Mississippi Institutions of Higher Learning

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1 Mississippi Institutions of Higher Learning Presenter: Peter Reeves June 18, 2014 University of Oregon University of Pennsylvania University of Redlands University of Rhode Island University of Rochester University of San Diego University of San Francisco University of Southern Maine University of Southern Mississippi University of St. Thomas University of Tennessee, Knoxville University of Texas at Dallas University of the Pacific University of the Sciences in Philadelphia University of Toledo University of Utah University of Vermont Vanderbilt University Virginia Commonwealth University Virginia Department of General Services Wagner College Wake Forest University Washburn University Washington University in St. Louis Wellesley College Wesleyan University West Chester University West Liberty University West Virginia Institute of Technology West Virginia School of Osteopathic Medicine West Virginia State University West Virginia University Western Connecticut State University Western Oregon University Westfield State University Wheaton College Widener University Williams College Williston Northampton School Worcester Polytechnic Institute Worcester State University Xavier University Yale University Yeshiva University

2 Who Partners with Sightlines? Robust membership includes colleges, universities, consortiums and state systems Serving the Nation s Leading Institutions: 70% of the Top 20 Colleges* 75% of the Top 20 Universities* 33 Flagship State Universities 13 of the 14 Big 10 Institutions 9 of the 12 Ivy Plus Institutions 7 of 12 Selective Liberal Arts Colleges * U.S. News Rankings Sightlines is proud to announce that: 450 colleges and universities are Sightlines clients including over 325 ROPA members. 93% of ROPA members renewed in 2014 We have clients in 42 states, the District of Columbia and four Canadian provinces More than 100 new institutions became Sightlines members since 2013 Sightlines advises state systems in: Alaska California Connecticut Hawaii Maine Massachusetts Minnesota Mississippi Missouri Nebraska New Hampshire New Jersey Pennsylvania Texas West Virginia 2

3 A vocabulary for measurement The Return on Physical Assets ROPA SM The annual investment needed to ensure buildings will properly perform and reach their useful life Keep-Up Costs The accumulation of repair and modernization needs and the definition of resource capacity to correct them Catch-Up Costs The effectiveness of the facilities operating budget, staffing, supervision, and energy management The measure of service process, the maintenance quality of space and systems, and the customers opinion of service delivery Annual Stewardship Asset Reinvestment Operational Effectiveness Service Asset Value Change Operations Success 3

4 Progress Since 2011 > Through a combination of new construction, renovation, and demolition, the IHL has achieved a balanced age profile > Both E&G and Housing have reduced the average age of buildings meaningfully over the last 8 years > Increased capital investment has closed the gap to peers systems and slowed the rate of backlog growth > Despite having fewer resources than peer systems, operational performance across the IHL has shown improvement in both efficiency and effectiveness 4

5 5 Space Profile Driver of Challenges and Opportunities

6 % of Constructed Space Putting Your System Building Age in Context Pre-War Post-War Modern Complex The system age drives the overall risk profile Built before 1951 Durable construction Older but typically lasts longer Built between 1951 and 1975 Lower-quality construction Already needing more repairs and renovations Built between 1975 and 1990 Quick-flash construction Low-quality building components Built in 1991 and newer Technically complex spaces Higher-quality, more expensive to maintain & repair 25% Pre-War Post-War Modern Complex Percent of Total Space 40% Percent of Total Space 27% 20% 15% 10% 5% 0% Sightlines Database- Construction Age IHL- E&G IHL- Housing 6

7 Millions Total Capital Investment Millions Total Capital Investment (E&G) Total Capital Investment (Housing) $180 $180 $160 $140 35% $160 $140 18% $120 65% $120 82% $100 $100 $80 $80 $60 $60 $40 $40 $20 $20 $0 $0 7

8 Percent of Space Over 25 Investments Have Resulted in Younger Campuses 80% MS IHL Space over 25 years old 70% 60% 50% 40% 30% 56% 55% 53% 53% 53% 49% 48% 48% 68% 70% 68% 59% 54% 48% 39% 38% 20% 10% 0% E&G Housing 8

9 IHL has less space over 25 than peers Percent of Space Over % 90% FY14 IHL vs. Peers Space Over 25 80% 70% 60% 50% 40% 30% 20% 10% 0% A B IHL C D E F G H I J Space over 25 E&G Avg 9

