january 2009 presented by mark swindlehurst. what is the total area (m2 or acre) of the lancaster...

Estates Challenges

January 2009Presented by Mark Swindlehurst

What is the total area (m2 or acre) of the Lancaster University Estate ?

How many bed spaces does Lancaster University have ?

What was Lancaster Universities position in the 2008 People & Planet Green league table ?

Pre-Dinner Quiz

Lancaster University = 360 Acres 1,455,000m2

Equivalent to 196 Man Utd. football pitches

Total Residential Accommodation

7,109Bedspaces

Residential - UPP

4,425 Bedspaces

3340 Ensuite

1018 Non-ensuite

49 x1 bed flats

9 x2 bed flats

Residential – Lancaster University

2,684 Bedspaces

877 Ensuite

bedspaces

1710 Non-ensuite

bedspaces

42 x 1 bed flats

14 x 2 bed flats

5 x 3 bed flats

3 x 4 bed flats

Maintaining our Estate – at a sustainable level

Managing Space & Utilisation

Understanding the ‘true’ operating cost of the Estate

Supporting and reporting on our Environmental Impact and Carbon Reduction.

The Challenges

Age of the Estate (Buildings by m2)

Pre 1960 1960-1969 1970-1979 1980-1989 1990-1999 2000-20090%

5%

10%

15%

20%

25%

30%

35%

40%

Estate Management Statistics (EMS)

Royal Institution of Chartered Surveyors (RICS)

Gross Internal Area (GIA)

Net Internal Area (NIA)

Condition of the Estate

Royal Institution of Chartered Surveyors (RICS) grading:

A: New

B: Sound, operationally safe and exhibiting only minor deterioration

C: Operational, but major repair or replacement is needed in the short to medium term

D: Inoperable or at serious risk of major failure or breakdown

2008/9 Condition of Estate (GIA)Non-residential

A24%

B45%

C31%

D0%

Source: 2008/9 Conditions Survey

Building Conditions Non-residential

A B C D A B C D2006/7 2007/8

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2008/9

Building conditions benchmarked on 1994 group (Non-residential)

Lancaster University

University of Bath

University of Durham

University of East Anglia

University of Essex

University of Reading

University of Surrey

University of Sussex

University of Warwick

University of York

0% 10% 20% 30% 40% 50% 60% 70% 80%

Building condition % GIA condition A Building condition % GIA condition BBuilding condition % GIA condition CBuilding condition % GIA condition D

Source: EMS 2006/7

HEFCE/SMG estimate the sustainable estate provision for space to average £147.40 per m2 annually across UK HEIs on the basis of the Estate Management Statistics (EMS) data for 2002-03.

This cost comprises: • operating cost: £43.80 per m2 • maintenance cost: £53.40 per m2 • depreciation cost: £50.20 per m2

Add the opportunity cost of capital of £45.10 per m2

The total estate provision is £192.50 per m2

Sustainable Estate - Cost

2002/03 • operating cost: £43.80 per m2 • maintenance cost: £53.40 per m2

2008/09 (allowing 3% pa inflation) • operating cost: £50.77 per m2 • maintenance cost: £61.90 per m2

Sustainable Estate cost £113/m2

HEFCE/SMG define the total estate provision as the cost of keeping buildings in their current condition. Therefore, the cost of maintenance includes the cost of all maintenance required to keep the quality of a building’s fittings in good condition.

Maintenance costs

Operating costs are the short-run costs of using a building. Using EMS data, HEFCE/SMG defined operating costs as the sum of an HEI’s energy, rates, water, sewerage, cleaning, security and porterage costs, its insurance premiums and the HEI’s internal and external property management costs.

Operating costs

HEFCE/SMG define a building’s depreciation cost as the sum that must be saved each year to be able to replace a building at the end of its natural life and pay for periodic refits to the building.

Depreciation Cost

The opportunity cost of capital is the flow of earnings an HEI forgoes by owning a building rather than selling it and investing the proceeds.

Therefore, to find the opportunity cost of the capital tied up in the estate, it is necessary to estimate the price that the various parts of the estate would fetch in the market place.

The opportunity cost of capital

The Blue Elephant

Operating & Maintenance cost = £113/m2 (excluding depreciation & opportunity costs)

GIA or NIA

115,000m2 x £113/m2 = £13 million pa (excludes residences)

Maintenance only = £62/m2

115,000 x £ 62/m2 = £ 7.13 million pa

The Blue Elephant

Finance Strategy – key parameters

2008 2013

Insured Value of Estate £420m £500m?

