The Path to a Sustainable
Foundation for Facilities
Management in Education
Council of Great City Schools
Presented by: Doug Christensen, Lander Medlin, & Randy Ledbetter
Introduction
Lander Medlin – Executive Vice-President, CEO for APPA
Doug Christensen – Retired, Brigham Young University – Current: Consultant
Randy Ledbetter – Vice President of Sales – SSC
Appropriate Facility Costs
How many of you, given your current
portfolio of facilities (assets), knowledge of
enrollment trends, and future needs, would
take $18/SF/year + Annual Inflation for all
of your asset costs for the next 75 years?
What does the $18 Include:
 Annual cost of project delivered
 Remodeling/replacing existing facilities
 Maintenance & Operations (M&O)
 Energy/Utilities
 Recapitalization – retrofits and replacements
 Grounds
 Expansion of assets
TCO Survey
Summary & Analysis
Whitestone
Lowest
All Good
Mixed
Highest
All Good
Average
Totals
School District Trends
 2/3 (35 states) of states are providing less money for public education
than 5 years ago
 Depleted emergency funds lead to programs and staff being cut which
results in:
 Larger class sizes
 Less rounded education
 42% of superintendents believe that operations and maintenance will be
most affected by budget cuts
 Average of School District buildings within the US is 42 y/o
School District Trends
 64% of schools do not have a 1 to 1 technology initiative
 1/5 of students today are considered impoverished
 Impact of school facility conditions to learning environment and student
success:
 Condition of a classroom can affect a students progress by 25%
 43% of U.S. schools see the condition of their facilities interfering with
instruction delivery
 Unpredictable environment, Total Cost of Ownership (TCO) gives you an ability
to predict costs, create continuity, and establish a sustainable business model
What is TCO?
TCO Definition and Benefits:
 A tool set of principles used to manage Asset Sustainably
 Gives you the ability to predict future costs (40+ years)
 What is the Annual Cash Flow needed to own an asset through it’s life?
 Starting point: Ground Zero producing reliable data for decision making
 TCO Principles drive Sustainable Asset Management
 TCO gathers ALL data points so the right Asset Investment Choice is made
 TCO is an Investment Management strategy to maximize ROI
What is TCO?
The 3 costs of Asset Ownership
1. Project Delivery




Concept
Master Planning
Design
Construction
2. Maintenance & Operations
3. Recapitalization
What is TCO?
Manage Space as an Asset
4 in 1 program
Level 1 - Location Inventory/Database
 Location Warehouse
 Space Facts
Level 2 – Utilization/ Scheduling
 Space Allocation/Scheduler
 Space Utilization
Level 3 – Requests and Changes
 Space Planning & Standards
 Space History
Level 4 – Space Strategic Needs
 Space Needs to expand/reduce
 Space Needs aligned with Vision and Mission
Global
Locations
& Uniform
Asset Code
Scalable Example – Provo School District
In DEEP TROUBLE:
 Provo had failed in an effort to close two schools
 District is in a NO Growth scenario
 Too many facilities to budget and pay for
 Aging and seismic problems with facilities
 Very political on which buildings to close
 Demographics were/are changing
 Larger homes were not being built in Provo
 Had no idea what it should cost
Typical Asset Cash Flow
Provo School Board Request - after failure in community
 Independent condition assessment – ALL Assets
 Current needs and deferred maintenance
 Maintain existing facilities (currently not funded)
 Upgrade facilities (e.g. seismic, asbestos, ADA)
 Upsize to ‘target schools’ (e.g. add classrooms)
 Replace existing facilities (cost to maintain/ renew assets may exceed cost to replace )
 Next 10 year cash flow for each Building and General Site property
 What amount do I need to have each year to cover all needs
 MAKE US WHOLE
Test: Review the Blind List
1. Renovate 2. Remove 3. Keep 4. Priority
Building #
Gross Sq. Ft.
10 yrs. Of replacements
Total Asset Master Plan
Total 10 yr. Replacement Cost +
Asset master Plan Costs
% of building
replacement
Building 1
69,368
$747,791
$0
$747,791
11%
$11
$0
$11
$3,012,148
$0
$3,012,148
$45
$0
$45
$3,715,195
$966,780
$4,681,975
$79
$20
$99
$1,131,871
$465,000
$1,596,871
$15
$6
$21
$4,885,523
$1,057,016
$5,942,539
$77
$17
$94
$4,129,316
$2,681,137
$6,810,453
$86
$56
$141
$0
$1,629,688
$1,629,688
$0
$31
$31
Building 2
Building 3
Building 4
Building 5
Building 6
Building 7
67,247
47,200
75,801
63,508
48,283
51,875
45%
99%
21%
94%
141%
31%
Revealed the Property Name:
Building #
Building 1
Year
Made
Gross Sq. Ft.
10 yrs. Of replacements
Total Asset Master Plan
Total 10 yr. Replacement Cost +
Asset master Plan Costs
% of building replacement
1998
69,368
$747,791
$0
$747,791
11%
$11
$0
$11
$3,012,148
$0
$3,012,148
$45
$0
$45
$3,715,195
$966,780
$4,681,975
$79
$20
$99
$1,131,871
$465,000
$1,596,871
$15
$6
$21
$4,885,523
$1,057,016
$5,942,539
$77
$17
$94
$4,129,316
$2,681,137
$6,810,453
$86
$56
$141
$0
$1,629,688
$1,629,688
$0
$31
$31
Amella Earhart
Building 2
1983
67,247
Canyon Creek
Building 3
1955
47,200
Edgemont
Building 4
1994
75,801
Franklin
Building 5
1949
63,508
Grandview
Building 6
1939
48,283
Joaquin
Building 7
Maesar
Political & Emotional
1898
51,875
45%
99%
21%
94%
141%
31%
Provo School District 40 –year Capital Renewal Cash Flow
Recap
Deferred
Cash Flow
Look at Any Asset & Location
Example: Classroom Flooring next 10-years
Example: Utility Systems next 10-years
Example: Roofing the next 20-years
TCO Gap Management
Certainty of
Delivery and Inventory
Data & Graphics Gap
Save: $ 1.46/ sq. ft.
TCO
Total Cost
of Ownership
Certainty of
Best Design
and Build
Learning & ROI Gap
Save: 50% on design Cost
Decision Gap
Save: .5% on CRV/year
© CFG
Certainty of
J.I.T. Decisions
Equalized Force - Ideal Outcomes
Recap Costs
Project Delivery Costs
M&O
Costs
What’s YOUR number?
Six questions to reinforce what is needed to build a TCO approach:
1. Do you have a complete/comprehensive asset inventory down to the component
level?
2. What is your current replacement cost/CRV/value of your existing assets?
3. Have you planned for all expansions/additions/changes/modernizations within your
master plan? Is it aligned with mission and vision?
4. Do you have a mechanism in place to track all costs associated with your assets?
5. Is there a process to use data for sound business decision making? Best ROI
6. Do you have an ongoing inspection process to update/validate asset data?
How to get started?
 Determine the gaps
 Data
 Process
 Technology
 Break down the silos
 Develop or hire the expertise needed to
incorporate TCO principles
 Establish standards and deal with funding gaps
For More Information
Randy Ledbetter
randy.ledbetter@sscserv.com
703-338-8978