UNIVERSITY OF CALIFORNIA CAPITAL PROGRAMMONITORING PROGRESS AND PERFORMANCE

Vice President Patrick J. LenzBudget and Capital Resources, Office of the President

March 2010

University Of California Capital ProgramMonitoring Progress And Performance

PRESENTATION OUTLINE

A. ContextA. Context 1. 19-Year Trend in UC Project Volume2. Construction Market Conditions

B. Implementation of Key Recommendations of the 2005 Report1. Ownership & Accountability2. Formal Business Case Analysis3 Shorter Simpler Process3. Shorter Simpler Process4. Robust Flexible Contracting Environment5. Systemwide Building & Project Metrics, Standards & Data6. Change Agent

C. Additional Initiatives1. Early Notification to Regents of Budget & Scope Change2 Increased Reporting for High Risk Projects2. Increased Reporting for High Risk Projects

D. Accountability for Implementation and Next Steps 2

A. Context: 19-Year Trend of Project Volume

250300350400

$6 000 000$7,000,000$8,000,000$9,000,000

$10,000,000

ects

$000

)

100150200250

$2 000 000$3,000,000$4,000,000$5,000,000$6,000,000

ber o

f Pro

je

tal B

udge

t ($

050

$0$1,000,000$2,000,000

90-91 92-93 94-95 96-97 98-99 00-01 02-03 04-05 06-07 08-09

NumTo

t

Fiscal Year

Total Budget ($000) Number of Projects

3

A. Context: Construction Market Conditions

15.0%

20.0%

0.0%

5.0%

10.0%

-10.0%

-5.0%

0.0%97 98 99 00 01 02 03 04 05 06 07 08 09

-15.0%

Turner Cost Index (national output "selling" index)

Engineering News Record Construction Cost Index (national input index)Rider Levett Bucknall Cost Report (regional output "selling" index)

UC % change in Budget Augmentations

4

A. Construction Market Conditions Impact on UC Projects 2009-10

Project Prebid Estimate Low Bid

UCD Student Community Center $ 18,000,000 $ 13,500,000y $ , , $ , ,

UCD Tercero South Student Housing Phase II $ 42,000,000 $ 24,670,000

UCLA Northwest Student Housing Infill –Sproul Complex

$ 132,000,000 $ 80,000,000

UCLA Pauley Pavilion $ 99,000,000 $ 79,787,000

UCM S i l S i d M t B ildi $ 38 500 000 $ 33 500 000UCM Social Sciences and Management Building(Bid Packages 1 & 2)

$ 38,500,000 $ 33,500,000

UCSF Telemedicine & PRIME-US Education Facilities

$ 15,800,000 $ 11,400,000Education Facilities

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B. Implementation of Key Recommendations of the 2005 Report

1. OWNERSHIP AND ACCOUNTABILITY

RECOMMENDATION: Need for individual accountability for capital asset

President Action Chancellor Action• Designate an individual accountable to

y putilization, delivery & performance.

• Designate VP, Budget & Capital Resources, as accountable to the President for the performance of the capital program and ensuring a timely and effective process for Regental

• Designate an individual accountable to the Chancellor on the capital program for business case analysis, project performance, reporting/metrics/ benchmarking, and to advise of material and effective process for Regental

exercise of fiduciary responsibility

• Provide an annual assessment of the performance of the capital program as

g,changes to project budget, scope and schedule

• May designate a separate individual performance of the capital program as part of the Major Capital Projects Implementation Report

y g pfor this function at the Medical Centers

• Provide input towards the development of the annual assessment of the capital pprogram for the Major Capital Projects Implementation Report and the Capital Financial Plan 6

B. Implementation of Key Recommendations of the 2005 Report

2. FORMAL BUSINESS CASE ANALYSIS

RECOMMENDATION: Develop a thorough examination of non-building l ti d lt ti t li t id tifi ti f d d d l hi hsolutions and alternatives at earliest identification of need, and develop a high

level function for executing analysis and planning.

