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Backlog, Deferred Maintenance and its use in Planning

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Gina Matsoukas presents on putting a process in place that will help you turn granular details of your backlog of needs into a strategic action plan for your campus.

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Backlog, Deferred Maintenance and its use in Planning

  1. 1. 1 Backlog, Deferred Maintenance & it’s use in planning March 29th, 2012 Gina Matsoukas 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 Boston 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. Louis University of New Hampshire University of New Haven University of Notre Dame University of Oregon University of Pennsylvania University of Portland University of Redlands The University of Rhode Island, Narragansett Bay The University of Rhode Island, Feinstein Providence 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 Wheaton College (MA)
  2. 2. 2 Focusing on the backlog & deferred maintenance
  3. 3. 33 A vocabulary for measurement The Return on Physical Assets – ROPASM Asset Value Change Operations Success Annual Stewardship Reinvestment Asset Operating Effectiveness Service The annual investment needed to insure buildings will properly perform and reach their useful life “Keep‐Up Costs” Annual Stewardship The accumulated backlog of repair and modernization needs and the definition of resource capacity to correct them. “Catch‐Up Costs” Asset Reinvestment The effectiveness of the facilities operating budget, staffing, supervision, and energy management Operations Success The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery Service
  4. 4. 4 Why it needs to be more than a backlog Finite Facilities Needs 1. Catalog the needs 2. Analyze the data Strategic Direction 3. Identify building portfolios 4. Develop targets Investment Capacity 5. Define phase out plan Finite Facilities Needs Strategic Direction Investment Capacity
  5. 5. 5 Going beyond “deferred maintenance” Utility Infrastructure Develop a Comprehensive List of Needs Repair & Replacement Campus Modernization Master Plan
  6. 6. 6 Goals & Process Overview Backlog Goals: •Common Project Codification in One Database •Consistent Pricing & Timeframe Assignment •Coordination Between All Needs To Maximize Capital •Reconcile Need To Financial Capacity ‐ The Multi‐Year Phase‐Out Plan What the Full Process Should Look Like: 1. Base Data Assembly 1. Collection of existing studies and key planning documents 2. Inspection of building components and characteristics 2. Inventory Creation 1. Incorporate existing studies and assessments 2. Interviews with key facilities staff 3. Project pricing and codification 3. Development of Building Portfolios 1. Group buildings based on investment strategy 2. Allocation of available funding by portfolio 4. Development of Multi‐Year Funding Plan
  7. 7. 7 Adding value to each project •Repair/Maint •Modernization • Infrastructure Define Work Classification •Reliability •Asset Preservation • Space Improvement • Economic Operations • Safety / Code Define Project Classifications •A: 1‐3 years •B: 4‐6 years •C: 7+ Define Project Priority What is the Work? What is the Impact? What is the Priority?
  8. 8. 8 Putting strategy to the numbers
  9. 9. 9 Defining a Multi‐Year Investment Plan Beyond Picking Projects Descriptive text goes here ? Full Inventory of Projects Apply Building Portfolio & Timeframe Apply Investment Criteria & Timeframe Multi‐Year Project Plan Geographic, Program, Transitional, & Years Reliability, Asset Preservation, Program, Economic Operations , Safety/Code & Years Full Inventory of Projects Electrical, Plumbing, HVAC, Mechanical, Exterior, Interior, Safety… How Do You Target Projects Sightlines’ Process Proposed Solution Current Challenge Electrical, Plumbing, HVAC, Mechanical, Exterior, Interior, Safety… Pick Projects
  10. 10. 10 Creating a comprehensive plan Project Identification •Inventory •Interviews •Other studies Project Codification •Timeframe •Package •Investment Criteria Project Selection •Project scores •Meet investment objectives Building Portfolio Creation •Group Buildings •Outline investment strategies Funding Identification •What financial resources are available? Funding Allocation •By Portfolio •By Investment Criteria Multi‐year capital investment plan Capital Allocation Planning
