Claudius Brown

1

Creating a Framework for Effective Capital
Management

• Claudius Brown
• Business Director Eastern Canada
• VFA Executive Briefing
• November 7, 2008

2
Agenda

• Capital Planning Challenges
• Questions to Answer
• Case Studies
• The City of Richmond, BC
• Ontario Colleges Universities
• Elements of a Capital Planning Solution

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Common Capital Planning Challenges

• Aging infrastructure
• Evolving functional requirements
• Lack of accurate, complete information about
  existing assets
• Insufficient funds to address all needs
• Difficulty tying investments to strategic
  business goals

4
Typical Solutions

• Making the best of it
• Ballpark deficiency estimates
• Excel spreadsheets
• Subjective prioritization processes
• Consequences
• Inability to definitively tie projects to
  organizational mission
• Lack of confidence in prioritized capital
  requirements
• Cant determine where to invest and what is past
  value (good money after bad)

5
Trends in Capital Planning Meeting Client Needs
Questions You Need to Answer To Contribute
Business Value

• Who is your customer?
• Is the building suited for its purpose?
• What condition is the building in?
• What is the cost of current requirements?
• How should needs be prioritized?
• What is the optimal capital management approach?

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Many Pieces to the Puzzle

• Capital Management
• Maintenance Management
• Lifecycle Management
• Space Planning
• Lease Management
• Project Management
• Energy Management
• Spend Management

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Putting the Pieces Together

• How two different organizations are addressing
  their capital management challenges
• City of Richmond, BC
• Ontario Universities System

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City of Richmond, BCOrganization

• Population of 182,000
• Municipal building portfolio of 145 buildings
• Public Safety
• Community
• Parks
• Administration
• Service

145 Municipally managed buildings
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City of Richmond, BCChallenges
Answering the6 whats of asset management

• Aging municipal infrastructure
• Council requested report on sustainability
• Long-term costs to maintain
• Current conditions

• What do we own?
• What is it worth?
• What is its condition?
• What is the deferred maintenance?
• What is the remaining service life?
• What do we fix first?

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City of Richmond, BCSolution

• A Phased Assessment Program
• Phase 1 Community/Public Safety Buildings
  completed
• Phase 2 Community Use facilities completed
• Phase 3 All City Buildings completed
  Re-assessment program commenced
• VFA.facility Capital Planning System
  Implementation
• Costs, Projects, Plans, Funding Options

The credible and defensible information from
the VFA database is providing us with the tools
we need to adopt and implement an infrastructure
sustainment policy. Odd Bell, Facility
Project Planner, City of Richmond
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City of Richmond, BCResults
Funding Allocations by Program

• Central database of building information
• Accurate cost estimates for all deficiencies
• Able to model funding options
• Maintain current funding
• Maintain current condition
• Improve FCI to .05 in 10 years
• Answered 6 whats of asset management
• Able to demonstrate how investments support of
  the Citys long-term goals
• Justifiable funding increases

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Ontario Universities SystemOverview
VFAs software has become an integral part of
our planning process. Kevin Gallinger, Manager,
Maintenance Services at Carleton University

• Comprised of 18 universities across the province
• Programs in arts and science, doctoral law,
  education, engineering, medicine or nursing
  programs
• Encompasses 70 million square feet of
  facilities

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Ontario Universities SystemChallenges

• Rising enrollments straining resources for
  capital improvement
• Each university had different methods for
• Compiling data about facility condition
• Prioritizing needs
• Estimating costs
• Lacked defensible data on existing facility
  conditions and deferred maintenance needs across
  the portfolio
• Necessary to build a persuasive argument to the
  provincial government for more funding

40 Enrollment increase expected by 2010
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Ontario Universities SystemSolution

• Facility Condition Assessment Project (FCAP)
• Collected comprehensive facilities condition data
• Provided best-practice facility management tools
  to physical plant departments
• 20 of each universitys portfolio assessed each
  year
• VFA.facility software central database for
  condition information
• Provides physical plant directors with built-in
  RSMeans cost data to estimate cost of facility
  projects, what-if funding scenario tools

20 of each universitys portfolio now assessed
every year
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Ontario Universities System Results
40 million annual increase in Renewal Program
budget

• Accurate condition information about entire
  portfolio at fingertips
• Able to defend case for long-term facility
  planning initiatives with detailed data
• Promoted understanding of impact of investment
  decisions
• Two years after FCAP program began, University
  System awarded 93 million in deferred
  maintenance funding
• Increase of 40 million from previous years
• Funding for Renewal Program increased by 40
  million each year over 3 year period

High quality, reliable data has enabled us to
raise the profile of facility management and
planning among university presidents, governing
boards and government agencies. Duncan
Watt Vice President, Finance
Administration Carleton University
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SummaryKey Elements of a Capital Planning
Solution

• Ongoing assessment program to ensure accurate
  foundation for capital planning
• Centralized source of dynamic asset information
• Consistent methodology for data collection and
  prioritization
• Analytic tools to forecasting funding scenarios
• Ability to integrate various types of information
  into the planning process

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Questions?
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Questions?

• Claudius Brown
• Business Director Eastern Canada
• cbrown_at_vfa.com
• [phone]
• www.vfa.com