why the roof hasn't caved in [sightlines_caubo webinar]

Western Oregon University

Wheaton College (MA)

Whitworth University

Widener University

Wilkes University

Williams College

Worcester Polytechnic Institute

Worcester State College

Wright State University

Xavier University

Yeshiva University

Youngstown State University

Why the Roof Hasn’t Caved InSightlines Webinar; Presented by Jim Kadamus

December 3, 2015

Review of facilities trends – Space, capital, and operations;

including 2014 CAUBO study of deferred maintenance for

Canadian Universities

Identify what the trends tell us about the State of Facilities in

Higher Education institutions

Explore the reasons for why the roof has not caved in despite

the “bad news” trends and dire predictions

Examples from campuses that are successfully combating the

challenges

Recommendations and conclusions

Agenda

1

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

2

National Trends & The

State of Facilities

By the Numbers – Sightlines Database

343 Higher Education Member Institutions

Public, 60%

Private, 40%

1.5 Billion Total GSF

2,601,261 Students

educated at included

institutions

51 Institutions Represented in 2014

CAUBO Study

4,364 building totaling

over 200M GSF

Over 860,000 students

educated at included

institutions

$8.4 billion of total

deferred maintenance

identified

4

The Sightlines’ Paradigm

5

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 in United States)

Space Growth Enrollment Growth

6

0%

5%

10%

15%

20%

25%

% o

f C

on

str

uc

ted

Sp

ac

e

Putting Campus Building Age in Context

The campus age drives the overall risk profile

Pre

-Wa

r

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

U.S. 35%

Canada 48%

Percent of Total

Space

U.S. 31%

Canada 28%

Constructed Space – U.S. Constructed Space – Canada

7

Square Footage by Age Category - CAUBO

25%12%

19%

25%

41%

37%

15%26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2018

% o

f S

pa

ce

CAUBO Age Profile

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

Unless substantial investment occurs, space over 50 years old projects to double

8

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

$/G

SF

Capital Investment into Existing Space(National Spending in United States)

Annual Capital One-Time Capital Average

9

Sightlines’ Impact on Capital Spending

2011 new members’ capital spending before vs. after joining Sightlines

$0.72$1.11

$3.29

$3.30

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Before After

$/G

SF

54% Increase

10

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

$/G

SF

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

Avg. CAUBO backlog Avg. CAUBO backlog

With $8.4 billion of DM, total CAUBO backlog would average at approximately $85/GSF

11

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

$/G

SF

Facilities Operating Budget(National Average in United States)

Planned Maintenance Daily Service

12

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?

13

Why the Roof Hasn’t Caved In

& Campus Successes

The Predictions Have Not Become Reality – Why???

15

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

16










to space.



17

State System Sets Priority on 1960-70s Buildings

19% 20% 20% 20% 21% 21% 21% 21% 20% 20% 19% 19% 17% 20% 20% 20% 22% 23%29% 30% 30%

35% 37% 37%

14% 14% 13% 13% 13% 14% 14% 14% 14% 14% 15% 16%10%

10% 10% 12%14%

14%

15% 16% 17%

17%18% 20%

47% 47% 46% 46% 45% 43% 42% 40% 40% 40% 38% 36%

59% 57% 57% 56%53% 50%

44% 41% 38%34% 31% 29%

20% 20% 20% 20% 21% 22% 23% 25% 25% 26% 28% 29%

13% 13% 12% 12% 12% 12% 12% 13% 14% 14% 14% 14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% o

f To

tal

Cam

pu

s G

SF

Renovation Age by Category

Under 10 10 to 25 25 to 50 Over 50

Peers State System

18

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$/G

SF

Planned/Preventive Maintenance $/GSF

Impact of Renovating or Replacing 1960-70s Buildings

76% 77%79% 79% 80% 81% 82% 82%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014

Campus Inspection Index

19

Identified Needs by Category

Categorizing the $151.6 M in total campus needs; building needs are heavily in A timeframe

$130.5 , 86%

$15.3 , 10%

$5.8 , 4%

Total Needs by Structure$ in millions

Building Needs Infrastructure

Grounds Needs

$84.0

$2.3 $0.7

$27.4

$3.5 $10.4

$19.1

$0.1

$4.2

$0

$20

$40

$60

$80

$100

$120

$140

Building Infrastructure Grounds

To

tal N

ee

d, $

in

mil

lio

ns

Total Needs by Structure and Timeframe

A (1-3 years) B (4-7 years) C (8-10 years)

20

7%

9%

55%

1%

28%

Campus Identified Needs

Reliability

Safety/Code

Asset Preservation

Economic Opportunity

Program Improvement

Identified Needs by Investment Criteria

Timeframes A, B, & C only

8%

11%

48%

3%

30%

Comparison Campuses

Reliability – Issues of imminent failure of compromise to the system that may result in interruption to program or use of

space.

Safety/Code – Code compliance issues and institutional safety priorities or items that are not in conformance with

current codes, even though the system is “grandfathered” and exempt from current code.

Asset Preservation – Projects that preserve or enhance the integrity of buildings systems or building structure, or

campus infrastructure.

Economic Opportunity – Projects that result in a reduction of annual operating costs or capital savings.

Program Improvement – Projects that improve the functionality of space, primarily driven by academic, student life, and

athletic programs or departments. These projects are also issues of campus image and impact.

