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Backlog, Deferred Maintenance & it’s use in planning

March 29th, 2012Gina Matsoukas

University of Illinois at Urbana ChampaignThe University of Maine

University of Maine at AugustaUniversity of Maine at Farmington

University of Maine at MachiasUniversity of Maine at Presque Isle

University of Maine at Fort KentUniversity of Maryland

University of Massachusetts  AmherstUniversity of Massachusetts  Boston

University of Massachusetts  DartmouthUniversity of Massachusetts  Lowell

University of Michigan University of Minnesota University of Missouri

University of Missouri ‐ Kansas CityUniversity of Missouri ‐ St. Louis

University of New HampshireUniversity of New HavenUniversity of Notre Dame

University of OregonUniversity of Pennsylvania

University of PortlandUniversity of Redlands

The University of Rhode Island, Narragansett BayThe University of Rhode Island, Feinstein Providence

The University of Rhode Island, KingstonUniversity of RochesterUniversity of San Diego

University of San FranciscoUniversity of St. Thomas (TX)University of Southern Maine

University of ToledoUniversity of VermontUpper Iowa University

Utica CollegeVassar College

Virginia Commonwealth UniversityVirginia Department of General Services

Wagner CollegeWellesley College

Wesleyan UniversityWest Chester University of Pennsylvania

West Virginia University Western Oregon University

Wheaton College (MA)

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Focusing on the backlog & deferred maintenance

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A vocabulary for measurementThe Return on Physical Assets – ROPASM

Asset V

alue

 Change

Ope

ratio

ns Success

Annual Stewardship

Asset 

Reinvestment O

perating Effectiveness

Service

Annual Stewardship

The annual investment needed to insure buildings will properly perform and reach their useful life “Keep‐Up Costs”

Asset Reinvestment

The accumulated backlog of repair and modernization needs and the definition of resource capacity to correct them. “Catch‐Up Costs”

Operations Success

The effectiveness of the facilities operating budget, staffing, supervision, and energy management

Service

The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery

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Why it needs to be more than a backlog

Finite Facilities Needs1. Catalog the needs2. Analyze the data

Strategic Direction3.  Identify building portfolios4. Develop targets

Investment Capacity5.  Define phase out plan

Finite Facilities Needs

Strategic Direction

Investment Capacity

5

Going beyond “deferred maintenance”

Utility Infrastructure

Develop a Comprehensive List of Needs

Repair & Replacement

Campus Modernization

Master Plan

6

What the Full Process Should Look Like:

1. Base Data Assembly

1. Collection of existing studies and key planning documents2. Inspection of building components and characteristics

2. Inventory Creation

1. Incorporate existing studies and assessments2. Interviews with key facilities staff3. Project pricing and codification

3. Development of Building Portfolios

1. Group buildings based on investment strategy2. Allocation of available funding by portfolio

4. Development of Multi‐Year Funding Plan

Goals & Process Overview

Backlog Goals:•Common Project Codification in One Database•Consistent Pricing & Timeframe Assignment•Coordination Between All Needs To Maximize Capital•Reconcile Need To Financial Capacity ‐ The Multi‐Year Phase‐Out Plan

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•Repair/Maint•Modernization• Infrastructure

Define Work Classification 

•Reliability•Asset Preservation• Space Improvement• Economic Operations• Safety / Code

Define Project Classifications 

•A: 1‐3 years•B: 4‐6 years•C: 7+

Define Project Priority

Adding value to each project

What is the Work?

What is the Impact?

What is the Priority?

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Putting strategy to the numbers

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Descriptive text goes here

Defining a Multi‐Year Investment PlanBeyond Picking Projects

Full Inventory of Projects Apply

Building Portfolio& Timeframe

ApplyInvestment Criteria &Timeframe

Multi‐Year Project Plan

Geographic, Program, Transitional, & Years

Reliability, Asset Preservation, Program, Economic Operations , Safety/Code & Years

Full Inventory of Projects

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

Safety…

How Do You Target Projects

?

Sightlines’ Process

Current C

hallenge

Prop

osed

 Solution

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

Safety…

Pick Projects

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Creating a comprehensive plan

Project Identification•Inventory•Interviews•Other studies

Project Codification•Timeframe•Package•Investment Criteria

Project Selection•Project scores•Meet investment objectives

Building Portfolio Creation•Group Buildings•Outline investment strategies Funding 

Identification•What financial resources are available?

