sustainability and total cost of ownership strategies for higher education
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Sustainability and Total Cost of Sustainability and Total Cost of Ownership Strategies for Higher Ownership Strategies for Higher
EducationEducation
SustainabilityWhat Is Sustainability
Sustainable SeattleSustainable SeattleSustainability is the "long-term, cultural, economic and environmental health and vitality" Sustainability is the "long-term, cultural, economic and environmental health and vitality"
with emphasis on long-term, "together with the Importance of linking our social, financial, and with emphasis on long-term, "together with the Importance of linking our social, financial, and environmental well-being"environmental well-being"
http://www.scn.org/sustainable/susthome.html
Webster's New International Dictionary"Sustain - to cause to continue (as in existence or a certain state,"Sustain - to cause to continue (as in existence or a certain state,
or in force or intensity); to keep up, especially without interruption diminution,or in force or intensity); to keep up, especially without interruption diminution, flagging, etc.; to prolong."flagging, etc.; to prolong."
““Forum for the Future”Forum for the Future”"A dynamic process which enables all people to realize their potential and to "A dynamic process which enables all people to realize their potential and to
improve their quality of life in ways that simultaneously protect and enhance the improve their quality of life in ways that simultaneously protect and enhance the Earth's life support systems." Earth's life support systems."
SustainabilityFor Higher Education
Sustainability for Higher Education is Focused on the Sustainability for Higher Education is Focused on the Overall, Comprehensive Balanced Interaction of the Overall, Comprehensive Balanced Interaction of the
Academic, Social, Physical, Environmental and Academic, Social, Physical, Environmental and Economic Health of the University Over It’s Lifetime.Economic Health of the University Over It’s Lifetime.
What Is It?
A Strategic Asset Management Process Which Considers A Strategic Asset Management Process Which Considers ALLALL Costs and Requirements of Acquisition, Planning, Costs and Requirements of Acquisition, Planning,
Design, Construction, Operations and Maintenance, Design, Construction, Operations and Maintenance, Renewal, Disposal, and Replacement Incurred over the Renewal, Disposal, and Replacement Incurred over the
Life of a Facility (typically 30 to 50 years).Life of a Facility (typically 30 to 50 years).
Total Cost of Ownership
Sustainability & Total Cost of Ownership
Balanced Sustainability Modeling
Principles of Sustainability for Higher Education are Principles of Sustainability for Higher Education are Focused on the Overall, Comprehensive Value of the Focused on the Overall, Comprehensive Value of the Academic, Natural and Physical Environment Over Their Academic, Natural and Physical Environment Over Their Lifetime.Lifetime.
To be Successful, These Principals Must Address 5 (Not To be Successful, These Principals Must Address 5 (Not 3 or the “Triple Bottom Line”) Specific Components: 3 or the “Triple Bottom Line”) Specific Components: Mission, Economic, Environmental, Social and Mission, Economic, Environmental, Social and Operations.Operations.
