University of Illinois at Urbana-Champaign                                                                             The...
Sightlines Profile       Common vocabulary, consistent methodology, credibility through benchmarking               • 11 Ye...
Why buildings care      Buildings care about:      Stewardship:      •The annual investment needed to ensure buildings    ...
Webinar Overview • Maximizing your return on   physical assets • Why buildings care about   stewardship • How to estimate ...
Maximize your return on physicalassets                                   5
Did you know this about colleges and universities?      The average                   The average campus      endowment   ...
Maximizing your investment in campus facilitiesThe Return on Physical Assets – ROPASM    The annual                The acc...
Illustrating the connectionsThe Return on Physical Assets – ROPASM                                         Annual Stewards...
Polling the audience    Does Facilities Management      on your campus have a    recurring capital budget for     repair a...
Why should buildings care aboutstewardship?                                  10
Pay me now or pay me later                             11
Pay me now or pay me later!                              12
Stewardship, another way of looking at itResources needed to keep a building consistently operating as when first built 20...
Estimating the stewardship need                                  14
The life cycle of building componentsCash flow required to “keep up” a building        $60        $55       Furnishings   ...
Defining the Annual Stewardship TargetSetting goals to arrest the rate of asset depreciation         Industry Standard    ...
The life cycle of building componentsCash flow required to “keep up” a building        $60        $55       Furnishings   ...
Defining the Annual Stewardship TargetSetting goals to arrest the rate of asset depreciation          Industry Standard   ...
Insufficient “Keep up” funding creates backlog   Recurring capital falling further short of annual investment needs       ...
Benefits of stewardship&Drawbacks of not stewarding                              20
To steward or not to steward. That is the questionInvestment in stewardship:         Lack of stewardship:• Allows building...
$1 in Stewardship = $3 in Asset Reinvestment                 The Cost of System Failure    $35,000    $30,000    $25,000  ...
The cost of ignoring it                                  $1.5M   $450K                  X                          $150K  ...
Pay me now or pay me later!                              24
Questions and Discussion                           25
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Why Buildings Care

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  • Sightlines Profile Slide
  • The financial impact is significant. A $1 cut in stewardship results in the creation of a $3 capital exposure.This exposure is the result of the reduced useful life of the system (often a failure will occur well before the asset is fully depreciated – in such a case the asset is “under water”When a system fails there are emergency response costs and temporary repairs / services that are provided.The cost of construction is also more as the emergency repair forces an emergency construction with no bids, overtime installation and expedited shipping of materials.Finally a cost that is very difficult to quantify is the opportunity loss of replacing a system in kind. In a planned situation a replacement would be designed, would take advantage of current technology, and often be completed in a different, more effective manner.
  • PLU example.Cost of value engineering. Always at most inopportune time.Sure everyone of you can come up with an example of this on your own campus.Everybody has SOMETHING to steward on their campus. Some more than others. If you’re a young campus (USD) you might have more to protect than others, but we’ve never seen a campus with something new or renovated worth protecting.
  • Why Buildings Care