10 Age Housing Space Younger Than E&G Space 90 FY14 E&G vs. Housing Renovation Age OLE MISS JSU UMMC ASU MSU MVSU DSU USM MUW JSU MSU ASU OLE MISS DSU USM MVSU MUW Renovation Age (E&G) Renovation Age (Housing) 10

11 IHL Density Factor vs. Other Systems Users/100,000 Sq Ft FY14 IHL Density Factor vs Peers - A B C D IHL E F G H I J Density Factor Peer Avg 11

12 Program and Residential Space GSF/Students 250 IHL Educational vs Residential Space Educational Space per Student Residential Space Per Student Peer System Average 12

13 Variation Between Campus Density Users/100,000 GSF Density Factor MVSU MUW DSU ASU OLE MISS UMMC JSU USM MSU Density Campuses Avg 13

14 Capital Investments Recent trends improve IHL s position 14

15 Total $/GSF Total $/GSF IHL Spending Closing the Gap to Peer Systems $7 IHL Total Spending, Existing Space $7 Peers Total Spending, Existing Space $6 $6 $5 $5 $4 $4 $3 $3 $2 $2 $1 $1 $0 $ Annual Stewardship $/GSF Asset Reinvestment $/GSF Average 15

16 Millions Investments Reaching Target in Recent Years Includes only the investment in existing facilities $250.0 Total Capital Investment vs. Funding Target Increasing Net Asset Value $200.0 Lowering Risk Profile $150.0 $100.0 $50.0 Increasing Backlog & Risk $ Annual Stewardship Asset Reinvestment Annual Investment Target Life Cycle Need 16

17 Millions Millions E&G and Housing Differ in Approach Includes only the investment in existing facilities $160 Total Capital Investment vs. Funding Target (E&G) Increasing Net Asset Value $60 Total Capital Investment vs. Funding Target (Housing) Increasing Net Asset Value $140 $50 $120 $100 Lowering Risk Profile $40 Lowering Risk Profile $80 $30 $60 Increasing Backlog & Risk $20 Increasing Backlog & Risk $40 $20 $10 $ $

18 Total Dollars(Billions) Significant Growth in Total Backlog IHL E&G backlog over $1 billion and is growing $2.5 E&G IHL Total Asset Reinvestment Backlog Housing $2.0 $1.5 30% $1.0 $0.5 $1.31 $ % $0.0 $0.35 $ $/GSF $74 $89 $/GSF $60 $81 Sightlines System Average ($/GSF): $96 / GSF

19 19 Capital Renewal Understanding the upcoming 10 Year Capital Needs

20 Total Dollars (Millions) MS IHL 10 Year Capital Needs $2,000 Total 10 Year Capital Needs $1,800 $1,600 $1,400 $624 Infrastructure & Modernization Need Estimated based on building function and age, against a Sightlines database of needs. $1,200 $1,000 $800 $600 $400 $200 $0 $749 $387 Asset Reinvestment Need Renewal Needs: Life cycle needs coming due between Current Needs: The subsystem has already failed The subsystem is functioning with substantial degradation of efficiency or performing at increased cost

21 Total Dollars (Millions) Projecting the Investment Shortfall Total Dollars (Millions) $2,000 $1,800 $1,600 Asset Reinvestment Need $300 $ Year Capital Forecast Historical funding levels will NOT address all the next over the next 10 years. Prioritizing buildings needs is critical $1,400 $624 $200 $1,200 $1,000 $150 $800 $600 $749 $100 $400 $909 $50 $200 $387 $0 Asset Reinvestment Need Projected Investment $0 Current Need Renewal Need Modernization & Infrastructure Projected Investment 21

22 Total Dollars (Millions) Prioritizing helps address highest risk needs Total Dollars (Millions) $2,000 Asset Reinvestment Need $ Year Capital Forecast $1,800 $1,600 $1,400 $624 $250 $200 While the needs are substantial, Historical funding levels will address the Immediate needs and 70% of the renewal needs over the next 10 years. $1,200 $1,000 $150 $800 $600 $749 $100 $400 $909 $50 $200 $387 $0 Asset Reinvestment Need Projected Investment $0 Current Need Renewal Need Modernization & Infrastructure Projected Investment 22