Cash Generation £17m £23m

Surplus target 4-5% 5%+

Repairs & Maintenance £3m £8-9m

Debt to Income 23% <50%

Maintenance – 1.8% of insured asset value

20

05

/06

20

06

/07

20

07

/08

20

08

/09

20

09

/10

20

10

/11

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Gap Funded

£'000

ISS 2600m2 = £ 294k

Waterside 4000m2 = £ 452k

LICA 3000m2 = £ 339k

Circa £ 1.1m

Additional O&M Cost

On revenue we appear to be under investing

But....

Capital Programme Spent to    Projected

Spend   Projected as at 30th November 2008

Budget July '08 08/09 2008-09 2009-10 2010-11 Spend

£'000s £'000s £'000s £'000s £'000s £'000s £'000s

Major Projects £1m+        

County South 11,000 275 123 4,025 5,200 1,500 11,000

Sports Centre 20,000 1,227 34 6,723 11,050 1,000 20,000

ISS New Building 9,900 1,992 1,230 7,308

601 9,900

LICA 10,000 253 138

422 5,325 4,000 10,000

Biology & ES 3,557 2,208 1,359 1,352 3,557

    -

Student Learning Grid 3,000 139 93 1,861 1,000 3,000

Grizedale 3,051 206 153 2,044

801 3,051

Waterside 12,000 273 246 2,227 8,300 1,200 12,000

Health & Medicine (new building) 12,000 - -

500 4,500 7,000 12,000

Conference & Kitchen Facilities 3,500 - - 1,000 2,000

500 3,500

88,008 6,572 3,375 # 27,462 38,777 15,200 88,008

Rolling Programs    

Estates - Backlog Maintenance 5,165

970

52

2,332

1,000

750

5,165

Landscaping 3,300

674

12

944

1,182

500

3,300

Sports Facilities 2,166

4

-

1,162

500

500

2,166

Utilities Infrastructure 6,000

71

8

3,929

1,000

1,000

6,000

Lecture theatre refurb 2,500

64

0

1,436

500

500

2,500

Minor Works 2,100

1,086

286

314

350

350

2,100

Social Provision 2,250

666

19

584

500

500

2,250

P/E VAT (On Additions) - 625

- 52

-

23,481

3,398

448

10,326

5,032

4,100

23,481

Space Management We haven’t yet established the budgets to

maintain our existing built estate If we are to manage our costs – we also

need to better manage space and this includes utilisation

We are seeing positive improvements in the centralised timetabling and room bookings

The more space we build, the more monies we need to operate and maintain it

Do we really need more space ?

Space by type

Acade

mic/Admin149,140m247%

Residential (LU)55,941m2

18%

Res-idential (UPP)

111,460m235%

Faculties

Faculty of Arts

& Social Sciences 43,078

m241%

Faculty of Sci-ence & Tech-

nology 45,581 m2 44%

Man-age-ment

School 12,582

m212%

School of Health & Medicine 3,403 m2

3%

Central Facilities

Centrally bookable teaching

and learning rooms10,882

m236%

IT rooms3,993 m213%

Library services15,262

m251%

We need to manage and minimise energy use.

We are taking part in the HECMP We already subscribe to BREEAM for all our

Developments. Lifecycle costs, not capital costs ! Awareness of the costs in running the Estate Reduce, Reuse, Recycle Sustainable & Renewable energies

Energy & Environment

Energy Consumption (KW/h) per student FTE

2004/5 2005/6 2006/7 06/07 Mean 06/07 Lower quartile

06/07 Upper quartile

Lancaster University Sector

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Kw

/h

Source: EMS 2006/7

People and Planet Green League 2008 Published by The Times Higher Education in

June 2008 Highlights institutions environmental

performance Enables students to make choices about

institutions based on their ‘green’ credentials as well as academic

Lancaster Uni ranked 43 of 119 Universities Key Performance Indicator (KPI) for University

Council

People and Planet Green League 2008 Benchmarked on 1994 group

We need to interrogate and understand our operating costs

We need to acknowledge the Blue Elephant and increase revenue budgets.

We need to agree the expenditure/investment plan against ◦ Health & Safety◦ Strategic Priorities◦ Condition Survey Data

We need to think strategically about space We need to drive the Environmental initiatives

Summary

3D Fly through