Developing the Capital Plan is Only Half the Battle [ERAPPA 2017]
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Transcript of Developing the Capital Plan is Only Half the Battle [ERAPPA 2017]
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Developing the Capital Plan is Only Half the Battle
Ford Stryker & Kevan Will
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© 2017 Sightlines, LLC. All Rights Reserved.2
Today’s Presenters
➢ Kevan Will; Senior Account Manager, Sightlines➢ 11+ years of tenure at Sightlines
➢ Has worked with over 100 campuses in 27 states➢ Sightlines Operational Lead for The Pennsylvania State University
➢ Graduated from Gettysburg College with a BA in Management
➢ H. Ford Stryker; (Retired as of 6/30/17) Associate Vice President for the Office of Physical Plant, The Pennsylvania Sate University
➢ 20 years of tenure at The Pennsylvania State University➢ 25+ years of service in the Navy as a Civil Engineer Corps Officer
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© 2017 Sightlines, LLC. All Rights Reserved.3
•Introduction to Sightlines
•National Trends in Facilities in Higher Education
•About Penn State
•How Did Penn State Develop a Capital Plan Utilizing “Facilities Intelligence”?
•Executive Takeaways
•Questions & Comments
Agenda
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Introduction to Sightlines
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Leading provider of facilities
intelligence in higher education
helping them to identify ways to use
capital more strategically and identify
opportunities to improve operational
effectiveness and providing them with
tools for strategic planning, analyzing
and benchmarking.
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© 2017 Sightlines, LLC. All Rights Reserved.6
Sightlines by the NumbersRobust Membership includes Colleges, Universities, Consortiums and State Systems
43States+DC
90%Memberretention
rate
360+ROPA
Members
450Colleges &Universities
170New members
since 2013
5Canadianprovinces
Sightlines has advised state systems in:
• Alaska• California• Florida• Hawaii• Maine
• Massachusetts• Minnesota• Mississippi• Missouri• Nebraska• Ohio
• New Hampshire• New Jersey• Pennsylvania• Texas• Washington
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© 2017 Sightlines, LLC. All Rights Reserved.7
We Promote Integrated Campus Stewardship
Facilities intelligence that connects space, capital, and operating policies
Sightlines breaks through the organizational siloes and creates alignment from the “boardroom to the boiler room.”
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© 2017 Sightlines, LLC. All Rights Reserved.8
National Trends in Facilities in Higher Education
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© 2017 Sightlines, LLC. All Rights Reserved.9
2016 State of Facilities in Higher EducationComing Soon: 2017 State of Facilities Report
• Space growing faster than enrollment – with research universities being the exception.
• Construction vintage drives risk profile.• Steady investment levels with continued improvement
in annual capital funding.• Reliance on annual institutional capital growing for
both public and private institutions.• Facilities backlogs continue to rise.
http://www.sightlines.com/insight/state-of-facilities-2016/
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© 2017 Sightlines, LLC. All Rights Reserved.10
Space Growing Faster than Enrollment
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Pe
rce
nt
Ch
ange
Space and Enrollment TrendsNational Average
Space Enrollment
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© 2017 Sightlines, LLC. All Rights Reserved.11
Space and Enrollment Growth – Public vs. Private
0%
1%
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10%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Pe
rce
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ange
Space and Enrollment - Public
0%
1%
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2007 2008 2009 2010 2011 2012 2013 2014 2015
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Space and Enrollment - Private
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© 2017 Sightlines, LLC. All Rights Reserved.12
Space and Enrollment Growth by Constituent Group
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Pe
rce
nt
Ch
ange
Comprehensive Institutions Research Institutions Small Institutions
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© 2017 Sightlines, LLC. All Rights Reserved.13
An Accurate Prediction
“One side effect of this rapid growth has been the creation of anincreasingly large obligation for the future renewal and replacement ofthe physical plant.”
–Rick Biedenwig, 1980
Founder, Pacific Partners Consulting Group
Source: Before the Roof Caves In II: Published with assistance from APPA and Stanford University
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0%
2%
4%
6%
8%
10%
12%
Sightlines Database- Construction Age
Built pre-1951• Durable construction• Older but lasts longer
© 2017 Sightlines, LLC. All Rights Reserved.14
Campus Age Drives Overall Risk Profile
% o
f C
on
stru
cted
Sp
ace
Pre-War Built 1951 - 1975• Lower quality • Needs more repairs
& renovation1975 - 1990• Quick flash
construction• Low quality
components
Built post-1991• Technically complex• Higher quality• More expensive to maintain
or repair
Modern
Post War Complex
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Have We Shifted the Age Profile?
