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Take Control of Your Facilities: Explore the Tools for Aligning Space, Capital, and Operations

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With the expansion in college and university square footage, physical assets make up a greater portion of institutional wealth than ever before with values several times most endowments. However, with the ongoing needs brought about by a larger footprint, and challenges to operating and capital funding alike, it has never been so important to have an effective partnership between the CFO and Chief Facilities Officer.

Learn how institutional leaders are utilizing a new breed of facilities intelligence solutions to provide the same level of analytical rigor to facilities that most institutions already have for financial assets.

Webinar attendees will leave with an understanding of national trends affecting physical plant; insight into aligning space, capital, and operations; and how a new conversation can be created on your campus to assess performance, discover opportunities, and create lasting change.

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Take Control of Your Facilities: Explore the Tools for Aligning Space, Capital, and Operations

  1. 1. Center University of Missouri – Columbia University of Missouri – Kansas City University of Missouri – St. Louis University of Nebraska at Kearney University of Nebraska at Lincoln University of Nebraska Medical Center University of New Brunswick University of New Hampshire University of New Haven University of North Texas University of Northern Iowa University of Notre Dame University of Oregon University of Pennsylvania University of Redlands University of Rhode Island University of Rochester University of San Diego University of San Francisco University of Southern Maine University of Southern Mississippi University of St. Thomas University of Tennessee, Knoxville University of Texas at Dallas University of the Pacific University of the Sciences in Philadelphia University of Toledo University of Vermont Vanderbilt University Vassar College Virginia Commonwealth University Virginia Department of General Services Virginia State University Wagner College Wake Forest University Washburn University Washington University in St. Louis Wellesley College Wesleyan University West Chester University West Liberty University West Virginia Institute of Technology West Virginia School of Osteopathic Take Control of Your Facilities: Explore the Tools for Aligning Space, Capital, and Operations Sightlines Webinar; Presented by Jon King October 20, 2015
  2. 2. Introducing Our Presenter Jon King Associate Director, Member Services Sightlines
  3. 3. Today’s Desired Outcome Introduction: Who is Sightlines? Why the Roof Hasn’t Caved In ROPA+ - Changing the Conversation Five Strategies for Success 3
  4. 4. Feel Free to “Ask Sightlines” Enter questions in the box at any time Enter questions here at any point during the webinar Presentation slides and webinar recording will be sent to each attendee following today’s session
  5. 5. Who is Sightlines?
  6. 6. Sightlines is a Facility Asset Advisory Firm Identify ways to use capital more strategically and identify opportunities to improve operational effectiveness. Separate fact from fiction on key issues – operational performance, annual funding needs, and project backlogs. Document trends, provide consistent measurement, credible benchmarking and track progress to goals. Analytical Rigor, Common Vocabulary, Consistent Methodology, Common Platform