  11. 11. 11 Core Concepts of the Building Portfolio Approach Funding is allocated by Building Portfolios • Ensures that the right buildings have funding for needs • Funding allocation is done by Institutional leadership Funding is allocated by Project Outcome (Investment Criteria) • Ensures that the right type of work is done within each Portfolio •The type of work funded will differ by Portfolio Project selection is done to meet the funding allocations • Flexibility of project selection within the appropriated funding allocation •Project selection completed by Facilities leadership Result • Institutional leadership has set the level of, and direction for, investments • Facilities leadership can control individual project selection based on their detailed understanding of the campus facilities • Campus‐wide confidence, understanding, and involvement in capital investment strategy
  12. 12. 12 The portfolio approach starts by breaking down the numbers
  13. 13. 13 Total Identified Needs Total Needs $86 M New Construction $625,000 Grounds & Infrastructure $14.1M Building Needs $71.3 M Academic/Admin $26.4M 407,665 GSF $65/GSF Residential $31.8 M 330,354 GSF $96/GSF Student Life $11.5 M 271,345 GSF $43/GSF Support $1.5 M 60,924 GSF $25/GSF
  14. 14. 14 Identified Building Needs By System ‐ $71.3M Timeframe A,B, & C only – Excluding new construction, grounds, & infrastructure $21.1 $14.2 $12.9 $7.0 6.7 $3.9 $3.7 $1.4 $25 $20 $15 $10 $5 $0 $0.4 Interior Shell Plumbing HVAC Safety/Code Exterior Shell Electrical Heating Mechanical Cooling $ in Millions Total Need by System $4.8 $6.9 $4.1 $2.0 $2.8 $0.9 $2.0 $0.6 $0.2 $4.3 $2.0 $2.8 $1.4 $2.2 $1.7 $0.9 $0.3 $0.1 $12.0 $5.3 $6.0 $3.6 $1.8 $1.4 $0.8 $0.5 $0.2 A B C
  15. 15. 15 Identifying Buildings with Greatest Need $12 $15 $6 $3 $3 $4 $5 $7 $5 $3 $23 $26 $25 $22 $20 $12 $11 $14 $11 $15 $8 $14 $51 $57 $54 $16 $29 $16 $25 $39 $78 $169 $17 $9 $10 $12 $1 $11 $9 $8 $19 $11 $7 $8 $8 $13 $36 $105 $22 $3 $14 $33 $15 $1 $19 $44 Historic Project Investments into $‐ $50 $100 $150 $200 $250 Building #16 Building #15 Building #14 Building #13 Building #12 Building #11 Building #10 Building #9 Building #8 Building #7 Building #6 Building #5 Building #4 Building #3 Building #2 Building #1 Building Needs Envelope Building Systems Space Renewal Safety/Code 9% 13% 37% 41% Buildings FY03‐FY11
  16. 16. 16 Sample Campus #1 Mission‐Driven Portfolios
  17. 17. 17 93% 77% 76% 81% 71% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Recruiting Retention Academic Admin/Support Undetermined Future Average NAV by Portfolio NAV by Building Portfolio *Total Campus NAV includes infrastructure/grounds *Total Campus NAV – 74% Peer Campus NAV – 80%
  18. 18. 18 Allocating funding by Building Portfolio Remaining $9.7 M of funding allocated to portfolios based on remaining A timeframe needs Portfolio Average NAV “A Timeframe” Needs Excludes “urgent reliability” and “Special Interest projects” % of Total Funding Allocated Funding Allocated Recruiting 93% $8.7M 8% $0.7M Retention 77% $29.2M 27% $2.4M Academic 76% $55.7M 52% $4.5M Admin/Support 81% $8.0M 0% $0.0M Undetermined Future 71% $5.2M 0% $0.0M Infrastructure/Grounds n/a $14.1M 13% $1.1M Sub‐Total 10% of $9.7 M as Contingency 78% ‐ $121.0M ‐ 100% ‐ $8.7 M $1.0 M Total $9.7M Excludes Admin/Support and Undetermined Future Portfolios
  19. 19. 19 Summary of FY12‐14 $30 M Funding by Building Portfolio $8.7 A Timeframe Needs vs. FY12‐FY14 Funding Allocation $29.2 $55.7 $8.0 $5.2 $14.1 $2.6 $7.8 $3.6 $0.5 $0.7 $4.9 $0.4 $0.7 $2.4 $4.5 $1.1 $60 $50 $40 $30 $20 $10 $0 Recruiting Retention Academic Admin/Support Undet. Future Infra/Grounds $ in Millions Remaining Allocated Funding "Just In Time" Reserve Urgent Reliability & "Special Interest" Projects A Timeframe Needs Note: $1.0 M of “Special Interest” project funding for the Retention Portfolio, and $125 K of Infrastructure/Grounds funding is addressing B or C timeframe needs.
