Filter by

Strategic Physical Asset Advantage

Corrective Maintenance: A Strategic Institutional Issue?

April 25, 2019

With the total backlog of corrective maintenance at higher education institutions estimated to be over $40 billion, it is likely one of the largest expenses higher education faces in the future for an institution with a “bricks and mortar” campus to succeed.   This estimate accounts for over one billion square feet of campus facilities* which equates to a cost of about $40 of corrective maintenance needed for every square foot of space on campuses nationwide.  You can do the math at your institution, but as an example, if I worked at a campus with one million square feet of space, I could estimate that my backlog might be about $40 million.  To take it a step further, let’s say that my one million square foot campus houses approximately 2,500 students, which is feasible when applying a 400 square feet per student allocation, then the cost per student for deferred maintenance is  $16,000 per student.   Compared with the average cost to recruit a student at approximately $2,400 for private higher education* and to instruct a student at almost $18,000 per year*, the deferred maintenance cost could be considered quite strategic.

Leadership teams spend considerable effort and attention on the recruitment of students as well as student instruction to determine the most effective and efficient way to conduct these operations. However, the responsibility for corrective maintenance issues most often lies with the Director of Facilities/Physical Plant who is not typically part of an institution’s leadership team.  Moreover, the vast amount of corrective maintenance is not easily visible to anyone on campus, and therefore, they do not even know it exists until something fails that impacts the campus experience.  Often, that is when the problem is corrected, and not sooner.  Why not budget accordingly then?  Using the same example as above, if the $40 million is amortized over 40 years, the monthly payment would be about $220,000/month or approximately $2.6 million each year, which many institutions are not able to fund, and yet, doing less than that only perpetuates the problem because this is the cost to catch up on the deferred maintenance problem.

In order to achieve “zero” corrective maintenance, an institution would need to invest about 2-4% of the current replacement value (CRV) of their facilities into “maintenance,” meaning for a 1 million square foot campus, at $300/square foot, there would be 300 million dollars in CRV.  At 2-4% this equates to an annual maintenance investment of $6-12 million, or between $2,400-4,800 per student each year to maintain a campus of this size.  Combine this with existing deferred maintenance (per the first calculation), and you’d be looking at a range of $3,600-6,000 per student to catch up and keep up on their facilities maintenance if amortized over 40 years.  This represents the “real” cost of building ownership and maintenance that needs consideration.

Organizations such as SCUP, NACUBO, and APPA have exposed this issue for years, and many companies, including Performa, have been trying to address this issue in higher education because the campus environment has a significant impact on the recruitment of students and student experience on campus.  One of Performa’s clients, the University of St. Thomas located in St. Paul and Minneapolis, MN understands the issue well, and has made a commitment to addressing their deferred maintenance needs through a Facilities Renewal Program that identifies all physical asset needs, whether corrective maintenance or programmatic in nature, and evaluates each with respect to its ability to align with the institutional strategic plan.   Jim Brummer, the Associate Vice President for Facilities, said that “corrective maintenance is very much a priority at the University, from the Board of Trustees down, when the inquiry began about 15 years ago with an attempt to quantify the backlog from information provided by the facilities staff.”  Since Jim arrived at the University of St. Thomas in 2012, he has committed to reducing the backlog of deferred maintenance on campus beginning with the development of a corrective maintenance plan to quantify and qualify the total backlog of corrective maintenance on campus.  Working with Performa, the process included a visual inspection of all campus space by our team of engineers and architects and incorporated information provided by the University’s facilities department to deliver an objective assessment and prioritized plan for all corrective maintenance needs on campus.  The corrective maintenance plan identified approximately $67 million in deferred maintenance need campuswide, and Jim has said that “the corrective maintenance planning has informed our decision making about future campus improvements and our current expansion plan.  Within the next 3-5 years, the University is planning to invest $20–25 million to resolve much of the most significant needs that were identified.  $7-12 million will be trimmed from the list based on the major renovation of three of the oldest residence halls on campus in the next four years, and a new academic building that is currently being planned will replace an older facility with the largest deferred maintenance backlog.   The most significant impact on the deferred maintenance backlog comes when programmatic change and corrective maintenance can be address simultaneously in projects that align with our strategic plan which is what is happening now.”

Jim Brummer
Associate Vice President for Facilities
The University of St. Thomas

Although many institutions do not have the funding, nor a prioritized plan to address corrective maintenance the way the University of St. Thomas is able to do, most address their corrective maintenance needs in some way, typically during the summer months when there are less student and faculty activities on campus.    Heading into that season,  I challenge you to walk through campus at the beginning of the summer with your eyes wide open to the corrective maintenance needs you can see such as pavement repair, tuckpointing, painting, or window replacement, keeping in mind that for everything you can see, there is a significant amount more that you can not see such as aging building infrastructure systems.  At the end of the summer, take another walk through campus to see if you notice the transformation that has occurred.  I sincerely hope that it exceeds your expectations.

Sources:
   *Sightlines; 2015 State of Facilities
  *RNL; Cost of Recruiting an Undergraduate Student Report 2018
  *National Center for Education Statistics Fast Fact report for 2015-2016
  *Jim Brummer was interviewed for this article on April 19, 2019.

View previous articles written by Carolyn Glime, here.

 

Leave a Reply

Your email address will not be published. Required fields are marked *