Viewers will learn how Oregon University System (OUS) made the case for a 500% capital budget increase from 2001-03 to 2009-11 to attack deferred maintenance. Representatives from OUS, Portland State University (PSU) and Sightlines will discuss they used performance measurement and analysis, developed a political strategy for securing resources, and are implementing a plan for rapidly enacting capital projects at the campus level. Additionally, Portland State University (PSU) will provide an excellent case study on the impact of the new funding. With a very densely populated urban campus, one of the oldest space profiles in the system, and the largest backlog of deferred projects, the additional funding significantly impacted PSU. PSU will discuss their strategic selection of renovation projects, which both greatly benefited academic programs and improved the overall condition and appearance of campus.

1. How the Oregon University
System is Attacking Deferred
Maintenance
Jim Kadamus, Bob Simonton, &
Robyn Pierce
May 7, 2012
Denver, CO

2. Jim Kadamus- Vice President, Sightlines LLC
NATIONAL TRENDS IN HIGHER
EDUCATION FACILITIES

3. Campuses are getting older
More high risk space (over 50 years renovation age) on campus
30%
25%
20%
15%
10%
5%
0%
(%) Square Footage over 50 years old
(Renovation Age)
2007 2008 2009 2010 2011

4. New space investment falls with recent economic downturn
2010 and 2011 investment in existing space exceeds investment in new space
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
2007 2008 2009 2010 2011 est
$ in Billions
Capital Investment on New Space

5. Capital investment moves in cycles over time
$7
$6
$5
$4
$3
$2
$1
$0
Recurring capital investment remains steady
Capital Investment in Existing Space
$/GSF
2007 2008 2009 2010 2011
$/GSF
Annual Stewardship Asset Reinvestment

6. Capital Investment Mix since 2005
Proportionately less investment in space as overall capital funding grows
Total Project Spending Mix
14%
28%
FY2005
14%
35%
9%
FY2011
14%
30%
17%
33%
6%
Building Envelope Building Systems Infrastructure
Space Renewal Safety/Code

7. “Backlog of needs” are increasing
Backlogs up about $10/GSF over last five years
Total Backlog $/GSF
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
2007 2008 2009 2010 2011
$/GSF

8. Case Study: State System
Institutions with lower backlogs have lower operating costs
$3.95
$4.42
$0.24
$0.22
$5.00
$4.80
$4.60
$4.40
$4.20
$4.00
$3.80
$3.60
$3.40
$3.20
$3.00
Backlog less than $100/GSF Backlog more than $100/GSF
Operating Expenditures, $/GSF
Comparing Cost of Facilities
(High vs. Low Backlog of Need)
Daily Service Planned Maintenance

9. National trends creates issues for Higher Education
More buildings are crossing over into higher risk age profile and
will increase campus backlog unless addressed
Shrinking capital and increasing debt will make setting clear
priorities for capital renewal critical
Projects are shifting away from space and programmatic
projects and more into building enhancing type work
Backlog is growing and has grown by $10/GSF over the last 5
years

10. Sightlines Profile
Common vocabulary, consistent methodology, credibility through benchmarking
The annual
investment needed
to ensure buildings
will properly
perform and reach
their useful life
“Keep‐Up Costs”
Annual
Stewardship
The accumulated
backlog of repair
and modernization
needs and the
definition of
resource capacity to
correct them.
“Catch‐Up Costs”
Asset
Reinvestment
Asset Value Change
The effectiveness
of the facilities
operating budget,
staffing,
supervision, and
energy
management
Operational
Effectiveness
The measure of
service process, the
maintenance
quality of space and
systems, and the
customers opinion
of service delivery
Service
Operations Success
310+ Campuses in 42 States
54% Public; 46% Private
Database of 23,500 buildings
and 835 million GSF
Tracking $5.9 billion in
operating budgets…
…and $8 billion in capital
projects

11. Bob Simonton – Assistant Vice Chancellor for Capital Programs, OUS
OREGON UNIVERSITY SYSTEM

12. Oregon Space in Context
FY11, 69% of space over 25 years old, compared to 71% in FY07
Over 50, 35% Over 50, 40%
25 to 50, 36% 25 to 50, 29%
10 to 25, 14% 10 to 25, 16%
Under 10, 15% Under 10, 15%
Oregon 2007 Oregon 2011
Total Oregon Square Footage: 12.5M
# of Buildings: 405
# of Developed Acres: 1,200+
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Renovation Age Distribution

