NACUBO

My NacuboWhy Join: Benefits of Membership

E-mail:   Password:   

 Remember Me? | Forgot password? | Need an online account?

Business Officer Magazine
Loading

Flagship Focuses on Failing Facilities

By Juanita Holler

The University of Massachusetts Amherst (UMass) is the flagship public research university in Massachusetts with 27,000 students, more than 11 million gross square feet of space, and 330 buildings. In 2005, university finance and facilities leadership began working to better understand the factors that were driving very high levels of deferred maintenance and the associated risks to the university mission, faculty, and students.

The findings were more significant than anticipated, even to those who have lived with campus facilities deterioration for years:

  • Far too many of our campus facilities were near the critical life-cycle state. With 42 years as the average age of our buildings, much of the campus would cross the 50-year mark during the current decade. Adding to the problem, 13 percent of the building inventory was between 80 and 160 years old.
  • Limited capital investment and a heavy reliance on diminishing state capital funds had led to high rates of maintenance and facilities deferral and an asset reinvestment backlog of nearly $2 billion.
  • Capital funding that was appropriated was weighted toward investment in space renewal, despite major problems with building systems, envelope, and infrastructure.
  • Important and highly used classroom and research buildings were deteriorating, driving high operational expenses because of significant-repair work orders and high energy consumption.
  • Space demands made it difficult to justify demolition of buildings that were used beyond their useful life or did not meet the needs of evolving academic programs.

Simply quantifying the large backlog would not be enough to convince university leadership that a major infusion of capital was critical. Finance and facilities leaders needed to develop a clear multiyear capital strategy, set priorities, and then advocate for resources to fund them. Some buildings would need to be demolished, a fact that needed to be made clear to senior leaders. Finally, the strategy would need to be updated and progress monitored to justify to university and state government officials that capital invested was well spent, the backlog was being reduced, and additional future investment was justified.

Segmenting its total facilities inventory into project portfolios organized in categories for refurbishing, repair, or replacement, UMass Amherst leaders use data to determine the fate of any given building.

All Systems Go

In 2004, the consulting firm had begun working with campus budget and facilities staff to benchmark our campus with the other universities within the Sightlines portfolio. While that was helpful, it was clear that we needed a more detailed  inventory of all 330 buildings on campus. We contracted with the firm to develop an integrated facilities plan, which resulted in a detailed list of repair, modernization, and infrastructure needs. The results of the comprehensive assessment were surprising: $1.6 billion of needs within buildings; another $80 million in utility delivery systems and grounds (infrastructure) needs. Add to that campus plans for $571 million of new space to meet academic and program requirements. It was difficult to know where to start.

When we got serious about comprehensively documenting the backlog in 2006, the numbers were staggering-almost $2 billion. We definitely didn't realize that the rate and cost of deferral were so large.  So many buildings were due for renovation and major repair at the same time.

As noted earlier, the consulting firm proposed its idea of reviewing the total inventory and segmenting the documented need into groups of projects called Building Portfolios, to help campus leadership better understand the relative importance of projects (see figure). While the numbers were still large, they began to seem more manageable when seen in terms of separate groupings.

Portfolios were created in a way that segmented campus facilities by project needs and mission; they fell into the following categories.

  • Maintaining. This portfolio ($810 million) consisted of nonhousing and housing buildings that were in relatively good shape, but needed repairs and updating to stay in good condition.
  • Renovating. This category ($581 million) consisted of buildings that needed major internal renovations that included mechanical systems (HVAC), envelope projects (roofs and windows), and significant space renovation.
  • Transitioning. This and the "Repurposing" segment were created for those buildings that were in major disrepair but of questionable value to the campus. The "Transitioning" portfolio consisted of buildings that were slated for demolition. While the needs in those buildings were high ($196 million), the level of new capital invested would be minimal.
  • Repurposing. This portfolio ($40 million) consisted of buildings that could no longer serve their original purpose (such as science and engineering labs), but were still structurally sound and could be converted for other uses, such as office space.

Figure: University of Massachusetts Amherst Project Inventory Categorized by Portfolio

With the defined building portfolios, the then-business officer and -senior facilities officer began to engage senior leadership in the university. This step soon proved to be crucial since the university changed chancellors four times from 2006 to 2012. Fortunately, senior leaders understood the scope of the problem and, using the building portfolios as a guide, continued to hammer out priorities for funding and created a multiyear capital plan.

Then-Chancellor John Lombardi now had a well-documented plan that supported additional funding for facilities backlog. When the governor approved the Higher Education Bond Bill in October 2007, the university was positioned to compete favorably for a portion of that funding. The bill allocated up to $1 billion to state and community colleges, and the other $1 billion to the University of Massachusetts System. Of this amount, UMass Amherst received approximately $600 million. 

After the plan was made public, a May 9, 2007, article in the Boston Globe reported that the university is "... facing a daunting repair bill." State government officials immediately took notice, authorizing the university to significantly expand bonding to address the needs. The long process of approvals and securing bond funding began and still continues as we proceed with the planned projects. In addition to the state funding allocated to the university, UMass Amherst received approval to borrow an additional $215.6 million to undertake 14 new construction and renovation projects, starting in October 2011.

Slowly but Surely

The results have been impressive during the first several years of implementing our strategy. So far, we've realized the following outcomes.

  • Reduction in the backlog of projects. From 2009–11, we reduced by more than $300 million the amount needed to address facilities in need of serious attention. This represents an 18 percent decrease in backlog during a period when most campuses are facing growing numbers of deferred maintenance projects.
  • A positive change in the mix of projects. Space renovation projects were reduced from 41 percent of the total deferred maintenance backlog in 2006 to 29 percent by 2011. While major investments were made in campus utility plant and building systems, these combined projects also provided economic return for the campus in reduced energy consumption and costs.
  • Key decisions regarding building disposition. While the university is committed to historic preservation of legacy buildings, we agreed to demolish certain buildings and replace them with new structures, rather than put money into costly renovations. Decisions were based on the analysis of the cost of renovating and running these buildings. An important example is Bartlett Hall, a heavily used classroom building, for which the university used data and analysis to determine it was less costly to demolish the hall and replace it than to renovate it and continue to maintain it over time.

While the progress has been significant, senior officials know that securing the first round of capital funding is only the beginning of the process. The key to success is monitoring and reassessing the plan annually so that the university can respond to changing conditions, evolving mission requirements, and the continued deterioration of older buildings.

As important as the renovation of older buildings is the need to avoid the accumulation of future backlogs. Consequently, campus leadership has committed to increase annual stewardship of newer buildings as well. Newly constructed buildings all have 3.5 percent of construction costs budgeted for "keep-up" maintenance, and another 1.5 percent reserved for major systems renewal and replacement. The university is confident that this coordinated strategy of campus renewal and stewardship will preserve physical assets and enable UMass Amherst to continue to provide the level of education the citizens of Massachusetts expect.

JUANITA HOLLER is associate vice chancellor, facilities and campus services, University of Massachusetts Amherst.