  7. 7. 7 Who Partners with Sightlines? Robust membership includes colleges, universities, consortiums and state systems Serving the Nation’s Leading Institutions: • 14 of the Top 20 Colleges* • 15 of the Top 20 Universities* • 34 Flagship State Universities • 12 of the 14 Big 10 Institutions • 8 of the 12 Ivy Plus Institutions • 8 of 13 Selective Liberal Arts Colleges * U.S. News 2015 Rankings Sightlines is proud to announce that: • 450 colleges, universities and K-12 institutions are Sightlines clients including over 325 ROPA members. • 93% of ROPA members renewed in 2014 • We have clients in 43 states, the District of Columbia and Canada • 100 institutions became new members since 2013 Sightlines advises state systems in: • Alaska • California • Connecticut • Hawaii • Maine • Massachusetts • Minnesota • Mississippi • Missouri • New Hampshire • New Jersey • Oregon • Pennsylvania • Texas • West Virginia JP2
  8. 8. Slide 7 JP2 Make sure this is the most recent version of slide Jay Pearlman, 10/7/2015
  9. 9. Why the Roof Hasn’t Caved In
  10. 10. 0% 2% 4% 6% 8% 10% 12% %ofConstructedSpace Sightlines Database- Construction Age Sightlines Database- Renovation Age Putting Campus Building Age in ContextPre-War Built before 1951 Durable construction Older but typically lasts longer Post-War Built between 1951 and 1975 Lower-quality construction Already needing more repairs and renovations Modern Built between 1975 and 1990 Quick-flash construction Low-quality building components Complex Built in 1991 and newer Technically complex spaces Higher-quality, more expensive to maintain & repair Pre-War Post-War Modern Complex Percent of Total Space 40% Percent of Total Space 27% The campus age drives the overall risk profile
  11. 11. Space and Enrollment Growth Space growing faster than enrollment 0% 2% 4% 6% 8% 10% 12% 2007 2008 2009 2010 2011 2012 2013 2014 Space and Enrollment Growth National Average Space Growth Enrollment Growth
  12. 12. Annual Capital Investment 2014 levels finally reach pre-recession, but with a different funding mix $1.19 $1.18 $1.27 $1.24 $1.36 $1.50 $1.71 $1.77 $3.18 $3.63 $3.86 $3.22 $3.58 $3.44 $3.45 $3.60 $0 $1 $2 $3 $4 $5 $6 2007 2008 2009 2010 2011 2012 2013 2014 $/GSF Capital Investment into Existing Space Annual Capital One-Time Capital Average
  13. 13. Annual Capital Investment Private campuses rely more on annual institutional capital $0.90 $0.84 $1.03 $0.91 $1.02 $1.10 $1.19 $1.02 $2.57 $3.07 $3.14 $2.84 $3.34 $3.15 $3.31 $3.00 $0 $1 $2 $3 $4 $5 $6 $7 $8 2007 2008 2009 2010 2011 2012 2013 2014 $/GSF $1.59 $1.68 $1.63 $1.74 $1.89 $2.12 $2.52 $2.82 $4.02 $4.44 $4.97 $3.81 $3.94 $3.91 $3.66 $4.44 2007 2008 2009 2010 2011 2012 2013 2014 Public Average Private Average
  14. 14. Facilities Operating Budget Daily Service & Planned Maintenance 3.99 4.20 4.20 4.15 4.23 4.23 4.36 4.49 0.28 0.28 0.29 0.29 0.30 0.32 0.34 0.35 - 1.00 2.00 3.00 4.00 5.00 6.00 2007 2008 2009 2010 2011 2012 2013 2014 $/GSF Facilities Operating Budget Planned Maintenance Daily Service
  15. 15. Facilities Backlogs Continue to Rise Backlog $/GSF Public Average Private Average 0% 5% 10% 15% 20% 25% 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 2007 2008 2009 2010 2011 2012 2013 2014 $/GSF 0% 5% 10% 15% 20% 25% 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 2007 2008 2009 2010 2011 2012 2013 2014 Capital investment not enough to keep backlogs from growing
  16. 16. Summary of Trends The aging campus is driven by the need to renovate or replace 1960s and 70s buildings, many of which were poorly constructed To add to the problem, campuses have added new square footage to address increasing enrollment that has now leveled off or is even in decline The demand for both “catch up” on aging buildings and “keep up” of newer buildings is much higher than the availability of capital funding Therefore, backlogs continue to grow even though capital funding is finally back to pre-recession levels Flat operating budgets have not provided relief to the backlog problem In the face of these “bad news” trends, why have we not seen more building failures and major facility problems on campuses?
  17. 17. The Predictions Have Not Become Reality – Why???
