Learning Objectives. Learning Objectives. Capital Renewal and Deferred Maintenance. APPA Facilities Institute February 2014

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1 Capital Renewal and Deferred Maintenance APPA Facilities Institute February 2014 Steve Kraal Senior Associate Vice President Campus Planning and Facilities Management The University of Texas at Austin 1 Learning Objectives Developing an Effective CR/DM Program Trust and Credibility -well defined planning process -transparency -technically sound data and analysis Stewardship/Sustainability -maintaining a critical resource -make effective use of funding -managing risk 2 Learning Objectives Develop or Sustain an Effective CR/DM Program Communication Strategy -identify key stakeholders -develop appropriate information Prepare for Success -don t be this dog that chases cars 3 1

2 4 How We Got Here Demographic Profile First cost vs. durability Absence of life cycle funding Competing institutional priorities 5 14,000,000 UT Austin Age Profile 12,000,000 10,000,000 8,000,000 By Decade 6,000,000 Cumulative 4,000,000 2,000,000 0 <

3 Potential Risks Disruption to Normal Activities Reduced Utilization Damage to Facilities (compound effect) Effect on Health and Life Safety Reduction of Asset Value Poor Public Image 7 Context Summary Fairly clear understanding of: Magnitude of the issue Contributing factors Negative impact Has there been a change? 8 Data and Information What data do you need? Building age and size Type of construction Replacement value Cost of CR/DM requirements Initial investment and reinvestment 9 3

4 Data and Information Sources: Annual Financial Report Institutional Research Condition Assessment 10 Definitions Challenges include lack of: Common terminology Consistent use Two Suggestions: Align with standard terminology Make sense to your institution 11 Definitions What Are Your Definitions? -Deferred Maintenance -Regular Maintenance -Capital Renewal -Adaptation -Replacement Value 12 4

5 Assessing Capital Renewal Needs Rule of Thumb based on a percentage of replacement value, primarily a funding model. Predictive modeling assessment of facility condition at the system level using observation combined with statistical analysis. Condition or Deficiency-Based comprehensive physical inspection performed on regular cycles, identifying observed deficiencies. 13 Assessing Capital Renewal Needs Rule of Thumb Predictive modeling Condition Based 14 Rule of Thumb Generally 1.5% to 3% of replacement value Used to establish a funding or operating range. Usually based on a large aggregation of building or facility types. May not apply to small building inventories 15 5

6 Assessing Capital Renewal Needs Rule of Thumb Texas $33.6 Billion EG CCIV (FY11) Predictive 2% of EG CCIV (FY11) modeling $508M MP4 FY11 Expenditures $151.3M Condition % of EG CCIV (FY11) 0.5% Based Top 3 Institutions 1.1% 1.2% 1.9% 16 Assessing Capital Renewal Needs Statistical method of determining or estimating long range capital requirements Focus on primary building systems: -life span -system cost Applied to individual buildings or groups of buildings Predictive modeling Provides, annual, average & total costs Can be used to estimate future costs 17 Predictive Modeling Roofs $6,000, Year Predicted Annual Cost - Roofs $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- 18 6

7 Predicted Modeling - HVAC $50,000, Year Predicted Annual Cost - HVAC $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 19 Assessing Capital Renewal Needs systematically evaluating an organization s capital assets in order to identify repair, renewal, or replacement needs that will preserve their ability to support the activities they were assigned to serve. 20 Why Do Condition Assessments? It s not what I know that keeps me awake, its what I don t know What you re telling me can t possibly be true, everything was fine a few years ago Everything is broken and must be replaced right away 21 7

8 Condition Assessment- General Outcomes Primary focus is on providing objective data on current facility condition Generally groups data into categories, i.e. priorities and systems Establishes a benchmark to evaluate changes in condition over time Can be used to project impact of spending levels on future condition 22 Condition Assessment-Outcomes Possible Requirement Organization Priority establishes level of urgency Systems primary building systems; HVAC, plumbing, electrical, conveying Categories associated with building function/operation; life safety, ADA, energy. 23 Outcomes of Assessment Data 24 8

9 Comparison of Approaches The University of Texas at Austin cost to maintain current facility condition Approach Outcome $M/year Percentage of Value at 2.5% $55M Predictive/Life Cycle Condition Assessment 20 yrs. $50M $42M 25 FCI Discussion Facility Condition Index CR/DM Backlog Replacement Value Example: $100 Million Backlog =.10 FCI 1 Billion Replacement ValueR/DM backlog = Use of FCI at UT Austin FCI groups of buildings BCI individual buildings SCI specific building system 27 9

10 Using Assessment Data Changes in Priority Using Assessment Data Changes in Requirement Cost by System 29 Prioritizing Objectives Identify critical areas Support university s strategy Consistent, repeatable, and defendable decisions Rank relative to each other Allow ranking within and between project selection Encourage bottom-up initiation Incorporate wisdom of others Easy to communicate 30 10

11 Using Assessment Data Reinvestment Categories: A Allow to Age Gracefully BCI =.0 to.15 B Bandage as Needed BCI =.16 to.40 C Can Be Saved BCI =.41 to.70 D Do a Capital Project BCI > Performance Metrics Reinvestment Categories 32 Performance Metrics Fix vs. Patch 33 11

12 Performance Metrics % of Buildings with HVAC over 25 Years 34 Key Stakeholders Academic/Research -Provost -Deans -Faculty Finance/Budget Office Governing Board -Institutional -State-wide 35 Communication Strategies Consistent message Focused on specific audiences Identify how they benefit Keep it simple, bumper sticker 36 12

13 Building A Successful Program Manage Your Reality Address Planning Challenges Develop Trust and Credibility Focus on Stewardship/Sustainability Establish Good Communication Plan For Success 37 Be This Dog That Caught The Car 38 Capital Renewal and Deferred Maintenance Questions, Comments, Observations Sign-in Sheet & Evaluations 39 13