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Confidential & Proprietary
How to use Asset Sustainability &
Long Term Planning to get the funding
you need
Marc Retish, Ameresco
Rob Haneline, Ameresco Garry Stark, North Idaho College
May 9, 2018
Asset Sustainability
Confidential & Proprietary
Today’s Session:
• Introductions
• Common Challenges in Asset Management
• North Idaho College’s Approach
• Capital Creation Strategies
• Q&A
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Facilities’ Life Cycles: 50 Year Building
Years 10-15 Years 20-25 Years 30-35 Years 40-45
Interior Painting, Kitchens,
Bathrooms
DHW Heaters
35% of Building Replacement Value
65% of Building Replacement Value
Roofing
HVAC
Plumbing BLDG
Envelope
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2%-4% of Replacement Cost
Higher Ed 88 buildings, 3.5 m sq. ft.
Replacement Cost of Portfolio: $605,500,000
Annual Capital* Request:
$12,110,000/yr (2%) - $24,220,000/yr (4%)
*Capital Renewal not Capital Investment
Is this the Formula You Use for your Capital Request?
A show of hands
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Common Challenges: Asset Management
Copyright 2012
Growing deferred maintenance
Operating costs increasing
Changing functional demands
Aging Infrastructure
Energy Goals
Tribal Knowledge Transfer
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Deferred Maintenance: Risk
Deferred maintenance is the practice of postponing maintenance activities.
Generally, a policy of continued deferred maintenance may result in higher costs, asset failure,
and in some cases, health and safety implications. Wikipedia
Deferred Maintenance is everywhere
Deferred Maintenance is a cycle
Deferred Maintenance is a RISK to your organization
Deferred Maintenance results in premature life cycle
expiration, creating more costly repairs to address
failure, and increasing exposure to risk.
$1 deferred becomes $4 of maintenance over time* *Rick Biedenweg, former AVP of information resources at Stanford university
Yet, Deferred Maintenance is a Best Practice
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- 2009 Ad
- 5% of stimulus
to higher education
infrastructure
- $40-45 Billion and a
20 year vision
- “Shovel Ready Jobs”
~10 b sq ft ~$1.7 T $221B backlog (2013); $478B (2030)
Underfunding Issues: Everywhere and Unaddressed
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Are we using the right language?
• How much do we know about our aging infrastructure and the RISK it poses to our mission?
• How much deferral do we have and how
much RISK is represented?
• Where do we get the funding to manage the RISK of our aging infrastructure?
• How much funding do we need to
maintain and SUSTAIN the portfolio? • At what point in time, will the Quality of
Teaching & Learning (MISSION) be challenged in the absence of additional funding ?
The Boiler Room to the Board Room
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Physical Asset Criteria
• Building Condition Needs
• Unfunded Liability
• FCI
Utilization Criteria
•Facility utilization
•Enrollment Forecasting
•Space use
•Own vs. lease
Real Estate Criteria
•Asset Valuation
•Land Valuation
Environmental
Criteria
•Carbon Footprint
•Energy Conservation
•Renewable Solutions
Financial Criteria
•Capital Costs
•Operating Costs
•Capital Creation Strategies
•Incentives
Tools
Processes
&
Policies
Own the Conversation: Decision Development Framework
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North Idaho College
School Facts:
Coeur d’Alene, ID
Community College
34 Buildings
774,000 square feet
3,700 Students
# of Facilities Professionals: 40
Why did NIC ask Ameresco to put together an Asset Plan?
Previous Condition Assessment
Master Plans
Funding Mechanism
Annual Capital Budget
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• By creating Life Cycle Profiles for major building components and systems; Quantify Renewal Needs
• Forecast how capital needs will grow in both the short and long term (5-year & 30-year plan) as the buildings continue to age; Multi-Year Capital Plan
• Calculate building performance using industry standard metrics to evaluate overall building risk and continued asset sustainability;
Evaluate Building Performance
• Develop Cost by Discipline, Unfunded Liability, & Facility Condition Index (FCI) profiles for the portfolio; Risk Mitigation
• Introduce Asset Sustainability targets, as a measure of FCI, to demonstrate funding required to enhance the Quality of Teaching, Learning, and Research;
Asset Sustainability
• Benchmark Capital Creation Strategies and illustrate their impact on the portfolio in terms of building performance and risk.