  18. 18. Better data to identify and manage the most critical repair risks for campus. Systems tend to outperform their statistical target. Lower cost repairs to systems rather than full system replacements have bought extra service time. Because campuses are a collection of buildings – the risk is diversified over the portfolio. The functional obsolescence of space drives investments that brings outside resources, especially to space. What are Campuses Doing to Manage Risk? To keep the roof from caving in and building systems from failing
  19. 19. Better data to identify and manage the most critical repair risks for campus. Systems tend to outperform their statistical target. Lower cost repairs to systems rather than full system replacements have bought extra service time. Because campuses are a collection of buildings – the risk is diversified over the portfolio. The functional obsolescence of space drives investments that brings outside resources, especially to space. What are Campuses Doing to Manage Risk? To keep the roof from caving in and building systems from failing
  20. 20. ROPA+ - Changing the Conversation
  21. 21. Comprehensive Facilities Intelligence Solutions
  22. 22. Changing the Conversation in Higher Education
  23. 23. A Vocabulary for Measurement The Return on Physical Assets – ROPASM Asset Value Change The annual investment needed to ensure buildings will properly perform and reach their useful life “Keep-Up Costs” Annual Stewardship The accumulation 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 Operational Effectiveness The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery Service Operations Success 22
  24. 24. Sightlines ROPA+ Service
  25. 25. 24 ROPA+ The Process Disciplined Methodology + Past Performance = Facilities Intelligence • Sightlines collects and assembles data on campus to quantify, verify, and qualify facility performance.Measure • Through the benchmarking process, institutions have the capability to create custom comparisons that help them understand context and performance. Benchmark • Sightlines synthesizes an institution's verified data to provide expert insight and perspective and develop strategic directions for change. Analyze & Interpret • Sightlines continues to support each campus through our Member Portal, national thought leadership, educational webinars, and ongoing campus consultation. Membership
  26. 26. Sightlines’ Member Portal It’s time to get more from your data 25 More Support Informed with live notification to your data More Access Create customized dashboard featuring the metrics most important to you Seamlessly benchmark against 300 member institutions More Context My Story feature presents Sightlines key findings as an easy to digest narrative
  27. 27. 26 Collected Data Elements Building Information Building Construction Date Dates of Major Building Renovations Building Function (Resident Hall, Academic, Athletic, …) Building Gross Square Footage, Land Acres Locations Served by Central Systems – Heating, Cooling, Electrical Deferred Maintenance Deferred Maintenance Assessment (in-house or contracted) Building Information Building Construction Date Dates of Major Building Renovations Building Function (Resident Hall, Academic, Athletic, …) Building Gross Square Footage, Land Acres Locations Served by Central Systems – Heating, Cooling, Electrical Deferred Maintenance Deferred Maintenance Assessment (in-house or contracted) CampusProfile Staffing Table Department Organizational Chart Distribution of Trades, Cust. and Grounds Staff by Shop Including Super. Work Order Report Total Number of Requested and Completed Completed Work Orders by Shop and Type (Repair, PM, Project, etc.) Energy Profile Monthly Utility Cost and Consumption by Fuel Type (Gas, Oil, Electric) Primary Generation Equipment Profile Including Hours of Operation Staffing Table Department Organizational Chart Distribution of Trades, Cust. and Grounds Staff by Shop Including Super. Work Order Report Total Number of Requested and Completed Completed Work Orders by Shop and Type (Repair, PM, Project, etc.) Energy Profile Monthly Utility Cost and Consumption by Fuel Type (Gas, Oil, Electric) Primary Generation Equipment Profile Including Hours of Operation Operations Institutional Financial Statement Balance Sheet and Operating Budget Facilities Operating Budget Operating Budget and Actual by department and line item Capital Budget Recurring & One-Time Capital budget (Plant fund, R&R account) Institutional Financial Statement Balance Sheet and Operating Budget Facilities Operating Budget Operating Budget and Actual by department and line item Capital Budget Recurring & One-Time Capital budget (Plant fund, R&R account) Finance
  28. 28. More Space & Smaller Buildings = Savings Opportunity 27
  29. 29. $39.4 $14.2 $10.6 $17.3 $8.7 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 3% Replacement Value Life Cycle Need Annual Investment Target $inMillions FY14 Annual Investment Target Envelope/Mechanical Space/Program Defining an Annual Investment Target 28 Functional obsolescence drives investment prior to life cycles & discounts the annual target
  30. 30. $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions Total Capital Investment vs. Funding Target Annual Stewardship Asset Reinvestment Annual Investment Target Life Cycle Need Total Capital Investment vs. Funding Target Includes only the investment in existing facilities Increasing Backlog & Risk 29 Increasing Net Asset Value Lowering Risk Profile
  31. 31. $0 $10 $20 $30 $40 $50 $60 TotalDollars(Millions) Current Need Renewal Need Modernization & Infrastructure ROPA+ Prediction: Predictive Investment Model $65 $172 $155 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Asset Reinvestment Need TotalDollars(Millions) 30 Asset Reinvestment Need 10 Year Capital Forecast
  32. 32. Facilities Operating Expenditures 31 $- $1.00 $2.00 $3.00 $4.00 $5.00 Total Daily Service Costs Maintenance Custodial Grounds Daily Service Breakout Area of Focus Area of Focus
  33. 33. Maintenance Staffing Profile vs. Peers Maintenance Performance 32 More Material SpendingSimilar SupervisionCovering More Space
  34. 34. Demonstration Campus Energy Consumption vs. Peers 33 • Older facilities & new technically complex space is driving up energy consumption • Older facilities should be targeted for renovation to reduce consumption • Savings should be redirected back into annual stewardship Peer Averages • Peers strong investment into infrastructure & building systems have helps level off energy consumption.