Mission SustainabilityFundamentally, the Reason for Being. Understanding the Fundamentally, the Reason for Being. Understanding the Core Goals, Responsibilities and “Mission” of the Core Goals, Responsibilities and “Mission” of the Institution. In This Case, Education of Students. This is Institution. In This Case, Education of Students. This is the Overriding Component. Mission Sustainability the Overriding Component. Mission Sustainability Revolves Around Three Specific Components:Revolves Around Three Specific Components:
• The Academic ProgramThe Academic Program
• Student Recruitment & RetentionStudent Recruitment & Retention
• High Caliber Faculty and StaffHigh Caliber Faculty and Staff
Sustainability & Total Cost of Ownership
Economic Sustainability:An Understanding of Investment Requirements and Life-An Understanding of Investment Requirements and Life-Cycle Costs in a Total Cost of Ownership (TCoO) Cycle Costs in a Total Cost of Ownership (TCoO) Framework. A Fundamental Responsibility to the Ensure Framework. A Fundamental Responsibility to the Ensure that Dollars are Leveraged to Achieve the Most Efficient that Dollars are Leveraged to Achieve the Most Efficient Result. Revenue Sources Include but are Not Limited to:Result. Revenue Sources Include but are Not Limited to:
• State & Private Allocations, Tuition and Student FeesState & Private Allocations, Tuition and Student Fees
• Donations and Foundation / Auxiliary RevenuesDonations and Foundation / Auxiliary Revenues
• Equitable and Balanced DistributionEquitable and Balanced Distribution
Sustainability & Total Cost of Ownership
•Social Sustainability An Integration of the Social Ramifications to the Facility Management An Integration of the Social Ramifications to the Facility Management Process with an Emphasis on Implementing Management Practices Process with an Emphasis on Implementing Management Practices that Develop a Long-Term Approach in Support of the Educational that Develop a Long-Term Approach in Support of the Educational
Process for the Success of the Campus and the Community.Process for the Success of the Campus and the Community.
• Policy and LeadershipPolicy and Leadership
• Integration of the Learning Experience & Campus Integration of the Learning Experience & Campus ManagementManagement
• A Strategic Approach to Integrated PlanningA Strategic Approach to Integrated Planning
Sustainability & Total Cost of Ownership
Environmental Sustainability:A Conscious Consideration and Strategy to Minimize the Initial A Conscious Consideration and Strategy to Minimize the Initial and Long-Term Impacts on Natural Resources Through all and Long-Term Impacts on Natural Resources Through all Elements of a Facilities Design and Operation. Elements of a Facilities Design and Operation.
Sustainability & Total Cost of Ownership
• Commitment to Use of Environmentally Neutral Commitment to Use of Environmentally Neutral Processes and Materials in ConstructionProcesses and Materials in Construction
• Commitment to the Development of Polices Commitment to the Development of Polices Involving Environmentally Responsive Strategies Involving Environmentally Responsive Strategies
Operational Sustainability: An Understanding of the Operational Efficiencies, Impacts on Facility An Understanding of the Operational Efficiencies, Impacts on Facility
Stakeholders (Faculty, Students & Staff), Ability of the Organization Stakeholders (Faculty, Students & Staff), Ability of the Organization to Sustain and Maintain the Investment or Initiative Throughout the to Sustain and Maintain the Investment or Initiative Throughout the Projected Service Life of the Facility or Complex. Key Components Projected Service Life of the Facility or Complex. Key Components Include:Include:
• Formalized Asset Management PlanFormalized Asset Management Plan
• Trained, Adequate Staff & FundingTrained, Adequate Staff & Funding
• Balanced Portfolio of In House and Contracted ServicesBalanced Portfolio of In House and Contracted Services
Sustainability & Total Cost of Ownership
OPERATIONSOPERATIONS
MISSIONMISSION
ECONOMICECONOMIC
SOCIALSOCIAL ENVIRONMENTENVIRONMENTLI
VA
BLE
EQUITABLE COMPATABLE
VIAB
LE
SUSTAINABLESUSTAINABLE
AFFORDABLE
Sustainability & Total Cost of Ownership
Sustainability & Total Cost of Ownership
Formalizing TCoO• Balanced Sustainability (Policy)
• Relational Investments (Fiscal Management)
• Capital Asset Acquisition Program (Process)
• Annual Life Cycle Analysis Modeling (Assessment)
• Asset Management (Operational)
Relational Investments
Principles of Relational Investment Dictate that Principles of Relational Investment Dictate that Operating Cost be Linked to Capital Investment.Operating Cost be Linked to Capital Investment.