Office of the President (OP) Action Campus Action• Refine guidelines and criteria for a

business case analysis in a university setting and facilitate its use in a consistent manner systemwide

• As a high priority, utilize standard business case analysis & planning as an iterative process to translate program needs into capital or non-capital solutions.y

• Provide timely input and review of campus business case analyses and proactive support to facilitate decision-making

p p

• Develop a business case analysis at earliest stages of identification of program need, and for any budget or major scopesupport to facilitate decision-making

• President to approve business case analysis prior to budget approval for

$

and for any budget or major scope modification.

• Chancellor to approve business case

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State-funded and over $60 million non-State funded projects

analysis for non-State funded projects under $60 million

B. Implementation of Key Recommendations of the 2005 Report

3. SHORTER, SIMPLER PROCESS

RECOMMENDATION Si ifi tl h t l th l i &

Campus Action

RECOMMENDATION: Significantly shorten lengthy pre-planning & pre-design phases. Use business case analysis for concept development. Provide more clearly defined decision making authority.

OP Action• Continue the efficient processing of

delegated projects under $60 million. Work towards making the Pilot Program

Campus Action• Utilize business case analysis for

early concept development

g gpermanent systemwide

• Negotiate with the State regarding improvements in the utilization of

• Clarify decision timeline and roles of user input. Avoid revisiting decisions and allow users to weigh in appropriatelyimprovements in the utilization of

“Streamlining” approval process for State-funded projects

pp p y

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B. Implementation of Key Recommendations of the 2005 Report

4. ROBUST FLEXIBLE CONTRACTING ENVIRONMENT

RECOMMENDATION: Move to a “Best Value” contracting model, modify UC contracts to be less onerous, change laws that preclude UC from benefitting from early design consultation with qualified subcontractors.

OP Action• Advocate for statutory authority to award

construction contracts on the basis of Best Value

Campus Action• Support staff training in the use of

contracts and advanced implementation tools/techniques such as buildingBest Value

• Develop additional contracting models such as Integrated Project Delivery and Performance Based contracts

tools/techniques such as building information modeling and lean production techniques

and Performance Based contracts

• Utilize strategic sourcing where possible

• Share best practices through forums and conferences

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B. Implementation of Key Recommendations of the 2005 Report

5. SYSTEMWIDE BUILDING & PROJECT METRICS, STANDARDS & DATA

RECOMMENDATION: Develop a common project administration system

OP Action Campus Action

that automates roll-up reporting to track projects, and benchmark design and construction metrics.

• Establish a bi-monthly OP/Campus Capital Program Leadership Forum toshare best practices and exchange timely data and information

• Support full participation by campus staff in the bi-monthly OP/Campus Capital Program Leadership Forum

timely data and information

• Develop appropriate metrics related to project performance

• Provide input into the development of project metrics

• Support data collection, evaluation and dissemination that includes comparative costs, surveys and audits as well as

• Provide appropriate level of data including soft and hard costs, bid data, and post-occupancy surveys for , y

information systems to make data accessible systemwide

p p y ysystemwide dissemination and use

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B. Implementation of Key Recommendations of the 2005 Report

6. Change Agent

RECOMMENDATION: Assign to a single “change-agent” the responsibilityRECOMMENDATION: Assign to a single change agent the responsibility of implementing recommendations set forth in this Report. This change agent to have the support at the highest levels – the Board of Regents, the President and his cabinet, and the Council of Chancellors.

Subsequent to this 2005 recommendation, the roles of the Regents, the President, and the campuses have been more clearly delineatedand the campuses have been more clearly delineated.

Each of these entities are accountable for the implementation of the recommendations that are consistent with their defined roles.

