Oregon State University E&G Presenters: Peter Reeves & Chad Hancock June 2017 University of Nebraska Medical Center University of Nebraska Omaha University of New Brunswick University of New Hampshire University of New Haven University of New Mexico University of North Texas University of Northern Iowa University of Notre Dame 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 Health Science Center University of Tennessee, Knoxville University of Texas at Dallas University of the Sciences in Philadelphia 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 Health Science Center West Virginia Institute of Technology West Virginia School ofosteopathic Medicine West Virginia State University West Virginia University Western Connecticut State University Western Oregon University Westfield State University Wheaton College Widener University
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* 34 Flagship State Universities 14 of the 14 Big 10 Institutions 9 of the 12 Ivy Plus Institutions Sightlines is proud to announce that: 450 colleges and universities are Sightlines clients including over 325 ROPA members. Consistently over 90% member retention rate We have clients in over 40 states, the District of Columbia and four Canadian provinces More than 125 new institutions became Sightlines members since 2013 Sightlines advises state systems in: Alaska California Florida Hawaii Maine Massachusetts Minnesota Mississippi Missouri Nebraska New Hampshire New Jersey Pennsylvania Texas * U.S. News 2016 Rankings 2
Key Connections Across Facilities Oregon State Observations: Space Increased student density and a large amount of older space (over 50 years) increase the future capital and operational costs Capital Mix of capital spending (emphasis on new construction versus existing space) and type of spending (less DM versus major renovation/program improvement) have resulted in a growing backlog of needs Operations Challenges in the space profile (density and age) and capital profile (growing backlog) are further compounded by limited operational resources 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 4
Peer Institutions ROPA Analysis includes E&G space totaling 5.2M GSF Peer Institution Colorado State University Iowa State University The Ohio State University The Pennsylvania State University The University of Arizona The University of Tennessee University of Colorado - Boulder University of Florida University of Illinois - Urbana/Champaign University of Nebraska - Lincoln University of Oregon University of Utah University of Washington Comparative Considerations Size, technical complexity, region, geographic location, and setting are all factors included in the selection of peer institutions 5
% of GSF Putting Your Campus Building Age in Context Pre-War Post-War Modern Complex The campus age drives the overall risk profile Built before 1951 Durable construction Older but typically lasts longer Built from 1951 to 1975 Lower-quality construction Already needing more repairs and renovations Built from 1976 to 1990 Quick-flash construction Low-quality building components Built in 1991 and newer Technically complex spaces Higher-quality, more expensive to maintain & repair 20% Pre-War Post-War Modern Complex Percent of Total Space 40% Percent of Total Space 27% 15% 10% 5% 0% Sightlines Database- Construction Age Peer Contruction Age APLU OSU - E&G Construction 6
Student FTE Enrollment continues to grow FTE/100K GSF A B C D E F G H I J OSU K L M 30,000 Student Enrollment 600 Density Factor 25,000 500 20,000 400 15,000 300 10,000 200 5,000 100 0 0 Average 7
GSF / Student Program Space Less program space compared to peers 300 Program Space per Student 250 200 150 100 50 0 A B C D E F G H I J K OSU L M 8
GSF / Student Research Space A B C D E F G H I J K OSU L M GSF / Faculty FTE A B C D E F G H I J K OSU L M Research Space Per Student Research Space per Faculty FTE 300 1,400 250 1,200 200 1,000 800 150 600 100 400 50 200 0 0 9
Buildings / 1,000,000 GSF GSF Smaller Buildings are Also the Oldest 60 Building Intensity 50,000 45,000 OSU Building Size by Age Category 50 40,000 40 35,000 30,000 30 25,000 20,000 20 15,000 10 10,000 5,000 0 0 # of Bldgs. 15 16 59 141 10
Title Similar age distribution compared to peers Recent renovations contribute to a younger age profile 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 60% 22% 8% Campus Age by Category Construction Age High Risk 32% 16% 10% 10% 42% 45% High Risk High Risk 16% 20% 19% Renovation Age 31% High Risk 32% 22% 15% OSU Peers OSU Peers Buildings over 50 Life cycles of major building components are past due. Failures are possible. Core modernization cycles are missed. Highest risk Buildings 25 to 50 Major envelope and mechanical life cycles come due. Functional obsolescence prevalent. Higher Risk Buildings 10 to 25 Short life-cycle needs; primarily space renewal. Medium Risk Buildings Under 10 Little work. Honeymoon period. Low Risk Under 10 10 to 25 25 to 50 Over 50 11
Years Older Despite Renovations at OSU 70 Construction vs. Renovation Age 60 50 40 30 20 10 0 3 10 10 14 4 6 9 2 5 14 10 10 3 21 A OSU B C D E F G H I J K L M Construction Age Renovation Age 10 =Average 12
Future Age Projection Preparing for future need on campus 00% 90% 80% Campus Age by Category 45% 49% 52% 53% Over 50 Buildings over 50 Life cycles of major building components are past due. Failures are possible. Core modernization cycles are missed. Highest risk 70% Buildings 25 to 50 60% 50% 40% 30% 20% 16% 20% 15% 19% 23% 28% 25-50 10-25 Major envelope and mechanical life cycles come due. Functional obsolescence prevalent. Higher Risk Buildings 10 to 25 Short life-cycle needs; primarily space renewal. Medium Risk 10% 0% 24% 19% 17% 19% 2% 2016 2020 2025 2030 Under 10 Buildings Under 10 Little work. Honeymoon period. Low Risk Under 10 10 to 25 25 to 50 Over 50 13
