Sustainability and Total Cost of Ownership Strategies for Higher Education

1. Sustainability and Total Cost of Ownership Strategies for Higher Education

2. Sustainability What Is Sustainability Sustainable Seattle 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 environmental well-being"http://www.scn.org/sustainable/susthome.html “Forum for the Future” "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 Earth's life support systems." Webster's New International Dictionary "Sustain - to cause to continue (as in existence or a certain state, or in force or intensity); to keep up, especially without interruption diminution, flagging, etc.; to prolong."

3. Sustainability For Higher Education Sustainability for Higher Education is Focused on the Overall, Comprehensive Balanced Interaction of the Academic, Social, Physical, Environmental and Economic Health of the University Over It’s Lifetime.

4. Total Cost of Ownership A Strategic Asset Management Process Which Considers ALL Costs and Requirements of Acquisition, Planning, Design, Construction, Operations and Maintenance, Renewal, Disposal, and Replacement Incurred over the Life of a Facility (typically 30 to 50 years). What Is It?

5. Sustainability & Total Cost of Ownership Balanced Sustainability Modeling Principles of Sustainability for Higher Education are Focused on the Overall, Comprehensive Value of the Academic, Natural and Physical Environment Over Their Lifetime. To be Successful, These Principals Must Address 5 (Not 3 or the “Triple Bottom Line”) Specific Components: Mission, Economic, Environmental, Social and Operations.

6. Sustainability & Total Cost of Ownership Mission Sustainability Fundamentally, the Reason for Being. Understanding the Core Goals, Responsibilities and “Mission” of the Institution. In This Case, Education of Students. This is the Overriding Component. Mission Sustainability Revolves Around Three Specific Components: • The Academic Program • Student Recruitment & Retention • High Caliber Faculty and Staff

7. Sustainability & Total Cost of Ownership • Economic Sustainability: • An Understanding of Investment Requirements and Life-Cycle Costs in a Total Cost of Ownership (TCoO) Framework. A Fundamental Responsibility to the Ensure that Dollars are Leveraged to Achieve the Most Efficient Result. Revenue Sources Include but are Not Limited to: • State & Private Allocations, Tuition and Student Fees • Donations and Foundation / Auxiliary Revenues • Equitable and Balanced Distribution

8. Sustainability & Total Cost of Ownership • Social Sustainability • An Integration of the Social Ramifications to the Facility Management Process with an Emphasis on Implementing Management Practices that Develop a Long-Term Approach in Support of the Educational Process for the Success of the Campus and the Community. • Policy and Leadership • Integration of the Learning Experience & Campus Management • A Strategic Approach to Integrated Planning

9. Sustainability & Total Cost of Ownership Environmental Sustainability: A Conscious Consideration and Strategy to Minimize the Initial and Long-Term Impacts on Natural Resources Through all Elements of a Facilities Design and Operation. • Commitment to Use of Environmentally Neutral Processes and Materials in Construction • Commitment to the Development of Polices Involving Environmentally Responsive Strategies

10. Sustainability & Total Cost of Ownership • Operational Sustainability: • An Understanding of the Operational Efficiencies, Impacts on Facility Stakeholders (Faculty, Students & Staff), Ability of the Organization to Sustain and Maintain the Investment or Initiative Throughout the Projected Service Life of the Facility or Complex. Key Components Include: • Formalized Asset Management Plan • Trained, Adequate Staff & Funding • Balanced Portfolio of In House and Contracted Services

11. Sustainability & Total Cost of Ownership These 5 Components Are Inherently Linked…

12. Sustainability & Total Cost of Ownership MISSION ECONOMIC OPERATIONS SUSTAINABLE VIABLE AFFORDABLE SOCIAL ENVIRONMENT EQUITABLE COMPATABLE LIVABLE

13. 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)

14. Sustainability & Total Cost of Ownership Relational Investments Principles of Relational Investment Dictate that Operating Cost be Linked to Capital Investment.

15. Sustainability & Total Cost of Ownership What Are Relational Investments • Relational Investments Include Capital Projects, Maintenance & Operations and Associated Staffing and Material Cost. Specific Components Include: • Design & Construction • Routine, Deferred & Preventive Maintenance • Utilities • Materials & Equipment

16. Sustainability & Total Cost of Ownership Categories of Relational Investments

17. Sustainability & Total Cost of Ownership HYPERLINK

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19. 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

20. Sustainability & Total Cost of Ownership Who Needs to Support This Effort? Simply Put, Without the Support of Senior Management and Most Importantly, the VP for Finance and Accounting or CFO, it is Difficult to Establish a Mandate to Incorporate the Requirement as Part of the Daily Management Process

21. Sustainability & Total Cost of Ownership Impacts? 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.

22. Sustainability & Total Cost of Ownership • 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 Million 100 Performance With Capital Renewal LostCapital Investment Plan Design Construct Cost (25%) $$$ 50 Performance Without Capital Renewal $$$ Accelerated Capital Investment 10 Operating Cost (75%) COST 0 15 30 45 Years TIME $10,000,000 Facility

23. Sustainability & Total Cost of Ownership Requirements • Cross-Training and Staff Exchange of Design and Operations and Maintenance Management Personnel • Understanding of How Life Cycle Cost is Controlled at all Stages in the Facility's Service Life • Maintain O&M Data and Design Decisions for Future Facility Design

24. Sustainability & Total Cost of Ownership Requirements • Assure Adequate Resources are Available to Implement Life-Cycle Cost Management Decisions • Architects and Engineers Must Include Holistic Sustainability Goals in Their Design Criteria and Considerations • Owner's MUST Consider the Long Term Economic Impacts of Their Short Term Decisions

25. Sustainability & Total Cost of Ownership Requirements • Assuring that Value Engineering Programs and Construction Contract Incentives and Other Procurement Mechanisms Demonstrate Savings in Expected Life Cycle Rather than Construction Cost Only • Requirement for Architects and Engineers to Document Clearly Their Design Decisions Made to Control Life Cycle Cost and the Subsequently Expected Operating Consequences for Each Facility

26. Sustainability and Total Cost of Ownership Strategies for Higher Education