    1. 1. University of Illinois at Urbana-Champaign The University of Maine University of Maine at Augusta University of Maine at Farmington University of Maine at Machias University of Maine at Presque Isle University of Maine at Fort Kent University of Maryland University of Massachusetts Amherst University of Massachusetts BostonSightlines Webinar University of Massachusetts Dartmouth University of Massachusetts Lowell University of Michigan University of Minnesota University of Missouri University of Missouri - Kansas City University of Missouri - St. LouisWhy Buildings Care University of New Hampshire University of New Haven University of Notre Dame University of Oregon(Pay me now, or pay me later) University of Pennsylvania University of Portland University of RedlandsNovember 28, 2011 The University of Rhode Island, Narragansett Bay The University of Rhode Island, Feinstein ProvidencePresented by: Robert Zurlo and Colin Sanders The University of Rhode Island, Kingston University of Rochester University of San Diego University of San Francisco University of St. Thomas (TX) University of Southern Maine University of Toledo University of Vermont Upper Iowa University Utica College Vassar College Virginia Commonwealth University Virginia Department of General Services Wagner College Wellesley College Wesleyan University West Chester University of Pennsylvania West Virginia University Western Oregon University 1
    2. 2. Sightlines Profile Common vocabulary, consistent methodology, credibility through benchmarking • 11 Year old company with offices in Connecticut, Pennsylvania, and Oregon • Provide services on over 320 campuses • Sightlines database includes over 28,000 buildings and over 835 million GSF 2
    3. 3. Why buildings care Buildings care about: Stewardship: •The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs” 3
    4. 4. Webinar Overview • Maximizing your return on physical assets • Why buildings care about stewardship • How to estimate stewardship needs of a campus • The benefits of stewardship and drawbacks of not stewarding • Questions and discussion 4
    5. 5. Maximize your return on physicalassets 5
    6. 6. Did you know this about colleges and universities? The average The average campus endowment replacement value 6
    7. 7. Maximizing your investment in campus facilitiesThe Return on Physical Assets – ROPASM The annual The accumulated The effectiveness The measure of investment needed backlog of repair of the facilities service process, the to ensure buildings and modernization operating budget, maintenance will properly needs and the staffing, quality of space and perform and reach definition of supervision, and systems, and the their useful life resource capacity to energy customers opinion “Keep-Up Costs” correct them. management of service delivery “Catch-Up Costs” Operational Service Effectiveness Asset Value Change Operations Success Capital Operations 7
    8. 8. Illustrating the connectionsThe Return on Physical Assets – ROPASM Annual Stewardship “Keep-Up” Asset Operating Reinvestment Effectiveness “Catch Up” Service 8
    9. 9. Polling the audience Does Facilities Management on your campus have a recurring capital budget for repair and maintenance? 9
    10. 10. Why should buildings care aboutstewardship? 10
    11. 11. Pay me now or pay me later 11
    12. 12. Pay me now or pay me later! 12
    13. 13. Stewardship, another way of looking at itResources needed to keep a building consistently operating as when first built 2010 2020 2030 2040 2050 2060 S t e w a r d s h i p 13
    14. 14. Estimating the stewardship need 14
    15. 15. The life cycle of building componentsCash flow required to “keep up” a building $60 $55 Furnishings Minor Systems Major Systems $50 $45 $40 $35$/GSF $30 $25 $20 $15 $10 $5 $0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 Younger Older Years Annual Life Cycle Cash Flow 15
    16. 16. Defining the Annual Stewardship TargetSetting goals to arrest the rate of asset depreciation Industry Standard Annual Stewardship Target 14 12 10 $ in Millions 8 6 $12.0 4 2 0 3% Replacement Value 16
    17. 17. The life cycle of building componentsCash flow required to “keep up” a building $60 $55 Furnishings Minor Systems Major Systems $50 $45 $40 $35$/GSF $30 $25 $20 $15 $10 $5 $0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 Younger Older Years Annual Life Cycle Cash Flow Amortization of Life Cycle Expenses 17
    18. 18. Defining the Annual Stewardship TargetSetting goals to arrest the rate of asset depreciation Industry Standard Annual Stewardship Target $14 Life Cycle Need Determined by: - Campus GSF $12 - Campus Age - Function of Space - Technical Complexity $10 Target Need: Life Cycle is discounted for $ in Millions $8 the coordination of modernization and $6 $5.0 renovation $4 $1.8 $2 $4.0 $3.0 $- Life Cycle Need (Equilibrium) Annual Stewardship Target $9.0M $4.8M Envelope/Mechanical Need Space/Programming Need 18
    19. 19. Insufficient “Keep up” funding creates backlog Recurring capital falling further short of annual investment needs Total Annual Stewardship $6.0 $5.0 $4.0$ in Millions $ 3.9 M $3.0 $ 3.0 M $ 1.8 M $ 2.5 M $ 1.8 M $2.0 $1.8M $0.5 $0.9 $0.4 $0.6 $1.0 $0.4 $0.5 $0.3 $0.7 $0.9 $0.5 $0.4 $0.7 $0.8 $0.7 $0.9 $0.8 $0.8 $0.8 $0.6 $0.4 $0.5 $0.6 $0.0 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 Envelope/Mechanical Space/Programming Investment Target Approximately $26.6 M has been deferred since FY2001 19
    20. 20. Benefits of stewardship&Drawbacks of not stewarding 20
    21. 21. To steward or not to steward. That is the questionInvestment in stewardship: Lack of stewardship:• Allows building systems to • Accelerates and heightens exceed expected life cycles capital requirements• Avoids premiums for repairs by • Strains maintenance operations competitively bidding projects and increases day-to-day costs• Eliminates system failure by • Negatively affects the quality of proactively addressing issues work life for• Ensures no program students, faculty, and staff interruptions For every $1 spent on stewardship, capital investment need is reduced by $3-4 21
    22. 22. $1 in Stewardship = $3 in Asset Reinvestment The Cost of System Failure $35,000 $30,000 $25,000 $20,000 Temp Services Failure Mitigation $15,000 Reduced Life $10,000 Construction $5,000 $0 Planned DM Failure 22
    23. 23. The cost of ignoring it $1.5M $450K X $150K 23
    24. 24. Pay me now or pay me later! 24
    25. 25. Questions and Discussion 25

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