23 23 Operational Effectiveness Highlighting efficiencies that have been observed over the last 3 years

24 $/GSF Operating Expenditures: Investment Remains Below Peers $6.0 IHL FY14 Actual Expenditures $/GSF Peers $5.0 $4.0 $3.0 $2.0 $1.0 $ Daily Service PM Average 24

25 GSF/FTE General Repair Inspection Score Acres/FTE Grounds Inspection Score Operational Efficiencies Realized Since 2011 Maintenance Staffing Grounds Staffing 120,000 IHL Peers 5 60 IHL Peers , , , , , Maintenance Staffing Average Average General Repair Inspection Score Grounds Staffing Average Average Grounds Inspection Score 25

26 Energy Consumption BTU/GSF 140,000 Energy Consumption 120, ,000 80,000 60,000 40,000 20, Fossil BTU Per GSF Electric BTU Per GSF Average 26

27 Opportunities > Variations in each campus space profile require a customized approach to funding capital needs across the system. A successful approach will: > Develop a catch-up strategy to address older campuses to address significant accumulated needs. > Maintain and grow annual capital funding to younger campuses, slowing the growth of backlog. > Capital Renewal provides the IHL with a tool to help understand and effectively target future building needs > Project Selection will be crucial to maximizing the impact of the resources that the IHL campuses have. > Target high risk immediate needs to minimize operational demands and service interruptions > Develop portfolios of buildings to identify and potentially divest of non core assets 27

28 Questions & Discussion Peter Reeves Associate Director; Member Services

29 Peer Systems System Comparison Group Connecticut State Colleges & Universities Massachusetts State Colleges and Universities Pennsylvania State System of Higher Education Rutgers University Campuses University of Alaska System University of Maine System University of Massachusetts System University of Missouri System University System of New Hampshire West Virginia Higher Education Policy Commission Comparative Considerations Size, technical complexity, region, geographic location, and setting are all factors included in the selection of peer institutions 29

30 Appendix #1: Space Profile

31 IHL slightly younger than peers Age FY14 IHL Renovation Age vs Peers A B C D IHL E F G H I J Weighted Renovation Age Peer Avg 31

32 Campus Age Profile % of Total Campus GSF 100% 90% 80% 70% Campus Age by Category 6% 7% 12% 20% 19% 19% 29% 30% 21% 34% 25% 20% 51% 48% 60% 37% 23% 45% 50% 26% 40% 37% 30% 28% 18% 20% 26% 30% 20% 10% 39% 36% 22% 26% 26% 30% 18% 13% 17% 17% 2% 24% 0% OLE MISS JSU UMMC MSU ASU USM DSU MUW MVSU Under to to 50 Over 50 **Ordered by increasing space over 25 32

33 IHL less dense than peers Users/100,000 Sq Ft 450 Density Factor Density Factor (IHL) Density Factor (Peers) Average 33

34 Appendix #2: Capital and Backlog 34

35 $ in Millions Defining an Annual Investment Target $ FY14 Annual Investment Target $ $ $124.9 Functional obsolescence drives investment prior to life cycles & discounts the annual investment target $ $230.7 $43.7 $50.00 $91.3 $68.5 $0.00 3% Replacement Value Life Cycle Need Annual Investment Target Envelope/Mechanical Replacement Value: $7.7B Space/Program 35

36 $ in Millions Defining an Annual Investment Target $ in Millions $180 FY14 Annual Investment Target (E&G) $180 FY14 Annual Investment Target (Housing) $160 $160 $140 $140 $120 $100 $87.4 $120 $100 $80 $163.1 $80 $60 $30.6 $60 $40 $20 $0 3% Replacement Value $65.3 Life Cycle Need $49.0 Annual Investment Target Envelope/Mechanical Space/Program Replacement Value: $5.4B $40 $20 $0 $50.9 3% Replacement Value $30.3 $10.6 $19.3 $14.5 Life Cycle Need Envelope/Mechanical Annual Investment Target Space/Program Replacement Value: $1.7B 36