Funding Allocation•By Portfolio•By Investment Criteria

Multi‐year capital 

investment plan

Capital AllocationPlanning

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Core Concepts of the Building Portfolio Approach

•Ensures that the right buildings have funding for needs• Funding allocation is done by Institutional leadership

Funding is allocated by Building Portfolios

• Ensures that the right type of work is done within each Portfolio• The type of work funded will differ by Portfolio

Funding is allocated by Project Outcome (Investment Criteria)

• Flexibility of project selection within the appropriated funding allocation•Project selection completed by Facilities leadership

Project selection is done to meet the funding  allocations

• Institutional leadership has set the level of, and direction for, investments• Facilities leadership can control individual project selection based on their detailed understanding of the campus facilities

•Campus‐wide confidence, understanding, and involvement in capital investment strategy

Result

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The portfolio approach starts by breaking down the numbers

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Total Identified Needs

Total Needs $86 M

New Construction$625,000

Grounds & Infrastructure$14.1M 

Building Needs$71.3 M

Academic/Admin$26.4M

407,665 GSF$65/GSF

Residential$31.8 M

330,354 GSF$96/GSF

Student Life$11.5 M

271,345  GSF$43/GSF

Support$1.5 M

60,924 GSF$25/GSF

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$21.1

$14.2$12.9

$7.0 $6.7

$3.9 $3.7

$1.4$0.4$0

$5

$10

$15

$20

$25

Interior Shell Plumbing HVAC Safety/Code Exterior Shell Electrical Heating Mechanical Cooling

$ in M

illions

Total Need by System

$4.8$6.9

$4.1$2.0 $2.8

$0.9 $2.0 $0.6$0.2

$4.3$2.0

$2.8

$1.4$2.2

$1.7 $0.9 $0.3 $0.1

$12.0

$5.3

$6.0

$3.6$1.8

$1.4 $0.8 $0.5 $0.2

$0

$5

$10

$15

$20

$25

Total Need by System

A B C

Identified Building Needs By System ‐ $71.3MTimeframe A,B, & C only – Excluding new construction, grounds, & infrastructure

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Identifying Buildings with Greatest Need

$14 

$11 

$3 

$5 

$7 

$20 

$5 

$4 

$26 

$3 

$3 

$23 

$6 

$15 

$12 

$8 

$15 

$14 

$12 

$29 

$16 

$22 

$25 

$16 

$54 

$25 

$78 

$39 

$57 

$51 

$169 

$12 

$10 

$17 

$11 

$9 

$11 

$8 

$19 

$11 

$7 

$8 

$8 

$13 

$36 

$105 

$22 

$3 

$9 

$14 

$1 

$33 

$15 

$1 

$19 

$44 

 $‐  $50  $100  $150  $200  $250

Building #1

Building #2

Building #3

Building #4

Building #5

Building #6

Building #7

Building #8

Building #9

Building #10

Building #11

Building #12

Building #13

Building #14

Building #15

Building #16

Building Needs

Envelope Building Systems Space Renewal Safety/Code

9%13%

37%

41%

Historic Project Investments into BuildingsFY03‐FY11

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Mission‐Driven PortfoliosSample Campus #1

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71%

81%

76%

77%

93%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Undetermined Future

Admin/Support

Academic

Retention

Recruiting

Average NAV by Portfolio

NAV by Building Portfolio

*Total Campus NAV includes infrastructure/grounds

*Total Campus NAV – 74%

Peer Campus NAV – 80%

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Allocating funding by Building Portfolio

Portfolio Average NAV

“A Timeframe” NeedsExcludes “urgent reliability” and

“Special Interest projects”

% of Total Funding Allocated

Funding Allocated

Recruiting 93% $8.7M 8% $0.7M

Retention 77% $29.2M 27% $2.4M

Academic 76% $55.7M 52% $4.5M

Admin/Support 81% $8.0M 0% $0.0M

Undetermined Future 71% $5.2M 0% $0.0M

Infrastructure/Grounds n/a $14.1M 13% $1.1M

Sub‐Total10% of $9.7 M as Contingency

78%‐

$121.0M‐

100%‐

$8.7 M$1.0 M

Total $9.7M

Remaining $9.7 M of funding allocated to portfolios based on remaining A timeframe needsExcludes Admin/Support and Undetermined Future Portfolios

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Summary of FY12‐14 $30 M Funding by Building Portfolio

$8.7 

$29.2 

$55.7 

$8.0 $5.2 

$14.1 

$2.6 

$7.8 $3.6  $0.5 

$0.4 

$4.9 $0.7 

$0.7 

$2.4 

$4.5 $1.1 

$0

$10

$20

$30

$40

$50

$60

Recruiting Retention Academic Admin/Support Undet. Future Infra/Grounds

$ in M

illions

Remaining Allocated Funding

"Just In Time" Reserve

Urgent Reliability & "Special Interest" Projects

A Timeframe Needs

A Timeframe Needs vs. FY12‐FY14 Funding Allocation

Note: $1.0 M of “Special Interest” project funding for the Retention Portfolio, and $125 K of Infrastructure/Grounds funding is addressing B or C timeframe needs.  

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Targeting NAVs by PortfolioSample Campus #2

2121

Understanding the Net Asset Value Index

NAV Index =(Replacement Value‐Building Needs)

Replacement ValueX 100

Campus leadership can set different NAV levels for different buildings and portfolios, helping to balance capital 

investments across campus and prioritize project selection

Investment Strategy

100%‐85%

85%‐75%

75%‐60%

Below 60%

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.  Reliability issues are widespread throughout the building.

