developing the capital plan is only half the battle...western connecticut state university western...

Western Connecticut State UniversityWestern Oregon University

Westfield State UniversityWidener University

Williams CollegeWorcester Polytechnic Institute

Worcester State UniversityXavier University

Yale University

Developing the Capital Plan is only Half the Battle

Adam Gogolski, Account Manager, Sightlines

April 27, 2018

OACUBO 2018

© 2017 Sightlines, LLC. All Rights Reserved.2

Agenda and Introduction

Challenges Facing Higher Education

What happened to put us in this position?

What are forward-thinking institutional leaders doing to turn it around?

Discussion

Adam Gogolski – Account Manager

• Worked on over 80 campuses in 25 states during his 7-year tenure at Sightlines

• 5 of which were flagship institutions, 2 in the Big Ten

• Graduated with BS degrees in Industrial Engineering and Economics from the University of Pittsburgh


Higher Education is in a Financial Crisis

63%

2015 2016 2017

71%56%

Percentage of Chief Business Officers saying media reports that higher education is in the midst of a financial crisis are accurate

Source: Inside Higher Ed, https://www.insidehighered.com/news/survey/survey-finds-business-officers-increasingly-considering-more-painful-options


Challenges Facing Higher Education

Changes inEnrollment

Changing SpaceNeeds

Limited Operations (No economy of

scale)

Separate Data Sets, Disconnected

Networks

Too Many Firesto Put Out

Difficulty MeasuringProgress

Trying to Balance Strategic Initiatives with

Current Challenges

Missing Link Between Facilities

& Finance

Pressed for Timeand Bandwidth

More Challenges than Funding


How Do We Protect ALL of Our Assets?

Average Endowment

Average Building Replacement Value

5x


What Does Sightlines Do?

43States+DC

90%Memberretention

335+ROPA

Members

450Colleges &

Universities

170New members

since 2013

5Canadianprovinces

State & University Systems

• Alaska• California• Florida• Hawaii• Maine

• Massachusetts• Minnesota• Mississippi• Missouri• Nebraska

• New Hampshire• New Jersey• Ohio• Pennsylvania• Texas• Washington


Students are Coming Back to Higher Ed

0%

2%

4%

6%

8%

10%

12%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

% G

row

th

Fiscal Year

Space Growth vs. Enrollment Growth

Space Growth Enrollment Growth


Not All Institutions Have Been Impacted Evenly

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2007 08 09 10 11 12 13 14 15 16 2007 08 09 10 11 12 13 14 15 16 2007 08 09 10 11 12 13 14 15 16

% G

row

th s

ince

20

07

Fiscal Year

Space Growth vs. Enrollment Growth

Space Growth Enrollment Growth

Baccalaureate Master’s Research


Buildings Were Constructed in Two Eras

0%

2%

4%

6%

8%

10%

12%

% o

f C

on

stru

cted

Sp

ace

First WaveDriver: Enrollment

Growth

Second WaveDrivers: Program and Enrollment

Growth

0%

5%

10%

15%

20%

25%

30%

% o

f C

on

stru

cted

Sp

ace


The Major Funding Challenge is Still to Come

Wave 1: 1960-1980 35% of total GSF

Wave 2: 1995-201538% of total GSF

Wave 1Needs

Wave 2Needs


New Construction Projects Have Slowed

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 08 09 10 11 12 13 14 15 16 2007 08 09 10 11 12 13 14 15 16 2007 08 09 10 11 12 13 14 15 16

% G

SF

Renovation Age by Category

Total Under 10 Total 10 to 25 Total 25 to 50 Total Over 50


Low Risk Medium Risk High Risk End of Life


Operating Resources Have Not Kept Pace with Inflation

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$/G

SF

Operating Resources by Constituent Group

Daily Service PM


19% increase over 2007 9% increase over 2007 9% increase over 2007

Inflation over this time period is roughly 33.5%


Capital Reinvestment Has Fallen Short of Needs

$4.2 $3.4 $3.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2007-2009 2010-2012 2013-2016

$/

GSF

Baccalaureate

$4.1 $3.8 $3.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2007-2009 2010-2012 2013-2016

$/

GSF

Master’s

$4.1 $4.1 $4.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2007-2009 2010-2012 2013-2016

$/

GSF

Research

Sightlines Annual Investment Target

Actual Institutional Spending


Facilities Needs Have Continued to Grow

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$/G

SF

10-Year Facilities Needs by Constituent GroupBaccalaureate Master’s Research


The Question on Everyone’s Mind

How do we reverse the trend and start making

progress?


Traditional Facilities Assessments…

…go from project list to project selection from the bottom up and without a comprehensive strategy

TechnicalAssessment

ProjectSelection

Misses opportunities to optimize capital

resources

Fails to harness operating knowledge

Doesn’t tie to mission

Ignores financial capacity

This approach…

And therefore…


Experience Tells Us…

Replace air

compressors

and steam

stop valves

“Capital

Planning is

more than just

a project list.”Upgrade all

heat

detectorsCosmetic

Repair of

Student

Apartments.

Bathroom

Upgrades

Replace

Doors

Install

new

sprinklers


The Solution Starts with Strong Data

Facilities condition assessments

Specialized studies(elevators, roofs, etc.)

Campus master plans

Internal review documents

The optimal solution will turn this…

Building drawingsEquipment lists

How many of you have one or more of the following pieces of data?

…Into This


Begin the Communication Process

• Trying to compel action through a daunting DM figure does not work.

• It freezes decision making and compounds the core issue.

