Taming Deferred MaintenanceBefore the Roof Caves In
Mike Gower, Executive Vice President for Finance and Administration and Treasurer, Rutgers University
Harold Hewitt, Executive Vice President and Chief Operating Officer, Chapman University
Mark Schiff, President, Sightlines
Hugh Warren, Associate Vice President, Facilities Operations & Maintenance, University of Alberta
WHERE CAMPUSES STAND…
National, Public & Peer Group Trends in Facilities
June 2016
By the Numbers – State of Facilities Database
3
Public, 60%
Private, 40%
377 Higher Education Institutions
Comprehensive/Doctoral, 34%
Research, 26%
Small Institutions,
32%
Community Colleges, 8%
1.5 Billion Total GSF
2,137,705 Students educated at included institutions
The Sightlines’ Paradigm
4
5
Space and Enrollment GrowthSpace growing faster than enrollment beginning in 2013 to 2015
0%
2%
4%
6%
8%
10%
12%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Space and Enrollment Growth(National Average)
Space Growth Enrollment Growth
0%
2%
4%
6%
8%
10%
12%
% o
f G
SF
Sightlines Database- Construction Age Sightlines Database- Renovation Age
6
The campus age drives the risk profile with Post-War and Complex comprising 67%
Putting Campus Building Age in ContextP
re-W
ar
Built before 1951
Durable construction
Older but typically lasts longer P
os
t-W
ar Built between 1951 and
1975
Lower-quality construction
Already needing more repairs and renovations
Mo
de
rn Built between 1975 and 1990
Quick-flash construction
Low-quality building components
Co
mp
lex
Built in 1991 and newer
Technically complex spaces
Higher-quality, more expensive to maintain & repair
Pre-War Post-War Modern ComplexPercent of Total Space
40%Percent of Total Space
27%
7
Progress in resetting the clock on buildings over 50 years old
Square Footage by Age Category
13% 19%
18%
27%
31%
30%
38%24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Construction Age Renovation Age
% o
f Sp
ace
Construction Age vs. Renovation Age
Under 10 10 to 25 25 to 50 Over 50
Buildings Under 10
Little work. “Honeymoon” period.
Low Risk
Buildings 10 to 25
Short life-cycle needs; primarily space renewal.
Medium Risk
Buildings 25 to 50
Major envelope and mechanical life cycles come due.
Higher Risk
Buildings over 50
Life cycles of major building components are past due. Failures are possible.
Highest risk
8
Annual Capital InvestmentPrivate campuses rely more on annual institutional capital; public rely more on one-time
Public Average Private Average
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
$/G
SF
9
Annual Capital Investment36% of private campus capital comes from annual institutional sources
26%22% 25% 24%
28% 28% 28% 29% 28%
74%78% 75% 76%
72% 72% 72% 71% 72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Pe
rce
nt
of
Tota
l Do
llars
Sp
en
t
Public Average Private Average
28% 27% 25%31%
35% 33% 35% 36% 36%
72% 73% 75%69%
65% 67% 65% 64% 64%
2007 2008 2009 2010 2011 2012 2013 2014 2015
10
Facilities Backlogs Continue to Rise
Capital investment not enough to keep backlogs from growing
Backlog $/GSF
Public Average Private Average
0%
5%
10%
15%
20%
25%
30%
0.00
20.00
40.00
60.00
80.00
100.00
$/G
SF
0%
5%
10%
15%
20%
25%
30%
0.00
20.00
40.00
60.00
80.00
100.00
11
Facilities Operating BudgetsAfter years of flat budgets, small increases in campus operating budgets in 2014 and 2015
Public Average
3.65 3.91 3.92 3.854.29 4.28 4.39 4.51 4.67
0.250.25 0.26 0.26
0.26 0.27 0.28 0.290.31
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
4.44 4.61 4.62 4.62 4.62 4.64 4.58 4.75 4.84
0.320.34 0.34 0.32 0.32 0.33 0.34
0.37 0.36
2007 2008 2009 2010 2011 2012 2013 2014 2015
Private Average
Operating Budget $/GSF
Trends in Summary
Space is growing faster than enrollment; there are exceptions, particularly research institutions
Campus age profile driven by when buildings were constructed. 67% of space was built in two periods: 1955-1975 or 1995-2015
There is some progress on resetting the clock on building systems. But the majority of space (55%) needs some level of renovation.
Capital investment at public campuses is the highest since 2009, mainly as a result of borrowed one time capital.
Capital investment at private campuses is gradually returning to 2009 peak levels, driven by annual institutional capital.
Despite capital investment increases there is not enough money to address aging campuses, so deferred maintenance continue to grow.
After years of flat funding, facilities operating budgets grew modestly in 2014 and 2015.
Rutgers University
13
Case Study: Rutgers University What data made the case that a
paradigm shift was needed?
What strategies are being adopted?
What are the expected outcomes?
How is campus engaged in the conversation?
