FY2013 ROPA Presentation University of Alaska System A vocabulary - - PowerPoint PPT Presentation

FY2013 ROPA Presentation

University of Alaska System

A vocabulary for measurement

The Return on Physical Assets – ROPASM

Asset Value Change The annual investment needed to ensure buildings will properly perform and reach their useful life Recurring Capital

Annual Stewardship

The accumulated backlog of repair/ modernization needs and the resource capacity to correct them One-Time Capital

Asset Reinvestment

The effectiveness of the facilities

• perating budget,

staffing, supervision and energy management

Operational Effectiveness

The measure of service process, the maintenance quality

• f space and

systems, and the customers opinion

• f service delivery

Service

Operations Success

System Comparisons

Connecticut Maine Mississippi Missouri New Hampshire Oregon Pennsylvania

Summary of main points

University of Alaska System

• A combination of factors make both operational and capital management of facilities at UA

System more difficult:

• Complex building systems – impact maintenance coverage, skill mix, and cost
• High building intensity – more buildings to tend to and different types, also impacts

maintenance coverage, skill mix, and costs

• High cost – regional costs means dollars don’t go as far as they do for peers

Campus & regional characteristics are demanding

• Facilities’ operating budget has grown more quickly than peers
• UA System’s maintenance and custodial departments are covering more buildings than peers

and has increased coverage by over 15% in the last 3 years

• Customer satisfaction survey highlights improvements & opportunities

Higher levels of daily service compensate for campus demands

• Stronger investments into existing facilities has primarily come from one-time sources of

capital and has helped narrow the gap between targets

• Upcoming renewal needs are expected to be greater than the historical recurring capital levels,

furthering the importance of continued campus reinvestment Rising investments, closing the target gap

Majority of space in high-need category

25-50 Years 51%

* Life cycle costs based on the average tech 3 academic space.

Over 50 9% Under 10 19%

$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50

$/GSF

Annual Life Cycle Cash Flow Amortization of Life Cycle Expenses

10 – 25 Years 21% Average Life Cycle Costs – Standard Academic Building

Total capital spending

Heavier recent investment in new construction

$0.0 $50.0 $100.0 $150.0 $200.0 $250.0 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Millions

Total Capital Spending*

Existing Space New Space/Non-Facilities

$98M

NAV index steadying with increased investment

System is nearing Systemic Renovation Stage

Capital Upkeep Stage: Primarily new or recently renovated buildings with minor capital needs; “You pick the projects” Repair & Maintain Stage: Buildings beginning to show their age, may require more significant investment on a case-by-case basis Systemic Renovation Stage: Buildings require more significant repairs and large capital infusions; “The projects pick you” Transitional/Gut Renovation/Demo Stage: Major buildings components are in jeopardy of

• failure. Reliability issues are widespread

throughout the building

76% 76% 73% 75% 74% 72% 72% 72% 76% 75% 74% 73% 71% 70% 69% 68% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2006 2007 2008 2009 2010 2011 2012 2013

NAV Index

• Repl. Value – Backlog
• Repl. Value

NAV =

UA System NAV UA System NAV w/o AR

Without asset reinvestment investments, NAV would decrease by 8% and over $607M would be added to backlog within 7 years

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Millions

UA System ROPA+ Prediction Model

10 years

ROPA+ prediction model

10 year total renewal need: $235.7M; annual deferral

Low Risk (Space Renewal) Medium Risk (Envelope) High Risk (Mechanical) *B-Line does not reflect existing deferred maintenance, utility & grounds infrastructure needs or upcoming modernization need $23.6M avg.

Key Takeaway #2

The UA System already has an estimated $1.13B in deferred maintenance, infrastructure, and modernization backlog:

• $425M of deferred maintenance identified through ROPA+ analysis
• Estimated $708M backlog in campus infrastructure and modernization

Over the past 8 years, the UA System has invested an average of $35.5M into the existing

• facilities. If the historic investment trend continues over the next 10 years the total expected

investment would be $355M, roughly $778M less than the existing backlog of deferred maintenance and modernization need.

$425 $355 $708 $778

$- $200 $400 $600 $800 $1,000 $1,200 Backlog Future Reinvestment $ in Millions

10-Year Average Reinvestment Spending Remaining Backlog with Sustained Reinvestment Spending

Key Takeaway #3

If reinvestment investments increased by 15% over the next ten years, UA system would be able to invest approximately $408M into deferred maintenance, infrastructure, and modernization needs. Increase in overall investment results to a rising NAV by 6%.

72% 72% 73% 74% 74% 75% 76% 76% 77% 78% 78% 20%

30% 40% 50% 60% 70% 80% 90% 100%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

$1,133 $874

• $53

+$149

• $355

$- $200 $400 $600 $800 $1,000 $1,200 FY13 Backlog 10-Year Reinvestment Spending Additional Deferral FY23 Projected Backlog

$ in Millions

10 year investment scenario Projected NAV

Additional Investment by 15%

Key Takeaway #5

Continue to communicate strategic plans, such as the Investment Quadrant Chart, University Building Fund, and Sustainability Funding Plan to each campus to aid in projecting upcoming needs and capital planning.

Key Takeaway #6

Sample Performance Dashboards Goal

Capital Investment

(% Invested in Envelope/Mechanical)

+5% Change in Energy Consumption

(% Change in total BTU’s/GSF)

• 5%

Operating Budget

(% difference budget vs. actual)

+/- 1% Planned Maintenance

(% of facilities operating budget)

8%

Identify key metrics for monitoring performance toward future goals. The upcoming detailed analysis of the customer satisfaction survey could identify some areas for improvement.