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C. Additional Initiatives

1. EARLY NOTIFICATION TO REGENTS OF BUDGET AND SCOPE CHANGE

FY 2008-09:

• Total Number of Active Projects: 291 (valued at $9.2 billion)

• 51 out of 291 projects had budget augmentations totaling $816 million

• 7 of these projects account for 60% of the total augmentation.These are large, complex hospital, research and lab projects

• Reasons cited for budget augmentations approved in FY 2008-09

Scope or program change due to unanticipated gifts or grants – 52%U f diti 43%Unforeseen conditions – 43%Schedule extensions – largely due to State suspension, litigation – 29%Market conditions – 29%Other (errors & omissions, document coordination) – 24%

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( , ) %

C. Additional Initiatives

OP Action Campus ActionM i t i d t ti th t j t i

1. EARLY NOTIFICATION TO REGENTS OF BUDGET AND SCOPE CHANGE

• Provide the Chair of Grounds & Buildings with timely decision points with respect to material changes in budget, scope and schedule

• Maintain documentation that project is within budget/scope at all major design and construction milestones

• Revise existing campus delegations to stipulate timing of notification and approval requests

• Develop and implement a predictive mechanism that tracks expenditure patterns relative to project budgetsapproval requests

• Collaborate with campuses to develop a predictive mechanism to track expenditure patterns relative to project

patterns relative to project budgets

• If project exceeds approved budget at any milestone, prepare a business case

d b it t ti t texpenditure patterns relative to project budgets

• Provide timely consultation and reviews

and submit augmentation request to approving entity before proceeding with any subsequent commitments

of potential augmentations

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C. Additional Initiatives

OP Action• Provide campuses with timely review of

Campus Action• Submit quarterly project status

2. INCREASED REPORTING FOR HIGH-RISK PROJECTS

• Provide campuses with timely review of campus reports with constructive comment and support action with respect to issues of concern

• Submit quarterly project status reports for high risk projects to OP that include projected cost and time to completion, and a listing of outstanding issues of concern

• Participate as a member of a campus Advisory Committee convened for

issues of concern

• Convene an Advisory Committee for each high risk project with membership

individual high risk projects from earliest planning stages

comprised of key stakeholders

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D. Accountability for Implementation of Recommendations

Regents

• Fiduciary duty for the University’s capital program

• Annual strategic assessment of the campuses’ capital programs including review of the updated ten-year Capital Financial Plans

President

• Annual assessment of capital program for Regents’ review (Major Capital Projects Implementation Report)Implementation Report)

• Business case analysis guidelines, reporting/metrics/benchmarks and best practices

• Bi monthly OP/Campus Capital Program Leadership Forum Co Chair• Bi-monthly OP/Campus Capital Program Leadership Forum Co-Chair

• Business case approval prior to budget approval; Regental notification regarding material changes to approved projects, consideration of alternatives, and recommendation to the Board for the proposed solutionrecommendation to the Board for the proposed solution

• High-risk project monitoring 15

D. Accountability for Implementation of Recommendations

Campus

• Individual accountable to the Chancellor on the capital program

• Business case analysis from the earliest concept development of a capital project and to inform the Capital Financial Plan

• Bi-monthly OP/Campus Capital Program Leadership Forum Co-ChairBi monthly OP/Campus Capital Program Leadership Forum Co Chair

• Project performance and business case for material changes to project

• Quarterly reports on high-risk projects to be submitted to OPQuarterly reports on high risk projects to be submitted to OP

• Annual reporting and updates for projects and Capital Financial PlanState Support Required for Implementation

• Refinement of “Streamlining” approval process for State-funded projects

• Statutory amendment to extend Best Value contracting systemwide

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D. Accountability for Implementation of RecommendationsNext Steps – March to September 2010

OP Actions• Budget & Capital Resources (BCR) at OP

has been reorganized so that the Capital

Campus Actions• Designate an individual accountable for

the performance of the capital program Program is under a single Associate Vice President

by May, 2010. May designate a separate individual for this function for the Medical Centers

• VP-BCR to convene a bi-monthly OP/Campus Capital Program Leadership Forum (Forum) by April, 2010

• Provide leadership and fully participate in the OP/Campus Capital Program Leadership Forum

• Refine guidelines and criteria for business case analysis in a university setting for discussion in the Forum by May, 2010

• Use business case analysis on all projects commencing July, 2010

• Develop format for quarterly project status reports for high risk projects for discussion in the Forum by July 2010

• Submit quarterly project status reports of high risk projects to OP commencing September, 2010discussion in the Forum by July, 2010 commencing September, 2010

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