Top Research University
Member of the Association of American Universities (AAU) and the Big 10 Conference
Top 20 in the U.S. in research R&D expenses
Celebrating its 250th Anniversary this year
Sightlines member since 2003
27MSupported
GSF
1,550Maintained
Acres
67,000Students
Established
1766
Space Challenge: Older Buildings
15
50.4 49.448.8
41.1
0
10
20
30
40
50
60
Rutgers Big 10 Peers
Year
s
Construction vs. Renovation Age
Construction AgeRenovation Age
Under 10 Years
Under 10 Years
10 to 25 Years
10 to 25 Years
25 to 50 Years
25 to 50 Years
Over 50 Years
Over 50 Years
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Rutgers Big 10 Peers
% o
f To
tal C
amp
us
GSF
Campus Buildings by Renovation Age
High Cost High Cost
Space Challenge: Smaller Buildings
16
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Rutgers Big 10 Peers
AV
ERA
GE
GSF
/ B
UIL
DIN
G
Average Building Size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Under10,000 GSF
10,000 to30,000 GSF
30,000 GSFto 60,000
GSF
Over 60,000GSF
Building Count vs. Building Size
% of Buildings
% of GSF
Inadequate Spending into Existing Space
17
$0
$20
$40
$60
$80
$100
$120
$140
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Mill
ion
s
Capital Spending vs. TargetsExisting Space Only
Annual Capital One Time Capital
Target Need Equilibrium Need
$98
$79
$126
$96
$0
$20
$40
$60
$80
$100
$120
$140
Rutgers Big 10$
/GSF
Asset Reinvestment NeedFY10 vs. FY15
FY10 FY15
A New Paradigm
18
1. Engage campus in a conversation to think about space in a new way
2. Provide Facilities with a Seat at the Table
3. Put in place new policies around space use
• Small buildings are taken down
• Buildings with high backlog are taken down
EXPECTED
OUTCOME
19
Strategy #1: No Net New Policy
• For any new building, at least one building comes down
• Enforced through Facilities Leadership & President’s OfficeACTION
$0.00
$1.00
$2.00
$3.00
$4.00
Under 10,000 GSF 10,000 to25,000 GSF
25,000 to50,000 GSF
Over50,000 GSF
Mai
nte
nan
ce C
ost
-$
/GSF
Typical Maintenance Costs* by Building Size
*Costs are from the Sightlines database, featured in the Chronicle of Higher Ed article, “Less is More: Campus Officials Trim Square Feet to Cut Costs”
• Owners release space
• University has flexibility to consolidate and take down excess space
• Campus utilization increases – more revenue with lower carrying cost of facilities
EXPECTED
OUTCOME
20
Strategy #2: Change the Budget to Charge for Space
• Schools/Departments/Centers pay for space – RCM ModelACTION
21
Strategy #3: Change the Paradigm of Classroom Utilization
• Document and measure utilization
• Get serious about scheduling – target the low hanging fruit
• Set policies that incentivize central control:
• If departments put space into the pool for general use, facilities will support upgrades
• If departments keep space for their own use, the department is on their own to fund improvements
ACTION
• Campus utilization increases – more revenue with lower carrying cost of facilities
• Starts to make an impact on reducing the cost of Higher Education
EXPECTED OUTCOME
Mission: To provide personalized education of distinction that leads to inquiring, ethical and productive lives as
global citizens.
7th Best University in the Western Region According to US News and World Report
Sightlines member since 2006
2.1M GSF
75Maintained
Acres
7,500Students
Established
1861
Space Growth vs. Enrollment Growth
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Peers % Change in Space and Enrollment
100%
110%
120%
130%
140%
150%
160%
170%
180%
190%
200%
Chapman % Change in Space and Enrollment
24
Impact of Campus Growth
19% decrease in density since 2004
0
100
200
300
400
500
600
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Use
rs/1
00
K G
SF
Density Factor
Chapman Density Factor Peer Avg Density
Wear & Tear on Facilities
Capital Investment
Trades Staffing Levels
Operating Expenses
Density Affects:
24%35%
25%
46%21%
14%29%
6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Peer Reno Age Chapman RenoAge
% o
f G
SF
Campus Age by Category
Under 10 10 to 25
25 to 50 Over 50
25
Campus Age Profile
Understanding the Impact of Age on Capital & Operations
$32.94 $34.65
$111.66
$174.06
$0.00
$50.00
$100.00
$150.00
$200.00
Under 10 10-25 25-50 Over 50
$/G
SF
10-Year Capital Need from BPS
$0.63$0.69 $0.72
$0.29
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
Under 10 10-25 25-50 Over 50
$/G
SFAverage Work Order Cost by Reno. Age Category
Total Needs
$469.4M
Projects beyond FY23 (10 years)
$18.0M
New Space
$358.1M
Grounds & Infrastructure
$1.4M
Building Needs
$91.9M
Capital Upkeep
$27.2M
1.1M GSF
$24/gsf
Repair and Maintain
$15.4M
191,383 GSF
$81/gsf
Systemic Renovation
$24.3M
232,982 GSF
$124/gsf
Transitional
$25.0M
117,495 GSF
$212/gsf
26
Creating Building Portfolios
27
Total Investment vs. Funding Target
One-time capital closed the gap prior to FY13
$1.5 $1.8 $2.6 $2.5 $2.9 $3.5 $4.0 $4.2 $3.3$5.0
$3.5 $3.6$1.4$1.9
$2.5 $2.7 $2.3
$4.1 $3.9$5.0 $6.7
$0.8 $3.3 $3.2
$0
$5
$10
$15
$20
$25
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$ in
Mil
lio
ns
Total Capital Investment vs. Funding Targets
Annual Capital One Time Capital Annual Investment Target Life Cycle Need
Increasing Backlog
Reducing Backlog
Stabilizing Backlog
28
Asset Reinvestment Need
Spending at target levels has arrested growth in Asset Reinvestment Need
$66
$57 $59 $58 $58 $58 $55 $56 $57$60
$54 $57
$72 $73 $73 $74 $74 $73 $76$80 $78 $81 $83 $85
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Total Asset Reinvestment Need $/GSF
$6/GSF Difference
$28/GSF DifferencePeersChapman
$4
$25
$114
$0
$20
$40
$60
$80
$100
$120
$140
$160
$ in
Mill
ion
s
ROPA+10 Year Total Capital Need
29
Defining Need with ROPA+ Prediction
ROPA+ provides a more comprehensive view of backlog and upcoming need
Renewal Need• What building needs will come
due in the next 10 years?• Building Exteriors• Electrical• HVAC• Interiors• Plumbing• Roofing
Current Need• What on campus is currently
broken, operating at a significantly higher cost, or requires significantly more time to maintain?