  35. 35. Multiple Perspectives on Quality of Service Service Process, Campus Inspection, and Customer Survey Service Process How are requests made? Who can make requests? Who schedules the work? Is there a timeline/completion date given? Are customers made aware of request status? 34
  36. 36. Multiple Perspectives on Quality of Service Service Process, Campus Inspection, and Customer Survey 0 1 2 3 4 5 Performance… Work Requests Organization Scheduling Process Centralization Service Process 35
  37. 37. Multiple Perspectives on Quality of Service Service Process, Campus Inspection, and Customer Survey 0 1 2 3 4 5 Performance… Work Requests Organization Scheduling Process Centralization Service Process Campus Inspection Sightlines completes a building and grounds inspection rating the general repair, cleanliness, exterior condition, and mechanical systems spaces in a 3 hour tour 36
  38. 38. Multiple Perspectives on Quality of Service Service Process, Campus Inspection, and Customer Survey 0 1 2 3 4 5 Performance… Work Requests Organization Scheduling Process Centralization Service Process 0 1 2 3 4 5 Grounds Exterior Mechanical Spaces General… Cleanliness Campus Inspection 37
  39. 39. Multiple Perspectives on Quality of Service Service Process, Campus Inspection, and Customer Survey 0 1 2 3 4 5 Performance… Work Requests Organization Scheduling Process Centralization Service Process 0 1 2 3 4 5 Grounds Exterior Mechanical Spaces General… Cleanliness Campus Inspection Customer Survey 13% 50% 32% 5% Far Exceeds Expectations Exceeds Expectations Meets Expectations Below Expectations 38
  40. 40. Multiple Perspectives on Quality of Service Service Process, Campus Inspection, and Customer Survey 0 1 2 3 4 5 Performance… Work Requests Organization Scheduling Process Centralization Service Process 0 1 2 3 4 5 Grounds Exterior Mechanical Spaces General… Cleanliness Campus Inspection Customer Survey 13% 50% 32% 5% Far Exceeds Expectations Exceeds Expectations Meets Expectations Below Expectations 1.00 3.00 5.00 1.00 3.00 5.00 WorkPerformance Communication & Process Excellent Performance Poor Performance Excellent Performance Best practice range Separate report with all the results & feedback 39
  41. 41. 40 ROPA+ = Total Facilities Intelligence Solution 1. Stewardship falls 2. Failures increase 3. Increased operational demands 4. Customer satisfaction decreases 5. Capital investment driven by customers. Space wins over systems. 6. Backlog increases 1. Focused project selection 2. Decreasing operating costs 3. Increasing stewardship 4. Reduce emergency work 5. Increased customer satisfaction 6. Flexibility of project selection
  42. 42. Five Strategies for Success
  43. 43. Five Strategies for Success Build strategically Less can be more Look ahead Keep-up Reward savings
  44. 44. Less Can Be More
  45. 45. > “No Net New Space” – A policy rooted in sustainability, it states that no new space on campus will be built without the removal of an equal amount of deficient square footage. > “No Net New Backlog” – A variation of no net new space that states that no new construction can occur without the mitigation of an equal value of backlog. New Policies to Control Overhead
  46. 46. Tracking Backlog Progress Since 2005
  47. 47. Campuses Taking Action Our partnership gives them the power to act and drive results
  48. 48. Build Strategically
  49. 49. Sample: Nearly Double Peers’ Users 7,500 More users on campus versus peer campuses Liberal Arts Comprehensive University Urban/City School Community College Users/100K GSF Campus A
