Using Total Cost of Ownership
To Make Decisions
League of Innovation Conference
March 13, 2013
Greg Nelson
Vice President of Administrative Services
San José City College
San José City College
• Founded in 1921
• 10th Oldest Community College in
California
• Accredited by the ACCJC/WASC
• Approximately 10k Students
Accreditation Requirements
• Plan to Support the Operations and
Maintenance of New Planned Facilities
• Plan must include actual calculations of
Total Cost of Ownership of New
Facilities & Equipment
• Plan Also Must Include Planned
Maintenance and Maintaining Existing
Equipment of Existing Facilities
A 2010 Retrospective
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No Identifiable Methodology
No Preventative Maintenance
No Consistent Data
No Calculation of TCO
No Formalized Process
Placed On Sanctions
Total Cost of Ownership
• Traditionally Used for IT Hardware
• Traditionally Used for IT Software
• Used in Many Corporate Sectors for
Investment purposes
• What About Higher Education?
What is Your Definition of
Total Cost of Ownership?
http://www.savemoneywithgates.com/images
/iceberg-large.jpg
TCO Lifecycle
San José City College
Overall:
“…to determine a value that will reflect the true,
effective cost of the San José City College
facility including planning, design, constructing
and equipping of the facility and also the
recurring costs to operate the facility over the
useful lifespan on the facility.”
College Goals Related to TCO
• 1. Establish an agreed upon systematic
procedure for the evaluation of existing
and proposed college facilities
• 2. Utilize the concept of to develop a
process for the evaluation of facilities that
can be integrated into the overall TCO
• 3. Develop a procedure for the assessment
of existing and proposed facilities that
utilizes existing data from college files
College Goals Related to TCO
• 4. Ensure that the database developed for
the procedure is compatible with current
state reporting systems
• 5. Design the prototype system in a
manner that allows the College to
annually update the information in the
system and add additional data elements
related to planning and budgeting
Building the Foundation
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•
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•
Formalized Plan and Process
Assessed All Campus Facilities
Instituted Data Collection Process
Established TCO Equation
Link Process to Decision Making
How Did We Approach It?
• Reviewed Revised Master Plan
• Demolishing and New Construction
• What Data Was Present
• How Are We Integrating Preventative
Maintenance Issues
• What Was Missing
San José City College
Total Cost of Ownership Process
Facilities
Master Plan
Total Cost of
Ownership
Existing
New
Gilbane
Ongoing
Costs
Existing Facilities
• Approximately 480k Square Feet of Existing
Space
• Some Buildings Scheduled for Demolishing
• Buildings That Need Non-Aesthetic Upgrades
• Newer Buildings Built in Last 10 years
• Buildings from 1948 to 2012
• Campus is Land Locked
JAGUAR
GYM
NEW DEMO PLAN
New Facilities
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•
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•
Renovate Existing Vo-Tech Facilities
New Media Arts Center
New Kinesiology, Athletics & Wellness Bldg.
Underground Infrastructure Improvements
New Campus Loop Road
San José City College
Total Cost of Ownership Process
Facilities
Master Plan
Total Cost of
Ownership
Existing
New
Gilbane
Ongoing
Costs
Ongoing Costs
• Payroll & Benefits – Custodial,
Facilities Maintenance, Grounds,
Management & Support Staff For
These Employee Groups
• Elevator & Other Service Related
Contracts
• Taxes – If Any
Ongoing Costs
• Energy, Water/Sewer, & Gas
• Maintenance Costs i.e. Filters, Bulbs
etc.
• Telecommunication Related Costs
Present Value (R & S)
• Current value of existing facilities based on Santa
Clara County Assessors Office and Commercial Rates
in South bay (Buildings older than 1980 with no
improvements value at 35% of replacement value.
Buildings after 1980 with renovation, seismic
upgrades or new facilities value at 80-90% of
replacement value)
• Some Counties or Municipalities Complete Assessed
Value for College For Exemption Calculations
• Multi-County Service Areas With Capital Assets Can
Vary By County
Present Value (Replacement)
• Costs associated with replacing a facility or unit of a
facility at the present fair market value or other third
party assessment if fmv not available
• Gilbane Building Company and Foundation for
Community Colleges (FUSION Database)
• Gilbane for Continuing and New Facilities
• Foundation for Community Colleges for Buildings
Scheduled to be Demolished
TCO Equation
• TCO = REPL – RES + E + W+ OM&R + O + P
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•
•
•
•
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TCO = Total Cost of Ownership
REPL = Present Value of Capital Replacement Costs
RES = Present Value (resale value, salvage value)
E = Present Value of Energy Costs
W = Present Value of Water Costs
OM&R = Present Value of Operating, Maintenance &
Repairs Costs
• O = Present Value of other known costs (contracts for
services)
• P = Payroll Costs of Maintenance & Custodial
Personnel
Preventative Maintenance
Which One Are You?