Capital Creation Strategies
Introduction
North Idaho College engaged Ameresco to conduct an Asset Management Review of
their portfolio and to produce the following key deliverables:
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Practical Life Cycle Modeling Approach
Modeled
Life Cycle
“Templates”
Basic Asset
Details:
Age
Size
Number of
Floors
Building Type
Incorporation of
data sources
Interview with
site staff
Further on-site
validation
Predictive
Life Cycle
“Profiles”
Validation of
Asset Templates:
Life Cycle “Model” Life Cycle “Profile”
Unique Data Development: Best Practices
Create predictive Life Cycle forecasts in AssetPlanner™ utilizing Ameresco’s
proprietary Data Development Framework & associated modelling techniques;
Conduct interviews with Facilities Management and Site Staff (Asset Reviews)
Establish Life Cycle Profiles (major building inventory)
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Facilities Assessed
Administration Classrooms Gyms Library
Maintenance Museum Residence Hall Student Union Warehouse /
Storage
Wellness
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Buildings are more expensive to maintain as they age, and the risk of failure increases as building systems near their “end of life.”
Total Size: 774 thousand ft2 (34 facilities)
Weighted Average portfolio
age is 39 years (circa
1979)
Age Profile
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The Replacement Cost identifies the current dollar amount needed to replace a facility relative to its current size and function.
$142M to replace 34 buildings
Replacement Cost Profile
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Asset Prioritization
Weighted score for each Building System
• Is System LIFE SAFTEY/CODE RELATED? Yes/No
• Does System have an ADVERSE EFFECT ON SECURITY? Yes/No
• If System fails, will it SHUT BUILDING DOWN? Yes/No
• If System is replaced, is there an ENERGY SAVINGS OPPORTUNITY? Yes/No
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2018 Capital Needs By Discipline – Urgent & High Priority
Total Deferred Backlog of $12.4M includes over $9.1M deemed Urgent and High Priority.
2018 Deferred Backlog: $12.4M
including
$9.1M in Urgent and High Priority
Sample of Urgent Items:
• Fire Alarm System
• Sanitary Waste Drainage Piping
• Boilers Cabinet Unit Heaters
• Fume Hood
• Roof Drainage
Sample of High Items:
• Air Handling Units
• Drop Down Ceiling
• Exhaust Fans
• Overhead Garage Doors
• Steam and Hot Water Radiators
• Stand Alone Thermostats
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Capital Needs By Discipline - 30 Years
2018 Deferred Backlog: $12.4M
$230K average annual funding
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Total Liability - 30 Years
2018 Liability: $12.4M
(Deferred Backlog)
2047 Liability: $117M
Total
Liability
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Unfunded Liability - 30 Years
Cumulative lifecycle renewal costs (top line) and the average annual capital funding
allocation (dark blue area) of $230 thousand per year.
2047 Unfunded Liability: $110.1M
Unfunded
Liability
Average Annual Funding of
$230K per year
2018 Liability: $12.4M
(Deferred Backlog)
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• Industry Standard Infrastructure Risk Metric Used to Track Condition Performance of Facilities / Portfolios
• The FCI provides a consistent measurement of condition for a single building, group of buildings, or a
total portfolio.