  20. 20. 20 Sample Campus #2 Targeting NAVs by Portfolio
  21. 21. 2211 Understanding the Net Asset Value Index NAV Index = (Replacement Value‐Building Needs) Replacement Value X 100 Campus leadership can set different NAV levels for different buildings and portfolios, helping to balance capital investments across campus and prioritize project selection Investment Strategy 100%‐ 85% 85%‐ 75% 75%‐ 60% Below 60% Capital Upkeep Stage: Primarily new or recently renovated buildings w/ 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‐scale capital infusions/ renovations are inevitable; “The projects pick you” Demolition/Transitional/ Gut Renovation Stage: Major buildings components are in jeopardy of complete failure. Reliability issues are widespread throughout the building. NAV of Index
  22. 22. 22 Building Portfolios Total Identified Needs $197.0 M New Construction $36.9 M Infrastructure & Grounds $27.7 M Building Needs $132.4 M Education & General $45.3 M Under 25 Years Old $18.6 M Over 25 Years Old $26.7 M Residential $73.6 M First Year Residences $22.6 M Upper Class Residences $51.0 M Auxiliary $13.2 M PAC Site $0.2 M Targeting investment to institutional priorities 7 Buildings 355,494 GSF 5 Buildings 331,140 GSF 11 Buildings 639,830 GSF 3 Buildings 138,571GSF 10 Buildings 504,618 GSF 1 Building 55,000 GSF Sub‐Portfolios
  23. 23. 23 Funding Allocation Methodology Option 110% 100% 90% 80% 70% 60% 50% 40% Education & General‐ Under 25 Years Education & General‐ Over25 Years Current NAV Index by Sub‐Portfolio Residential‐ First Year Residential‐ Upperclass Auxiliary PAC Site Sub‐Portfolio NAV Establishing Target NAV by Portfolio or Sub‐Portfolio E&G‐Under 25 E&G‐Over 25 Residential‐ First Year Residential‐ Upper Class Auxiliary PAC Site Total Current NAV 82% 83% 80% 73% 70% 99% 79% Target NAV 85% 85% 80% 80% 75% 99% 81% Est. Investment Need to Target NAV $3.4 M $2.7 M ‐ $13.9 M $2.1 M ‐ $22.1 M
  24. 24. 24 Sample Campus #3 Targeting Investments based on Facility NAV and Value to Program
  25. 25. 25 Descriptive text goes here 25 Min, Max, & Average NAV by Portfolio 120% 100% 80% 60% 40% 20% 0% Academic (Non‐ Research) Academic (Research) Min, Max, and Average NAV by Portfolio Campus Average* = 82% Dormitory Student Life Athletic Admin/Support Aux. Housing *Campus average includes Infrastructure & Grounds needs
  26. 26. 26 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% NAV Index by Building Academic (Non‐Research) 26 Using the NAV Within Portfolios Portfolio: Academic (Non‐Research) Portfolio Average = 88% Bottom 10% # of Buildings 6 Investment to Bring Buildings to Portfolio Average $7.6 M
  27. 27. 27 Using the detailed analysis for multi‐year investment planning Investment strategy and project selection based on facts 100% 90% 80% 70% 60% 50% 40% Net Asset Value vs. Program Value By Building High Program Value, High NAV Low Program Value, High NAV Focus on system work, minimal space 4 5 6 7 8 9 10 Building Condition (NAV) Value of Facility to Program 1‐10 scale, 1= low, 10 = high Maintain & protect High Program Value, Low NAV Repairs & Space Improvement Low Program Value, Low NAV Emergency work only
  28. 28. 28 Sample Campus #4 Utilizing a “Transitional” Portfolio
  29. 29. 29 Needs by Building Portfolio 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 $80.4 M Transitional Portfolio contains buildings to be demolished or sold
  30. 30. 30 FY11 Investments by Building Portfolio FY11 Building Investments by Portfolio 20% 17% 34% 0.21% 2% 25% 2% Maintain Maintain (Housing) Building Renovation Transitional Repurpose Infrastructure New Space Building Portfolio FY11 Investment ($/GSF) Maintain $3.58 Maintain ( Housing) $4.30 Building Renovation $14.89 Transitional $1.54 Repurpose $1.29
  31. 31. 31 Sample Campus #4 Bringing it all together
  32. 32. 32 Process Summary Descriptive text goes here • Campus Communication • Portfolio “Re‐alignment” • Priority Revision • Tracking Spending • Communicate Results • Contingency Management • Project Impact • Portfolios • Investment Criteria • Financial Alignment •Multi‐year Plan • Technical Review • Information by System • Integrate Program • Integrate Infrastructure • Assess Urgency Project ID Project Selection Capital Budget Process Project Execution
  33. 33. 33 Sightlines Approach … •Utilizing trade management and staff in assessment process •Present material to facilities staff before bringing findings to senior staff or trustee level •Include supervisors in presentations to institutional senior staff Engage the people who know the buildings and systems •Incorporating campus master plans and modernization programs •Alignment between financial capabilities and facility needs Build support of Users •Reporting of all needs to the campus community • Align facility needs to the institution’s financial capacity Create Transparency
  34. 34. 34 The Successful Plan Will … •Understand how underfunding creates backlog • Impact of changing campus age Articulate the Cause of Backlogs ‐ Catch‐up vs. Keep Up • Comprehensive, credible and flexible • Illustrate operations impact •Benchmarking for context Communicate a Credible Inventory of Needs • Building Portfolios reflect institutional strategy • Investment Criteria define the investment outcome •Timeframe – aligns financial capacity to facilities needs Set Priorities that Create Investment Strategies, Not Picking Projects •Fact – Never get enough funding •Fact – New things always occur – contingency management is key •Fact – Customer support is important Measure and Report Performance Annually
  35. 35. 35 Questions & Discussion

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