Sustainability & Total Cost of Ownership
What Are Relational InvestmentsRelational Investments Include Capital Projects, Maintenance & Operations and Associated Staffing and Material Cost. Specific Components Include:
• Design & ConstructionDesign & Construction
• Routine, Deferred & Preventive MaintenanceRoutine, Deferred & Preventive Maintenance
• UtilitiesUtilities
• Materials & EquipmentMaterials & Equipment
Sustainability & Total Cost of Ownership
Life Cycle Costs (M&O)
60%
Design & Construction
Costs 25%
Client Costs 5%Utility Costs
10%
Categories of Relational Investments
Sustainability & Total Cost of Ownership
When Should Total Cost of Ownership be Implemented?
• As Early As Possible
• Become Part of the Overall Capital Planning Program
• Implementation of the Total Cost of Ownership Process MUST Begin at the Policy Making Level
Sustainability & Total Cost of Ownership
Simply Put, Without the Support of Senior Simply Put, Without the Support of Senior Management and Most Importantly, the VP for Management and Most Importantly, the VP for Finance and Accounting or CFO, it is Difficult to Finance and Accounting or CFO, it is Difficult to
Establish a Mandate to Incorporate the Requirement Establish a Mandate to Incorporate the Requirement as Part of the Daily Management Processas Part of the Daily Management Process
Sustainability & Total Cost of Ownership
Who Needs to Support This Effort?
Failure to Adequately Establish an Asset Management Program, Budget for Operations, Maintenance and
Renewal of Capital Assets Jeopardizes Realization of Full Investment Value, Accelerates Cost of Ownership
and Increases Deferred Maintenance Resulting in Devalued Assets. This Condition Impacts Cash Flow,
Bond Ratings and Cash Reserves or Profits.
Sustainability & Total Cost of Ownership
Impacts?
CO
ST
TIME
30
Performance With Capital Renewal
$10,000,000 Facility
Million100
50
10
0 15
PlanDesignConstruct Cost (25%)
Operating Cost (75%)
45 Years
Performance Without Capital Renewal
75 percent of the cost of ownership occurs AFTER design and construction
75 percent of the decisions that drive cost of ownership occur BEFORE design
Lost Capital Investment
Accelerated Capital Investment
$$$
$$$
Sustainability & Total Cost of Ownership
• Cross-Training and Staff Exchange of Design and Cross-Training and Staff Exchange of Design and Operations and Maintenance Management PersonnelOperations and Maintenance Management Personnel
• Understanding of How Life Cycle Cost is Controlled at all Understanding of How Life Cycle Cost is Controlled at all Stages in the Facility's Service LifeStages in the Facility's Service Life
• Maintain O&M Data and Design Decisions for Future Maintain O&M Data and Design Decisions for Future Facility Design Facility Design
Requirements
Sustainability & Total Cost of Ownership
• Assure Adequate Resources are Available to Implement Assure Adequate Resources are Available to Implement Life-Cycle Cost Management Decisions Life-Cycle Cost Management Decisions
• Architects and Engineers Must Include Holistic Architects and Engineers Must Include Holistic Sustainability Goals in Their Design Criteria and Sustainability Goals in Their Design Criteria and ConsiderationsConsiderations
• Owner's MUST Consider the Long Term Economic Owner's MUST Consider the Long Term Economic Impacts of Their Short Term DecisionsImpacts of Their Short Term Decisions
Requirements
Sustainability & Total Cost of Ownership
• Assuring that Value Engineering Programs and Assuring that Value Engineering Programs and Construction Contract Incentives and Other Procurement Construction Contract Incentives and Other Procurement Mechanisms Demonstrate Savings in Expected Life Cycle Mechanisms Demonstrate Savings in Expected Life Cycle Rather than Construction Cost OnlyRather than Construction Cost Only
• Requirement for Architects and Engineers to Document Requirement for Architects and Engineers to Document Clearly Their Design Decisions Made to Control Life Clearly Their Design Decisions Made to Control Life Cycle Cost and the Subsequently Expected Operating Cycle Cost and the Subsequently Expected Operating Consequences for Each FacilityConsequences for Each Facility
Requirements
Sustainability & Total Cost of Ownership