  Clarify financial issues for non-financial people (board members, major donors, parents, alumni, faculty) •  Make more compelling solicitations for major gifts Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

Additional Resources Articles on facility issues: http://bit.ly/SyPfacilities Understanding Facilities: Essentials of Planning and Design Selecting an Architect "To Build or Not to Build” Client-Favorable Contracts for Design & Construction Critical Issues quarterly letter #6: Financial Modeling http://bit.ly/SyPci06 Blog (entries on facilities) http://bit.ly/SyPblog Complimentary consultation sbf@synthesispartnership.com (by e-mail or telephone appointment) Reduce Cost & Risk: Facility Planning for Nonproﬁts Wednesday Webinar: August 25, 2010 SYNTHESIS © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

SYNTHESIS PARTNERSHIP Strategy, planning, and organizational development for nonproﬁts. From Strategy to Action www.synthesispartnership.com Reduce Cost & Risk: Facility Planning for Nonproﬁts synthesispartnership.blogspot.com 2010 Wednesday Webinar: August 25, SYNTHESIS sbf@synthesispartnership.com © 2010 Synthesis Partnership. All rights reserved PA R T N E R S H I P

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Reduce Costs And Risk In Nonprofit Facility Planning

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