Mod. & Infra. Need• Large-scale renovations• Upgrading systems prior to end
of useful life
Type of Need Type of Funding
One-Time
Annual
Annual & One-Time
Top Research University
Top 5 Canadian, Top 100 world wide
6 Years on “Canada’s Greenest Employers”
Sightlines member since 2014
11.3MSupported
GSF
443Maintained
Acres
36,918Student FTE
Established
1908
Waves of Construction
UAlberta differs from Canadian national trend due to recent construction
0%
5%
10%
15%
20%
25%
30%
35%
40%
% o
f sp
ace
CAUBO National Trend
Alberta
UAlberta 8% 49% 10% 33%
CAUBO 11% 48% 13% 28%
Pre-WarPrior to 1951
Durable construction, older but built to last
Post-War1951-1975Low quality
construction, not aging well
Modern1975-1990Quick-flash
construction, low quality
Complex1990 to today
Quality but costly construction, highly
technical
Understanding the Age of CampusSome of UAlberta’s oldest buildings have been reset, but profile changing in coming years
18%25%
13%
13%
17%
20%
47%
46%
35%
21%12%
32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
U AlbertaConstruction Age
U Alberta RenovationAge
Peer Renovation Age
University of Alberta Campus Age
Under 10 10-25 25-50 Over 50
Buildings Under 10
Little capital work required, Implement PM program.
Low Risk
Buildings 10 to 25
Short life-cycle needs; primarily space renewal.
Medium Risk
Buildings 25 to 50
Major envelope and mechanical life cycles come due.
Higher Risk
Buildings over 50
Life cycles of major building components are past due. Failures are possible. Reactive
maintenance needs are high.
Highest Risk
Complexity Drives Operating Costs
Younger buildings are more complex and cost intensive
4.1
3.5 3.4 3.2
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Under 10 10 to 25 25 to 50 Over 50
Tech
Rat
ing
Tech Rating by Age Category
$504
$517
$551
$655
$801
$- $300 $600 $900
Tech 1
Tech 2
Tech 3
Tech 4
Tech 5
$/WO
Average WO Cost
Adding Complex Space Increases Costs
UAlberta will double the amount of Tech 5 space in the next 10 years
High campus density impacts flexibility
UAlberta is as Dense as Research Peers
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014 2015
Use
rs/1
00
,00
0G
SF
Density Factor
Density Peer Average
Consistent Investment while Need Increases
One-time capital helps close the gap between stewardship and target
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
2010 2011 2012 2013 2014 2015
USD
Total Investment vs. Target
Annual Capital One Time Capital Target
Decreasing Campus Value
Sustaining/Increasing Campus Value
Annual Investment Capacity: $35-$55MDue to limited decant space and contractor restrictions
Ten Years of Repair & Maintenance Need
UAlberta’s priority need is largest of peer group, with less occurring after year 5
$0
$20
$40
$60
$80
$100
$120
A B C D E U of A G
US
$/G
SF
Repair & Maintenance Need
5-Year Need Years 5-10
Peer avg: $72
Operating Budget Compared to Peers
UAlberta has lowest resources in peer group
Benchmarks ordered by increasing technical complexity
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
A B C D E F G H U of A J K
US
$/G
SF
Operating Budget Actual Expenditures
Daily Service Preventive Maintenance
Peer avg: $4.83
Plan Going Forward
• Continue to use quality data to show the DM need, support for partnering funds and making decisions
• Explore Campus as a Living Lab with Faculties for Student Research
• Be agile and ready to partner in with new opportunities
• People Counters
Grab your free State of Facilities report today!
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