Future Age Projection Preparing for future need on campus 00% 90% 80% Campus Age by Category 45% 42% 43% 40% Over 50 Buildings over 50 Life cycles of major building components are past due. Failures are possible. Core modernization cycles are missed. Highest risk 70% Buildings 25 to 50 60% 50% 16% 14% 21% 26% 25-50 Major envelope and mechanical life cycles come due. Functional obsolescence prevalent. Higher Risk 40% 30% 20% 20% 18% 22% 26% 10-25 Buildings 10 to 25 Short life-cycle needs; primarily space renewal. Medium Risk 10% 0% 26% 19% 14% 8% 2016 2020 2025 2030 Under 10 10 to 25 25 to 50 Over 50 *Age projection inclusive of OSU 10-year Capital Forecast Under 10 Buildings Under 10 Little work. Honeymoon period. Low Risk 14
Asset Value Change
$ in Millions Total E&G Capital Investment Large investments into new space over last 5 years $100.0 $90.0 $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 $30M of excluded project spending in FY13 Sports Performance Center & Life Sciences Building Capital Investment 2012 2013 2014 2015 2016 New Space Spending Learning Innovation Center Austin Hall Johnson Hall Linus Pauling Existing Space Infrastructure New Space Non-Facilities 16
$ in Millions Investment into Existing Space & Infrastructure Seismic upgrades lead to higher safety/code spending Axis Changed from Previous Slide $25.0 $20.0 Capital Investment into Existing Space Spending Mix FY12-16 $15.0 11% 10% 33% $10.0 $5.0 25% 21% $0.0 2012 2013 2014 2015 2016 Space Renewal Building Systems Safety/Code Building Envelope Infrastructure 17
E&G Investment Compared to Peers Peers outspend OSU in recent years Oregon State Peers 18
$ in Millions E&G Annual Investment Target Annual Funding Target: $31M $70.0 FY16 Annual Investment Target Replacement Value: $2.2B $60.0 $50.0 $40.0 $34.6 Functional obsolescence drives investment prior to life cycles & discounts the annual investment target $30.0 $20.0 $65.2 $12.1 $10.0 $25.2 $18.9 $0.0 3% Replacement Value Life Cycle Need Annual Investment Target Envelope/Mechanical Space/Program 19
$ in Millions Chasing a Moving Target $80 Total Capital Investment vs. Funding Target $70 Increasing Net Asset Value $60 $50 $40 Lowering Risk Profile $30 Increasing Backlog & Risk $20 $10 $0 2012 2013 2014 2015 2016 Annual Stewardship Asset Reinvestment Annual Investment Target Life Cycle Need 20
Dollar per GSF Total Dollars (Millions) Asset Reinvestment Backlog Estimates Asset Reinvestment Estimates Sightlines generated estimates for OSU s backlog are between 15 23% above the peer average $160 $140 $599 M $643 M $/GSF (left axis) Total Dollars (right axis) $700 $600 $120 $100 $80 $60 $114.68 $123.09 $100.50 $500 $400 $300 $40 $200 $20 $100 $0 Building Age Estimate Capital Spending Estimate Peer Average Building Age Estimate Considers the age and function of each building and compares that to the average need of similar buildings in Sightlines database $- Capital Spending Estimate Compares historical spending to the annual investment need established by Sightlines and extrapolates to establish campus backlog 21
Dollar per GSF Asset Reinvestment Backlog Estimates $160 $140 Asset Reinvestment Need Over time Using the Building Age Estimate and historical spending trends, OSU s backlog is estimated to have grown 14% versus peer s at 9% Oregon State Peers $120 $100 $80 $96.65 $102.57 14% $106.52 $109.24 $114.69 $91.80 $94.01 9% $95.92 $99.87 $100.50 $60 $40 $20 $0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 $/GSF (left axis) 22
Setting Priorities Not all buildings are created equal Program Value Program Growth Operational Demands Space Utilization 23
24 Operations Success
O&M Expenditures as a % of Institutional Operating Operations and Maintenance of Plant Expenses O&M Expense % of Institutional Budget FY16 vs Peers $40,000,000 4.00% 7% $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 6% 5% 4% 3% 2% 1% 0% % of Institution Operating Expenses Peer Range 25
Facilities Operating Expenditures vs. Peers Oregon State University Peers 26
FY16 Facilities Operating Expenditures vs. Peers OSU has the lowest operating budget of the peer group * Institutions arranged by Tech Rating 27
Maintenance operations General Repair/Impression Inspection Score 1 (Poor) 5 (Excellent) Institutions arranged by Tech Rating 28
$/GSF GSF/FTE FTE/Supervisor Custodial Operations High density on campus 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - Custodial Supervision 35 30 25 20 15 10 5 - Custodial Supervision $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 Custodial Materials 1 (Poor) Cleanliness Inspection Score 5 (Excellent) Institutions arranged by Density Factor 29
$/Acre Acre/FTE Grounds Metrics FTE/Super 80 70 60 Grounds Staffing 40 35 30 Grounds Supervision 50 25 40 20 30 15 20 10 10 5 - A B C D E F G H I OSU J K L - $1,400 Grounds Materials $1,200 $1,000 $800 Grounds Inspection Score $600 $400 $200 $0 A B C D E F G H I OSU J K L 1 (Poor) 5 (Excellent) Institutions arranged by Grounds Intensity 30
Executive Takeaways Space Capital Strategically adding new space may be required to manage campus density In addition, a plan to address older space (through investment or divestment/demo) will be needed to managing the increasing future capital and operational costs Increasing DM funding will allow for capital needs to be kept up with. This is especially true for younger spaces as they age Priorities must be set on where to target investment. Alignment of investment with institutional priorities is a must. Examples: Student success, faculty success, research, etc. Operations Given the limited resources and space/capital challenges, operational performance is admirable, but likely unsustainable without increased resources In addition to aligning investment decisions with institutional priorities, also consider those investments that will reduce operational demands/costs 31
32 Questions & Discussion