21

Identified Needs Compared to Investments

Identified needs means shift in future funding allocations

17%

41%14%

19%

9%

Campus Identified Needs

10%

21%

23%

39%

7%

Historical Project InvestmentsFY03-FY14

Building Envelope

Building Systems

Infrastructure

Space Improvement

Safety/Code

22










to space.



23

Aligning Facilities Renewal Needs with Resources

$295

$103

$186

$378

$0

$100

$200

$300

$400

$500

$600

10 Year Need, FCA $ + soft cost

Mil

lio

ns

5-Year Need Current Need

Need Years 5-10 Lifecycle

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Mil

lio

ns

10-Year Facilities Renewal Needsincluding soft costs


*Backlog quantified by FCA analysis

24

Gap Between Facilities Need and Resources

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Mil

lio

ns

Systems Exterior Interior

*Backlog excludes programmatic needs.

10-Year Facilities Renewal Needs

Projected funding based on last 5 years of spending

$481

$250

$0

$100

$200

$300

$400

$500

$600

10-Year Need ProjectedFunding

Mil

lio

ns

Need vs. Funding

25

Gap Between Facilities Need and Resources

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Mil

lio

ns

Lifecycle Current Need

Average Funding, FY10-14 Grow Funding by $3M/year


$481

$250

$0

$100

$200

$300

$400

$500

$600

10-Year Need ProjectedFunding

Mil

lio

ns

Need vs. Fundingincluding soft costs

Any needs above the

funding line would be

added to the backlog in

future years

*Backlog quantified by FCA analysis

26










to space.



27

Needs by Building Portfolio

Total Project Inventory

$1,854 M

New Space

$341 M

Building Needs

$1,443 M

Transitional Facilities

$171 M

Building Renovation

$505 M

Repurpose

$39 M

Maintain

$735 M

Non-housing facilities

$551 M

Housing facilities

$183 M

Site & Infrastructure

Needs

$70.3 M

28

Asset Reinvestment Progress

Significant investments in new and existing space in 2014

$1,974 $1,895 $1,792 $1,627 $1,607

$1,497 $1,443

$126 $107

$82

$82 $82

$77 $70

$457 $434

$410 $571 $541

$442 $341

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

April 09 Update Fall 09 Update June 2010Update

June 2011Update

June 2012Update

June 2013Update

June 2014Update

Mil

lio

ns

BPS Identified Needs by Update Stage

Building Needs Infrastructure New Space

$500M+ of Asset Reinvestment need

addressed since FY09 through O&M,

capital investment/renovation, and

demolition of aging facilities

29










to space.



30

Blended Functional and Investment Portfolios

Aligning needs with funding opportunities

Total Needs

$253.9M

New Construction

$83.3M

Grounds & Infrastructure

$11.3M

Building Needs

$158.3M

Institutionally

Funded

Academic

$41.7M

Administrative

$18.9 M

Sci./Research

$33.9 M

Athletic

$11.6 M

Residence Halls

$18.0 M

Faculty/Staff Housing

$10.9 M

Fraternities & Sororities

$9.0 M

Transitional

$14.2 M

Potential Grants Potential Gifts Potential to Sell Potential Gifts

Focus investment

into core campus

facilities that are

unlikely to receive

donor funding

31

Increasing Capital Investment Over Time

Investing capital in envelope and mechanical; using department dollars for space upgrades

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

2007 2008 2009 2010 2011 2012 2013 2014

$ in

Mil

lio

ns

Envelope Systems Infrastructure Space Renewal Safety/Code

Life Cycle Need

($74.3M)

Target Need

($38.9M)

Stabilizing/Decreasing

Backlog

Total Capital Investments FY2007 – FY2014

32

Recommendations and

Conclusions

We Need to Make the Problem Smaller

Not all buildings are created equal, therefore they

should not be treated that way.

Use building portfolios – for operations and capital - to

make the problem smaller

Subdivide capital projects by issues of reliability,

safety/code, program, and asset preservation.

Create “balance” and “diversity” in all facility

investments to lower risks.

34

Time is On Our Side

Yes it is

What we’ve learned over the past 30 years …

fixing components rather than replacing entire systems,

that life cycle estimates are inherently conservative,

coordinating campus needs and projects can lower capital costs, and

functional obsolescence of space can bring capital resources to allocate for repairs

There is no reason to believe that these factors will change in the next 15 to 20 years. Therefore although we will need to act, we have time to manage the investments.

35

Make the Case for Resources

By controlling the things you can control

The old approach of defining needs in a way that makes the DM

problem bigger and then requesting money will not work.

Problem is too big to address in total – must break it down in size

and priority

Opportunities exist to… Lower Demands - Space Management

Make the Problem “Smaller” – Use Building Portfolio

Management

Sustain Impact of Finite Funding - Create Multi Year Plans

Mitigate Risk - Target Capital to Reliability, Safety/Code, and Critical

Asset Preservation Issues

Apply these actions to make the case for additional

funding and use savings to self-fund stewardship

36

Questions & Discussion

2015 State of Facilities in Higher Education

Annual report available now! Webinar on December 10

www.sightlines.com/insight/state-of-facilities-2015

Webinar: The State of Facilities in

Higher Education – An In-Depth Look at

the 2015 Trends and Best Practices

December 10, 2015 @ 1pm EST

Invitation to follow today’s session!

38