FCI =
Renewal and Repair Costs
Replacement Cost
GOOD Range: FCI (0% - 5%)
FAIR Range: FCI (5% - 10%)
POOR Range: FCI (10%-30%)
CRITICAL Range: FCI (> 30%)
Sustainability Target Sustainability Target
Facility Condition Index (FCI)
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Facility Condition Index - 30 Years (Unfunded)
The portfolio has a 2018 FCI of approximately 8.7%, which places the facilities in the
“Fair” range. Without funding, the FCI would migrate to the “Critical” range by 2027
2027 FCI: 32.2% (Critical)
FCI without funding
2018 FCI: 8.7% (Fair)
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Facility Condition Index - 30 Years (with Funding)
Overlaying the average annual capital funding of $230 thousand has minimal impact to
FCI; it does not change the year that FCI migrates to the “Critical” range (i.e. 2028)
FCI without funding
FCI with $230K
Average Annual Funding
2028 FCI: 30.3% (Critical)
2018 FCI: 8.5% (Fair)
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Boswell Hall
31.4% FCI (Critical) 21.1% FCI (Poor)
• 64,547 Sq Ft • Built 1979 • Replacement Cost:
$13.2M • Current FCI: 21.1% Poor • Current Deferral: $2.8M
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Meyer Health Science Building
• 60,626 Sq Ft • Built 2005 • Replacement Cost:
$12.4M • Current FCI: 4.0% Good • Current Deferral:
$495.5K
4.0% FCI (Good) 40.8% FCI (Critical)
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Lee-Kildow Hall
• 45,175 Sq Ft • Built 1962 • Replacement Cost:
$9.2M • Current FCI: 25.4% Poor • Current Deferral:
$2.34M
25.4% FCI (Poor) 39.2% FCI (Critical)
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By establishing an Asset Sustainability Target of 10% FCI (Fair), the assets will be
continually “sustained” at an acceptable level of risk. To achieve this, it will require $3.5M per
year of funding over the next 30 years – an extra $3.2M per year.
Sustainability Target - 30 Years
$3.2M per year
additional
funding
required to
achieve target
Sustainability
Target
FCI without funding
FCI with $230K
Average Annual Funding
2028 FCI: 30.3% (Critical)
2018 FCI: 8.5% (Fair)
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Maintenance Optimization
Energy Conservation
Deep Retrofits
Renewable Solutions (PPA)
Real Estate Strategies:
Disposition
Consolidation
Redevelopment
Leveraged and Bundled Capital Creation StrategiesTM:
Real Estate
Strategies
Redevelopment
Strategies
Renewable
Solutions
Energy
Conservation
Maintenance
Optimization
Optimized
Capital
Creation
Strategies™
Capital Creation Strategies™ (CCS)
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Capital Needs with Energy Opportunities
2018 Deferred Backlog: $12.4M
2018 MEP
Backlog = $5.5M
2018 Mechanical Backlog: $5.1M
2018 Electrical Backlog: $0.4M
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2018 Capital Needs By Discipline – Urgent & High Priority
Total Deferred Backlog of $12.4M includes over $9.1M deemed Urgent and High Priority.
2018 Deferred Backlog: $12.4M
$9.1M Urgent and High Priority
$2.8M in Urgent and High MEP projects
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Impact of Capital Creation StrategiesTM
By leveraging Capital Creation StrategiesTM, the Unfunded Liability gap is reduced to
$106.5 million.
2018 Liability: $12.4M
2047 Unfunded Liability: $106.5M
Unfunded
Liability
Reduction
Sustainability Target
CCS (ESPC): $3.6M
Confidential & Proprietary Copyright 2011
Sustainability Target (10% FCI)
2030 FCI: 32.1% (Critical)
2018 FCI: 8.7% (Fair)
Useful Life Extension
The FCI maintains its position in the “Fair” range in 2018 until 2022. Additional funds
generated through this Capital Creation Strategy delays the migration to the “Critical” range
until 2030. This provides a 3-year extension to useful life for the entire portfolio directly
improving the Quality of Teaching and Learning.
Impact of Capital Creation StrategiesTM
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1. Establish a portfolio FCI Target of 10% to enhance the
Quality of Teaching and Learning;
2. Apply an adequate annual funding level to maintain the
Asset Sustainability Target of 10% FCI (~$3.4M per
year);
3. Proactively Position Capital Creation Strategies™ to
address funding shortfalls:
• Maintenance & Process optimization strategies – life extension
• Energy Conservation Measures
• Renewable Solutions – solar, PPA
• Real Estate Strategies – consolidation, disposition, redevelopment
Recommendations
Confidential & Proprietary
Recommendations (Continued)
Utilize Executive Level Dashboards as found in AssetPlannerTM
Your Trusted Sustainability Partner.
THANK YOU!
Marc Retish Rob Haneline Business Manager Account Executive
Direct: (612) 747-6188 Direct: (208) 818-8137