Total Costs of Ownership Calculations Assumptions
Total Gross Square Footage for SJCC Campus
840,528
Total Assignable Square Footage for SJCC Campus
435,108
Number of Custodians
8
Number of Grounds Personnel
2
Number of Maintenance Personnel
7
Number of Managers for above areas
2.25
Total Employee Count
19
Annulaized Cost of Custodians
952,283
Annulaized Costs of Grounds Personnel
164,636
Annualized Costs of Maintenance Personnel
608,786
Annualized Costs of Managers for above areas
246,132
Total Salary & Benefits
1,971,837
Custodians Cost per Square foot
$2.19
Maintenance Cost per Square foot
$0.72
Grounds Cost per Square Foot of outside space (Total Acreage less Gross Square Footage)
$8.65
Managers Cost per Square foot
$0.29
Annual Water Usage for May 2011- April 2012
$132,236.29
Cost Per Square Foot of Assignable Space
$0.16
Annual Constellation Gas usage for May 2011 - April 2012
$80,168.00
Annual PG&E Gas usage for May 2011 - April 2012
$56,395.00
Cost Per Square Foot of Assignable Space
$0.31
Total Gas usage
Annual Constellation Energy usage for May 2011 - April 2012
$136,563.00
$271,220.03
Annual PG&E Energy usage for May 2011 - April 2012
$1,011,897.97
Cost Per Square Foot of Assignable Space
$2.95
Total Energy usage
$1,283,118.00
TCO Calculator Summary
Total Gross Square Footage
Total Assignable square footage
Cumulative Costs
844,285
441,485
Year 1
$543,627,264
Year 5
$2,526,242,706
Year 1
Year 5
Present Value
Replacement Value Per FUSION database
$
323,978,186
Total Present Value
$
323,978,186
Current Value of Exisiting Facility
Santa Clara County fair market value if sold or suplused
$
216,851,996
Total Current Value
$
216,851,996
Energy
Gas
$
202,208
Electricity
$
2,490,641
Total Energy Costs
$
2,692,849
Water Usage
Water
$
104,232
Total Water Usage
$
104,232
Operating, Planned Maintenance & Repair Costs
Operating
$
168,100
Planned Maintenance
$
Repair Costs
$
24,000
Total Oper/Planned Maint/Repairs
$
192,100
Other Known Costs
Contracts
$
1,500,000
Total Other Known Cost Totals
$
1,500,000
Payroll (Salary & Benefits)
Custodians
$
955,685
Grounds
$
164,636
Managers
$
244,843
Maintenance & Support
$
607,885
Total Payroll & Benefits
$
1,973,049
$
543,627,264
Total Costs
REPL-RES+E+W+OMR+O+P =TCO
$
113,588,421
Total ($)
% of Total Cost
$
269,739,575
$
1,478,705,384
58.534%
$
269,739,575
$
1,478,705,384
58.534%
$
197,868,482
$
1,034,845,040
40.964%
$
197,868,482
$
1,034,845,040
40.964%
$
158,802
$
893,829
0.035%
$
2,077,579
$
11,337,788
0.449%
$
2,236,381
$
12,231,617
0.484%
$
81,829
$
460,665
0.018%
$
81,829
$
460,665
0.018%
$
148,100
$
780,500
0.031%
$
3,081,189
$
19,890,175
0.787%
$
213,573
0.008%
$
$
3,229,289
-
$
20,884,248
0.827%
$
254,807
$
8,783,440
$
254,807
$
8,783,440
$
762,549
$
4,244,476
$
164,636
$
823,180
$
204,237
$
1,114,562
$
507,070
$
2,767,189
$
$
1,638,492
469,926,268
$
$
8,949,407
2,526,242,706
$
79,311,890
$
495,169,722
0.348%
0.354%
Where We Are Now
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Removed From Sanctions
Clear Calculations and Assumptions
Making Informed Decisions
Transparent to All Stakeholders
Proven Process
Good Data Sets and Criteria
Full Documents
• http://www.sjcc.edu/data/files/galle
ry/FacilitiesFileGallery/20112012_SJ
CC_Total_Cost_of_Ownership.pdf
It Really Works!!!