Z Score,T Score, Percential Rank and Box Plot Graph
Why Buildings Care
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 Boston
Sightlines 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. Louis
Why 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 Redlands
November 28, 2011 The University of Rhode Island, Narragansett Bay
The University of Rhode Island, Feinstein Providence
Presented 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. 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
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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”
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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
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6. Did you know this about colleges and universities?
The average The average campus
endowment replacement value
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7. Maximizing your investment in campus facilities
The 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
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8. Illustrating the connections
The Return on Physical Assets – ROPASM
Annual Stewardship
“Keep-Up”
Asset Operating
Reinvestment Effectiveness
“Catch Up”
Service
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9. Polling the audience
Does Facilities Management
on your campus have a
recurring capital budget for
repair and maintenance?
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13. Stewardship, another way of looking at it
Resources 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
15. The life cycle of building components
Cash 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
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16. Defining the Annual Stewardship Target
Setting goals to arrest the rate of asset depreciation
Industry Standard
Annual Stewardship Target
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12
10
$ in Millions
8
6 $12.0
4
2
0
3% Replacement Value
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17. The life cycle of building components
Cash 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
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18. Defining the Annual Stewardship Target
Setting 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
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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
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21. To steward or not to steward. That is the question
Investment 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
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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
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23. The cost of ignoring it
$1.5M
$450K X
$150K
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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.