37 Total Dollars(Billions) Significant Growth in Total Backlog IHL E&G backlog over $1 billion and is growing $1.8 $1.6 E&G 30% IHL Backlog Housing $1.4 $1.2 $1.0 $0.8 $0.6 $1.31 $1.38 $1.44 $1.51 $1.58 $1.65 $1.68 $ % $0.4 $0.2 $0.35 $0.36 $0.38 $0.41 $0.44 $0.46 $0.47 $0.50 $ $/GSF $74 $74 $77 $81 $84 $86 $87 $89 $60 $64 $67 $64 $68 $75 $75 $81

38 IHL backlog less than peers $/GSF $180 $160 $140 $120 $100 $80 $60 $40 $20 FY14 IHL Backlog vs Peers $0 A B C IHL D E F G H I J Backlog $/GSF Peer Avg 38

39 Appendix #3: Capital Renewal 39

40 Capital Renewal: Predictive Investment Model Total Dollars (Millions) Total Dollars (Millions) $2,000 Asset Reinvestment Need $ Year Capital Forecast $1,800 $1,600 $200 $1,400 $624 $1,200 $150 $1,000 $800 $749 $100 $600 $400 $50 $200 $0 $387 Asset Reinvestment Need $0 Current Need Renewal Need Modernization & Infrastructure 40

41 Capital Renewal: Predictive Investment Model Total Dollars (Millions) Total Dollars (Millions) $2,000 Asset Reinvestment Need $ Year Capital Forecast $1,800 $1,600 $200 $1,400 $1,200 $150 $1,000 $800 $749 $100 $600 $400 $50 $200 $387 $0 Asset Reinvestment Need $0 Current Need Renewal Need 41

42 Capital Renewal: Predictive Investment Model Total Dollars (Millions) $2,000 $1,800 $1,600 $1,400 Asset Reinvestment Need Current Need Breakdown Roof 3% Space 6% Electrical 5% Envelope 4% $1,200 $1,000 Plumbing 17% Fire Systems 15% $800 $600 $749 Mechanical 1% $400 $200 $0 $387 Asset Reinvestment Need HVAC 49% 42

43 Total Dollars (Millions) Potential for Significant Growth $1,200 Projected Growth of Current Need with No Investment $1,000 $800 $600 $1,114 $400 $200 $365 $0 Current Needs Current Need, no investment 43

44 MS IHL 10 Year Needs By Campus Dollars / GSF Dollars / GSF $90 E&G 10 Year Investment Model By Campus ($/GSF) $90 Housing 10 Year Investment Model By Campus ($/GSF) $80 $70 $60 $50 $40 $30 $20 $10 $0 $80 $70 $60 $50 $40 $30 $20 $10 $0 Current Need Arrayed in increasing age Renewal Need Current Need Renewal Need 44

45 45 Appendix #4: Operations

46 GSF/FTE General Repair Inspection Score GSF/FTE Maintenance Coverage Maintenance Staffing Maintenance Staffing FY14 120,000 IHL Peers 5 160, ,000 80, , , , ,000 40,000 20, ,000 60,000 40,000 20,000 0 Maintenance Staffing Average Average General Repair Inspection Score Maintenance Staffing Institutions Ordered By: Tech Rating Average 46

47 GSF/FTE Custodial Coverage Cleanliness Inspection Score GSF/FTE Custodial Staffing Custodial Staffing FY14 60,000 IHL Peers 5 60, , ,000 40, , ,000 20,000 10, ,000 20,000 10,000 0 Custodial Staffing Average Average Cleanliness Inspection Score **Excluding UMMC from Coverage Custodial Staffing Average Institutions Ordered By: Density Factor 47

48 Acres/FTE Grounds Coverage Grounds Inspection Score Acres/FTE 60 IHL Grounds Staffing Peers 5 60 Grounds Staffing FY Grounds Staffing Average Average Grounds Inspection Score Grounds Staffing Average 48

49 Energy Consumption BTU/GSF BTU/GSF 140,000 Energy Consumption 350, , , , ,000 80, ,000 60, ,000 40, ,000 20,000 50,000 0 MVSU ASU MUW OLE MISS MSU DSU USM JSU Fossil BTU Per GSF Electric BTU Per GSF Average **Ordered by Technical complexity 0 UMMC HSC Peers 49