0%
2%
4%
6%
8%
10%
12%
% o
f G
SF
Sightlines Database- Construction Age Sightlines Database- Renovation Age
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© 2017 Sightlines, LLC. All Rights Reserved.16
Steady Investment Levels; Continued Improvement in Annual Capital Funding
$1.12 $1.19 $1.28 $1.21$1.60 $1.67 $1.71 $1.59 $1.73
$3.10
$3.83 $3.88$3.63 $3.09
$3.37 $3.35$2.99
$3.32
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Capital Investment into Existing Space
Annual Capital One-Time Capital Average
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© 2017 Sightlines, LLC. All Rights Reserved.17
Reliance on Annual Institutional Capital Growing for Both Public and Private Institutions
$0.77 $0.93 $1.11 $1.00$1.39 $1.47 $1.49 $1.30 $1.48
$2.51
$3.37$3.66 $4.06 $3.28
$3.56 $3.43
$2.95
$3.39
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Public Institutions
$1.55 $1.53 $1.51 $1.51$1.88 $1.96 $2.01 $1.97 $2.06
$3.83$4.43
$4.19
$3.04$2.84
$3.12 $3.23 $3.05$3.22
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Private Institutions
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© 2017 Sightlines, LLC. All Rights Reserved.18
Facilities Backlogs Continue to Rise
$81.72 $83.42 $87.19 $88.52 $90.73 $93.27 $95.31 $97.56 $100.07
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Backlog $/GSF
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© 2017 Sightlines, LLC. All Rights Reserved.19
Facilities Backlogs Continue to Rise
$0
$20
$40
$60
$80
$100
$120
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Public Institutions
$0
$20
$40
$60
$80
$100
$120
2007 2008 2009 2010 2011 2012 2013 2014 2015
$/G
SF
Private Institutions
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© 2017 Sightlines, LLC. All Rights Reserved.20
About Penn State
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© 2017 Sightlines, LLC. All Rights Reserved.21
Penn State Campus Profile
• University Park (UP) Campus Located in State College, PA
• 45,000 Students at UP• 95,000 Students at all locations• Sightlines Member since 2002
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© 2017 Sightlines, LLC. All Rights Reserved.22
Penn State Campus Profile: All Locations
Type UoM University Park
Campuses Total incl. Hershey & all other locations
Land Acres 7,343 3,042 22,539
Paved Roads Miles 35 28 63
Paved Walkways Miles 60 21 71
# of Buildings Each 940 478 1710
Building Area GSF (Millions) 24.6 8.1 32.1
24 distinct locations in Pennsylvania including a major hospital. Each location is subject to local governance and local support structure.
University Park is almost it’s own city with 2 power plants, it’s own water supply and filtration plant, sewage treatment plant, 4 substations, etc.
394 Man. & Sup. Staff; 957 TS Employees; 101 Temporary TS Employees
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© 2017 Sightlines, LLC. All Rights Reserved.23
How Did Penn State Develop a Capital Plan Utilizing “Facilities Intelligence”?
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© 2017 Sightlines, LLC. All Rights Reserved.24
Before You Begin, Remember to:
• Ensure it is Easy to Understand• Keep Everything at Macro Level•Have Backup Data (Facilities Intelligence)• Forecasted Impacts• Sell the ‘Big Idea’
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© 2017 Sightlines, LLC. All Rights Reserved.25
Two Key Capital Plan Components: Need & Money
• Need:• How much should you spend? • What is Capital – what’s in/what’s out? • Create ‘Keep Up, Catch Up’ model based on annual spending.
• Money:• How much money do you have? • Layer money together based on annual costs. • What can you get from the state? What can you borrow?• Create alternatives - if I spend this, what are the impacts?
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University Capital Plan FY18-19 to FY22-23
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Overview of the University Capital Plan
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Education and General
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Campus Renovation Age Profile
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Capital Renewal Investment Target for Buildings
$-
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
$-
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Average Annual Obligations in
Current University Capital Plan 'Catch Up'
'Keep Up'
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© 2017 Sightlines, LLC. All Rights Reserved.31
Backlog Projections – University Park
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Backlog Projections – Commonwealth Campuses
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Five-Year Capital Uses (Commitments), Schedule 1
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Five-Year Capital Sources, Schedule 2
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Education and General*
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Strategic Philosophy of the University Capital Plan
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Executive Takeaways: Key Steps to Developing a Sound Capital Plan
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1. Keep it at “Macro” Level.
2. Demonstrate Impact of the Plan through Forecasting.
3. Have and Communicate a Consistent Message.
4. Work with Financial Team, All Stakeholders and Decision Makers.
Key Steps to Developing a Sound Capital Plan
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Questions & Discussion
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