1. The Path to a Sustainable Foundation for Facilities Management in Education Council of Great City Schools Presented by: Doug Christensen, Lander Medlin, & Randy Ledbetter

2. Introduction Lander Medlin – Executive Vice-President, CEO for APPA Doug Christensen – Retired, Brigham Young University – Current: Consultant Randy Ledbetter – Vice President of Sales – SSC

3. 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?

4. 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

5. TCO Survey Summary & Analysis Whitestone Lowest All Good Average Mixed All Good Totals Highest

6. 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

7. 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

8. 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

9. What is TCO? The 3 costs of Asset Ownership 1.Project Delivery  Concept  Master Planning  Design  Construction 2.Maintenance & Operations 3.Recapitalization

10. What is TCO? 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 Manage Space as an Asset 4 in 1 program Global Locations & Uniform Asset Code

11. Scalable Example – Provo School District  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 In DEEP TROUBLE: Typical Asset Cash Flow

12. 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

13. Test: Review the Blind List 1. Renovate 2. Remove 3. Keep 4. Priority Building #Gross Sq. Ft.10 yrs. Of replacementsTotal Asset Master PlanTotal 10 yr. Replacement Cost + Asset master Plan Costs % of building replacement Building 169,368$747,791$0$747,79111% $11$0$11 Building 267,247$3,012,148$0$3,012,14845% $45$0$45 Building 347,200$3,715,195$966,780$4,681,97599% $79$20$99 Building 475,801$1,131,871$465,000$1,596,87121% $15$6$21 Building 563,508$4,885,523$1,057,016$5,942,53994% $77$17$94 Building 648,283$4,129,316$2,681,137$6,810,453141% $86$56$141 Building 751,875$0$1,629,688 31% $0$31

14. Revealed the Property Name: Political & Emotional Building #Year Made Gross Sq. Ft.10 yrs. Of replacementsTotal Asset Master PlanTotal 10 yr. Replacement Cost + Asset master Plan Costs % of building replacement Building 1199869,368$747,791$0$747,79111% Amella Earhart$11$0$11 Building 2198367,247$3,012,148$0$3,012,14845% Canyon Creek$45$0$45 Building 3195547,200$3,715,195$966,780$4,681,97599% Edgemont$79$20$99 Building 4199475,801$1,131,871$465,000$1,596,87121% Franklin$15$6$21 Building 5194963,508$4,885,523$1,057,016$5,942,53994% Grandview$77$17$94 Building 6193948,283$4,129,316$2,681,137$6,810,453141% Joaquin$86$56$141 Building 7189851,875$0$1,629,688 31% Maesar$0$31

15. Provo School District 40 –year Capital Renewal Cash Flow Deferred Cash Flow Reca p

16. Look at Any Asset & Location Example: Classroom Flooring next 10-years

17. Example: Utility Systems next 10-years

18. Example: Roofing the next 20-years

19. TCO Gap Management © CFG Certainty of Delivery and Inventory Certainty of J.I.T. Decisions Certainty of Best Design and Build Data & Graphics Gap Save: $ 1.46/ sq. ft. Decision Gap Save:.5% on CRV/year Learning & ROI Gap Save: 50% on design Cost TCO Total Cost of Ownership

20. Equalized Force - Ideal Outcomes Project Delivery Costs Recap Costs M&O Costs

21. 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?

22. 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

24. For More Information Randy Ledbetter randy.ledbetter@sscserv.com 703-338-8978 randy.ledbetter@sscserv.com