• Institutional leaders need to:

Understand the cause of deferral and slow

backlog accumulation

3Stop the Bleeding

42Create building

portfolios

Make the Problem

Smaller

Create multi-year

plans

Sustain Impact

of Finite Funding Target capital to reliability,

safety/code, critical asset

preservation

Mitigate Risk1


A Successful Approach Will

Provides a list that is framed and targeted

Allows leadership to focus on strategy and outcomes rather than individual projects

Encourages a partnership with stakeholders throughout the institutions

Allows continual review and prioritization as objectives change


Why a Portfolio-Based Approach?

Developing a portfolio approach will allow for a focused investment approach based on the Institutional Strategic Direction.

• Building Age• Building Condition• Building Location• Institutional focus• Academic requirements• Student needs

• Historical Significance• Safety/Code requirements• Recruitment/Retention• Transitional Space• Adaptive Reuse

Core considerations to the portfolio approach

• Institutional Priorities• Building Needs• Future Campus Direction

Institutional Leaders for buy in and communication

Not all buildings are created equal


Deciding Where NOT To Invest is Critical

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

?

Building Portfolio Process

Cu

rren

t C

hal

len

geP

rop

ose

d S

olu

tio

n

Electrical, Plumbing, HVAC, Mechanical, Exterior, Interior,

Safety…

Full Project Inventory

ProjectSelection

Full Project Inventory

Divest

Total Needs

$165.4M

Transitional Buildings

$35.2M

174,284 GSF

$202/GSF

Grounds/ Infrastructure

$15.3M

Building Needs

$114.8M

Core Academic

$34.0M

539,944 GSF

$63/GSF

Student Life

$30.1M

392,533 GSF

$77/GSF

Residence Halls

$21.9M

215,279 GSF

$102/GSF

Historic Preservation

$14.9M

87,281 GSF

$170/GSF

Campus Perimeter

$14.0M

116,172 GSF

$121/GSF

Example #1: Functional Portfolios

Institutionally Funded Student Fees Student Fees Gifts Sell

The “Big Problem”

The Manageable Solution

As Needed

Total Needs

$144.3M

Parking

$3.9M

1,1M GSF

$3.6/GSF

Grounds/ Infrastructure

$14M

Building Needs

$110.5M

Beneficial

$41.8M

977K GSF

$43/GSF

Legacy

$29M

574,368 GSF

$34/GSF

Millennium

$28.1M

1.8M GSF

$15.5/GSF

Transitional

$19.5M

240K GSF

$81/GSF

Rental

$7.2M

96K GSF

$75/GSF

24

Example #2: Vintage Portfolios

The “Big Problem”

Complete Renovation Exterior RenovationProgrammatic Stewardship

Emergency Reinvestment Only

No Capital ReinvestmentA Targeted Solution

As NeededAs Needed

Example #3: Balancing Needs & Program Value

Total Needs

$856.3M

Grounds $21.9M

Building Needs

$770.8M

Infra. and Central Plant

$72.6M

Capital Stewardship

$214.6M

Major Renovation

$318.1M

Maintain Only

$103.5M

Transition

$134.6M

Institutionally Funded

Gifts or Fundraising

Limit Capital Reinvestment

Divest

Utility Fees

As Needed


Use Objective Tools to Prioritize

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.


Show the Relationship Between Needs and Risk

Reliability $75.1M $64.9M $75.1M $15.9M

Safety/Code $29.2M $10.1M $29.2M $17.2M

Asset Preservation

$322.4M $0 $13.5M $14.2M

EconomicOpportunity

$18.6M $0 $18.6M $195,000

Program Improvement

$75.3M $0 $13.5M $4.5M

10

0%

35

%

86

%

7%

15

%

Sample Fund$75M

45

%

66

%

Highest Risk

Lowest Risk

Total Need$520M

Sample Fund$150M

Sample Fund$300M

0%

0%

0%

10

0%

10

0%

© 2017 Sightlines, LLC. All Rights Reserved.

28

Leverage Portfolio Priorities for the Planhttps://www.buyzip.com/products/magiclegs?variant=12076818464836&gclid=EAIaIQobChMIz7iF0Jer2gIVioTICh1RGQ9DEAkY

ASABEgIAcPD_BwE

https://www.buyzip.com/products/magiclegs?variant=12076818464836&gclid=EAIaIQobChMIz7iF0Jer2gIVioTICh1RGQ9DEAkYASABEgIAcPD_BwE

Admin/Other Classrooms HistoricUndergraduate

ScienceGraduate Research

$75M Plan $ 4,809,000 $ 24,020,000 $ 2,932,000 $ 19,860,000 $ 23,379,000

$150M Plan $ 7,648,000 $ 54,761,000 $ 6,855,000 $ 43,585,000 $ 51,550,000

$300M Plan $ 17,396,240 $ 121,779,000 $ 16,231,000 $ 63,621,000 $ 80,971,000

$- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000

Asset PreservationEconomic OpportunityProgram Improvement

ReliabilitySafety/Code









$75M Plan $150M Plan $300M Plan

Ad

min

/O

ther

Cla

ssro

om

sH

isto

ric

Un

der

grad

Sc

ien

ceG

rad

uat

e R

esea

rch


The Right Data Allows for Complex Analysis


A Complete Plan Will…

Articulate the Cause of Backlogs

Communicate a Credible Inventory of

Need

Create a Process;Don’t Just

Pick Projects

Measurable Performance

• Catch-up vs. Keep-up

• Understand how underfunding creates backlog

• Impact of changing campus age

.

• Comprehensive, credible, and flexible

• Illustrate operations impact

• Benchmarking for context

• Building Portfolios reflect institutional strategy

• Investment Criteria define the investment outcome

• Timeframe – aligns financial capacity to facilities needs

.

• Fact: Never get enough funding

• Fact: Emergencies arise so contingency management is key

• Fact: Customer support is important

Creating a complete plan will result in action rather than paralysis

31

Questions & Discussion


developing the capital plan is only half the battle...western connecticut state university western...

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