NAV of Index

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Building Portfolios

Total Identified Needs

$197.0 M

New Construction$36.9 M

Infrastructure & Grounds$27.7 M

Building Needs$132.4 M

Education & General$45.3 M

Under 25 Years Old

$18.6 M 

Over 25 Years Old$26.7 M

Residential$73.6 M

First Year Residences$22.6 M

Upper Class Residences$51.0 M

Auxiliary$13.2 M

PAC Site$0.2 M

Targeting investment to institutional priorities

7 Buildings355,494 GSF

5 Buildings331,140 GSF

11 Buildings639,830 GSF

3 Buildings138,571GSF

10 Buildings504,618 GSF

1 Building55,000 GSF

Sub‐Po

rtfolio

s

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Funding Allocation Methodology Option

40%

50%

60%

70%

80%

90%

100%

110%

Education &General‐ Under 25

Years

Education &General‐ Over25

Years

Residential‐ FirstYear

Residential‐Upperclass

Auxiliary PAC Site

Current NAV Index by Sub‐Portfolio

Sub‐PortfolioNAV

Establishing Target NAV by Portfolio or Sub‐Portfolio

E&G‐Under 25

E&G‐Over 25

Residential‐ First Year

Residential‐Upper Class Auxiliary PAC Site Total

Current NAV 82% 83% 80% 73% 70% 99% 79%

Target NAV 85% 85% 80% 80% 75% 99% 81%

Est. Investment Need to Target NAV $3.4 M $2.7 M ‐ $13.9 M $2.1 M ‐ $22.1 M

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Targeting Investments based on Facility NAV and Value to Program

Sample Campus #3

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Descriptive text goes here

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Min, Max, & Average NAV by Portfolio

0%

20%

40%

60%

80%

100%

120%

Academic (Non‐Research)

Academic(Research)

Dormitory Student Life Athletic Admin/Support Aux. Housing

Min, Max, and Average NAV by Portfolio

Campus Average* = 82%

*Campus average includes Infrastructure & Grounds needs

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NAV Index by BuildingAcademic (Non‐Research)

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Using the NAV Within PortfoliosPortfolio: Academic (Non‐Research)

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Portfolio Average = 88%

Bottom 10%

# of Buildings 6

Investment to Bring Buildings to Portfolio 

Average$7.6 M

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Using the detailed analysis for multi‐year investment planning

40%

50%

60%

70%

80%

90%

100%

4 5 6 7 8 9 10

Build

ing Co

ndition

 (NAV

)

Value of Facility to Program1‐10 scale, 1= low, 10 = high

Net Asset Value vs. Program ValueBy Building

High Program Value, High NAVMaintain & protect

High Program Value, Low NAVRepairs & Space Improvement

Low Program Value, Low NAVEmergency work only

Low Program Value, High NAVFocus on system work, minimal space

Investment strategy and project selection based on facts

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Utilizing a “Transitional” PortfolioSample Campus #4

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Needs by Building Portfolio

Total Project Inventory$2,280 M

New Space$571 M

Building Needs$1,627 M

Transitional Facilities$196 M

Building Renovation

$581 M

Repurpose$40 M

Maintain$812 M

Non‐housing facilities$602 M

Housing facilities$208 M

Site & Infrastructure 

Needs$80.4 M

Transitional Portfolio contains buildings to be demolished or sold

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FY11 Investments by Building Portfolio

20%

17%

34%

2%

0.21%

25%

2%FY11 Building Investments by Portfolio

 Maintain

 Maintain (Housing)

 Building Renovation

 Transitional

 Repurpose

Infrastructure

New Space

Building Portfolio FY11 Investment ($/GSF)

Maintain $3.58

Maintain ( Housing) $4.30

Building Renovation $14.89

Transitional $1.54

Repurpose $1.29

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Bringing it all togetherSample Campus #4

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Descriptive text goes here

Process Summary

• Campus Communication

• Portfolio “Re‐alignment”

• Priority Revision

• Tracking Spending• Communicate Results• Contingency Management 

• Project Impact• Portfolios• Investment Criteria• Financial Alignment•Multi‐year Plan

• Technical Review• Information by System• Integrate Program• Integrate Infrastructure

• Assess Urgency

Project IDProject ID Project SelectionProject Selection

Capital Budget Process

Capital Budget Process

Project ExecutionProject 

Execution

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Sightlines Approach …

•Utilizing trade management and staff in assessment process  •Present material to facilities staff before bringing findings to senior staff or trustee level

• Include supervisors in presentations to institutional senior staff 

Engage the people who know the buildings and 

systems

•Incorporating campus master plans and modernization programs

•Alignment between financial capabilities and facility needs

Build support of Users

•Reporting of all needs to the campus community• Align facility needs to the institution’s financial capacity

Create Transparency

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The Successful Plan Will …

•Understand how underfunding creates backlog• Impact of changing campus age

Articulate the Cause of Backlogs ‐ Catch‐up vs. 

Keep Up

•Comprehensive, credible and flexible• Illustrate operations impact•Benchmarking for context

Communicate a Credible Inventory of Needs

•Building Portfolios reflect institutional strategy• Investment Criteria define the investment outcome•Timeframe – aligns financial capacity to facilities needs

Set Priorities that Create Investment Strategies, Not Picking Projects

•Fact – Never get enough funding• Fact – New things always occur – contingency management is key• Fact – Customer support is important

Measure and Report Performance Annually

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Questions & Discussion