13. OUS Total Backlog of Need
Recent capital investments have started to decrease backlog
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
FY2007 FY2008 FY2009 FY2010 FY2011
$ in Millions
OUS AR Backlog Total
FY07‐FY11

14. $250
$200
$150
$100
$50
$0
State Project Investment FY07‐11
The system invested over $850 million over the past 5 years
FY2007 FY2008 FY2009 FY2010 FY2011
$ in Millions
Total Capital Investment into Space
Projects in Millions
Existing Space New and Replacement Space

15. Stewardship Falling Short of Target, One‐Time Helping Sustain Value
In FY11, one time capital helps to increase NAV for the first time
$140
$120
$100
$80
$60
$40
$20
$0
2007 2008 2009 2010 2011
Millions
Oregon System Target
FY07‐FY11
Annual Stewardship Asset Reinvestment
Target Need
Increasing Net
Asset Value
Sustaining Net
Asset Value
Decreasing Net
Asset Value

16. FY07 FY08 FY09 FY10 FY11
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Understanding the NAV
NAV is in “Balanced Portfolio” stage
“Keep Up” Stage: Primarily new or
recently renovated buildings w/
sporadic building repair & life cycle
needs
Balanced Portfolio Stage: Buildings
are beginning to show their age and
may require more significant
investment and renovation on a
case‐by‐case basis
“Catch Up” Stage: Buildings require
more significant repairs; major
building components are in jeopardy
of complete failure; large‐scale
capital infusions or renovations are
inevitable
NAV Index FY07 – FY11
(Replacement Value – Building Needs)
NAV= Replacement Value

17. OIT
U of O OSU
EOU
WOU PSU
SOU
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Understanding the NAV by Institution
Campuses distributed across stages; multiple capital strategies needed
“Keep Up” Stage: Primarily new or
recently renovated buildings w/
sporadic building repair & life cycle
needs
Balanced Portfolio Stage: Buildings
are beginning to show their age and
may require more significant
investment and renovation on a
case‐by‐case basis
“Catch Up” Stage: Buildings require
more significant repairs; major
building components are in jeopardy
of complete failure; large‐scale
capital infusions or renovations are
inevitable
NAV Index FY11
(Replacement Value – Building Needs)
NAV= Replacement Value

18. Oregon System FY07
Mix of Spending
16%
24%
16%
39%
5%
Capital mix of spending
OUS’s mix of spending shifted towards infrastructure and seismic projects
Oregon System FY11
Mix of Spending
5%
17%
34%
25%
19%
Bldg. Envelope
Bldg. Systems
Infrastructure
Space
Code

19. OUS Longitudinal Energy Consumption
OUS institutions decreasing consumption with the help of infrastructure projects
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2007 2008 2009 2010 2011
BTU/GSF
Average Energy Consumption / GSF
Fossil Electric
Top 3 Energy
Reductions
(since FY07)
PSU 29%
WOU 11%
SOU 8%
PSU, WOU and SOU
spending since FY07
5%
17%
33%
26%
19%
Bldg. Envelope Bldg. Systems
Infrastructure Space
Code

20. Oregon University System
Investments at the right places – Big Impact!
OUS’s campuses are aging
Up until FY10, backlog was growing annually
With the increase of funding and putting investments into the
right projects (building systems and infrastructure), OUS was
able to stabilize and reduce the backlog
 NAV started to increase due to a combination of annual
investments and one‐time capital infusions
Big impact on energy consumption with new infrastructure
project, decreased total consumption by 5% since FY09

21. Robyn Pierce – Director of Facilities, PSU
PORTLAND STATE UNIVERSITY

22. Age profile
Decreasing the space over 25 years old over time
17%
3%
56%
25%
13%
9%
52%
26%
20% 21%
36%
23%
60%
50%
40%
30%
20%
10%
0%
Under 10 10 to 25 25 to 50 Over 50
% of GSF
GSF by Reno. Age Category
PDX 2007 PDX 2011 Peers 2011