  50. 50. Insufficient Classroom Space? 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % Room Utilization – General Classrooms Room Utilization Difficult Scheduling During Most of Day
  51. 51. Functional Obsolescence is the Real Issue Many Small Courses, Few Small Rooms 0% 2% 43% 38% 17% 44% 23% 29% 4% 1% 41% 23% 27% 9% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0-25 26-30 31-35 36-40 40+ Distribution of Rooms Room Capacity Fall '13 Enrollment Spring '14 Enrollment
  52. 52. Build Strategically
  53. 53. Technical Assessment Project Selection Today: No Integration in the Process
  54. 54. Fails to harness operating knowledge Does not tie to mission, strategy or master plans Ignores financial capacity Misses opportunities to optimize capital resources Technical Assessment Project Selection Today: No Integration in the Process
  55. 55. Tie to Operations, Mission & Finance Technical Assessment: Conduct Building walk- throughs and component inventory to develop initial list of needs. Step 1: Integrate Technical Needs Integrate operational perspective to target inspections and reduce overall capital needs Step 2: Create Building Portfolios Segment the backlog and tie projects to mission and institutional strategy Step 3: Develop Multi-year Capital Plan Create outcome based strategies by portfolio Step 4: Project Section Pick projects that support mission, operations, and financial capacity
  56. 56. Look Ahead
  57. 57. 25% 31% 21% 45% 45% 23% 31% 24% 34% 22% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Construction Age Renovation Age Peer Renovation Age Buildings Under 10 Little work, “honeymoon” period. Low Risk Buildings 10 to 25 Lower cost space renewal updates and initial signs of program pressures Medium Risk Buildings 25 to 50 Life cycles are coming due in envelope and mechanical systems. Functional obsolescence prevalent. Higher Risk Buildings over 50 Life cycles of major building components are past due. Failures are possible. Core modernization cycles are missed. Highest risk Unique Campus Age Profile Under 10 10 to 25 25 to 50 Over 50
  58. 58. 10 Year Capital Renewal Curve
  59. 59. 10-Year Needs vs. Investment Capacity $0 $5 $10 $15 $20 $25 $30 TotalDollars(Millions) 10 Year Total Capital Need by Year $107 $120 $23 $100 $0 $50 $100 $150 $200 $250 Total 10 Year Need Projected Investment Capacity TotalDollars(Millions) 10 Year Total Capital Need & Capacity
  60. 60. Keep Up
  61. 61. The Multiplier Effect of Reinvested Savings * Stewardship is the annual investment into campus facilities $1 Invested in Stewardship* …$3 in Capital Backlog Need Equals …$2.70 in Annual Operating Costs Equals $1 Invested in Planned Maintenance Another investment impact is....
  62. 62. Reward Savings
  63. 63. Low Energy Consumption Keeps Dropping Increase in PM supports lower energy consumption Regional Peer Avg. Regional Peer Avg. Among the top 10% of lowest consuming institutions in Sightlines’ database
  64. 64. Increasing Focus on Systems, Envelope, & Infrastructure 11% 10% 20% 35% 24% Project Spending Mix Building Systems Envelope Infrastructure Space Renewal Safety/Code 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 FY08 FY09 FY10 FY11 FY12 $/GSF Project Spending $/GSF
  65. 65. “The State of Facilities in Higher Education” Sightlines’ annual publication on broad industry trends JP3
  66. 66. Slide 64 JP3 Update to "Coming Soon - 2015 SoF" Jay Pearlman, 10/7/2015
  67. 67. Questions & Discussion

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