Spotlight on Discovery: Building Age and Peer Pressure

“If all your friends were jumping off a bridge, would you do it?” The potential danger of giving in to peer pressure is a common warning from parents to their children. But, in the campus management of facilities in higher education, is there potential danger to your institution if you don’t pay attention to your peers?

At a recent on-campus presentation, facilities leaders were shown that their institution could be losing its competitive edge with their peers when it comes to the impact of their facilities stewardship investments. Asset reinvestment needs were growing, campus appearance was declining, and peer campuses were looking younger. The campus has reached a watershed moment and their future performance hinges on the decisions made at this critical juncture.

Construction age versus renovation age?

What is the difference between the construction age of a building and its renovation age? Here’s an example: If a laboratory was built in 1985, its construction age would be 31 years. If that same lab underwent a major renovation (a project within a building in which the total cost is over 50% of the total replacement value of the building and affects all major systems) in 2000, its renovation age would be 16 years. This type of asset reinvestment effectively resets the clock and restores the lifecycles on all major systems.

When building age is more than just a number

During the discovery process, a mid-sized west coast university was shown that their construction age is 43 years (blue line) and their renovation age is 40 years (green line), a difference of just three years. Their peers have a higher construction age by nearly 10 years, but their renovation ageConstruction & renovation age vs peers puts their collective buildings below 30 years old. Through their facilities funding, these competitor schools are younger, fresher looking and have the space to meet the programmatic demands. In this case, age is not just a measurement of a how long a building has stood, it expresses the quality of the experience that building provides to students, staff, and faculty, as well as its appearance. Peers are changing the cards they have been dealt using strategic investments for renovations, while this University has not.

An additional age-related factor is the age distribution of the buildings on the University’s campus. Seventy percent of their buildings are 25 years old or older, which classifies them as higher risk for major component failures, increased operational demands, and more frequent emergency repairs. On the other hand, peers have less than 40% of their buildings in this high risk category.

Furthermore, the institution’s asset reinvestment need has nearly doubled on a dollars per gross square foot ($/GSF) basis over the last decade (as shown in the chart titled Asset Reinvestment Need Over Time). The orange triangles show that campus inspection scores have asset reinvestment need over timedropped 12% since 2008, which is below the level of their peers, who have been able to keep their asset reinvestment needs stable over the same time period. Often referred to as catch-up costs, asset reinvestment is the accumulated backlog of repair and modernization needs and the definition of capital renewal and deferred maintenance funding to correct them.

New Knowledge, New Direction

Equipped with this new knowledge, facilities leaders at the University are able to make the case for increased funding. They can show that change is needed because continuing on their current path will further hurt the curb-appeal of their campus as they approach a critical threshold for deferred maintenance in their buildings. Facilities leaders are focusing on the need to find one-time funding sources that can be earmarked for major renovations, a strategy that is being implemented by their peers. Funding scenarios and debt capacities are now at the forefront of the University’s game plan for the future. They are exploring ways to increase funding, better target projects with the most impact, and group their facilities into categories based on their relationship to institutional mission, in hope of reversing course on campus.

 

 

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