23. Recent investments address historical underfunding
Stewardship spending has increased with reinvestment growth
$35
$30
$25
$20
$15
$10
$5
$‐
Peers PSU
FY2007 FY2008 FY2009 FY2010 FY2011 FY2007 FY2008 FY2009 FY2010 FY2011
$/GSF
Total Project Spending
Annual Stewardship Asset Reinvestment
Peers’ Longitudinal Average: $4.04/GSF
PSU’s Longitudinal Average: $12.78/GSF

24. Asset reinvestment is increasing net asset value
Increasing annual funding combined with one‐time capital having an impact
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
Increasing Net Asset Value
Sustaining Net Asset Value
Decreasing Net Asset Value
2007 2008 2009 2010 2011
$ in Millions
Total Project Spending vs. Target
FY07‐FY11
Annual Stewardship Asset Reinvestment Target Investment Range

25. FY07 FY08 FY09 FY10
FY11
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Understanding PSU’s NAV over the years
NAV is in trending upwards
“Keep Up” Stage: Primarily new or
recently renovated buildings w/
sporadic building repair & life cycle
needs
Balanced Portfolio Stage: Buildings
are beginning to show their age and
may require more significant
investment and renovation on a
case‐by‐case basis
“Catch Up” Stage: Buildings require
more significant repairs; major
building components are in jeopardy
of complete failure; large‐scale
capital infusions or renovations are
inevitable
NAV Index FY07 – FY11
(Replacement Value – Building Needs)
NAV= Replacement Value

26. Smith Memorial
Student Union, 93%
URBAN CENTER , 83%
WEST HEATING PLANT ,
61%
SIMON BENSON HOUSE
, 57%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Bringing up the campus NAV
Newer buildings are in “Keep Up” stage; many buildings in “Catch Up” stage
“Keep Up” Stage: Primarily new or
recently renovated buildings w/
sporadic building repair & life cycle
needs
Balanced Portfolio Stage: Buildings
are beginning to show their age and
may require more significant
investment and renovation on a
case‐by‐case basis
“Catch Up” Stage: Buildings require
more significant repairs; major
building components are in jeopardy
of complete failure; large‐scale
capital infusions or renovations are
inevitable
PSU By Building
(Replacement Value – Building Needs)
NAV= Replacement Value

27. Large investment into infrastructure and seismic upgrades
Shift into building and energy enhancing projects
PSU FY07
Mix of Spending
7%
23%
12%
54%
4%
1%6%
42%
17%
34%
PSU FY11
Mix of Spending
Bldg. Envelope
Bldg. Systems
Infrastructure
Space
Code
 $15.5M spent on seismic projects
 $22.8M spent on utility infrastructure
upgrade projects

28. Asset reinvestment need versus peers
Recent investment has decreased backlog by 20% since FY09
2007 2008 2009 2010 2011

29. Facilities operating budget
Daily service budget is over $1.00/GSF below peers
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

30. Energy cost and consumption
Infrastructure investment has major impact on consumption in high cost market
Since FY09, PSU saved a total of $1.87M due to reduction of
energy consumption
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

31. Portland State University
Shifting in the right direction
PSU had an aging campus with not a lot of capital resources
After receiving a large influx of money starting in FY09, PSU has
increased both keep up and catch up investments
With the capital and type of investments, they were able to
decrease the project backlog by 20%
 Seismic projects and infrastructure projects were large projects
that contributed to energy efficiency and safety/code
compliances
With the utility infrastructure upgrade project, PSU’s total
energy decreased by 40% since FY09
Limited operating budget has required hard choices on
allocation of staff

32. Investment strategy and project selection based on facts
Using the detailed analysis for multi-year investment
planning
100%
90%
80%
70%
60%
50%
40%
Net Asset Value vs. Program Value
By Building
High Program Value, High NAV
Low Program Value, High NAV
Focus on system work, minimal space
4 5 6 7 8 9 10
Building Condition (NAV)
Value of Facility to Program
1‐10 scale, 1= low, 10 = high
Maintain & protect
High Program Value, Low NAV
Repairs & Space Improvement
Low Program Value, Low NAV
Emergency work only

33. Questions or Discussion
Thank you!