Capital cost forecasting

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Improve your accuracy when planning a budget

A simple tool for analyzing your data

One of the most crucial needs for a facility professional is obtaining reliable data on which to base capital budgeting decisions. Your best cost data may be readily available to you in your past project data. This article will give you suggestions for organizing your project data to extract useful information that will make your future cost projections more reliable.

You likely already have all the tools you need. Using your own files and a simple spreadsheet program like Excel, you can manipulate past project costs to accurately forecast future projects, even if they're in multiple locations. This article will show you how, step-by-step.

Gathering base data

Start by going into your files and contracts for past projects. For our purposes, we went back to 2001. Using your spreadsheet program, set up columns for the data you believe to be most relevant. Consider how you want to reference this information in the future. Which comparisons are going to be of the most value to you? Include columns to categorize your information for any way you think you might want to group, sort, or filter the information.

Our example below includes these categories:

      a.  Project name

      b.  Project number

      c.  Year built

      d.  Campus location – Which metropolitan area is it in or near.

      e.  Specific building

      f.   Type of structure – Such as modular steel, block and plank, or renovation.

      g.  Style of building – Such as dormitory, townhouse, hotel, suite, or apartment.

      h.  Delivery method – Such as open bid, design/bid/build, or bid by invitation.

      i.   Construction cost – In dollars for that specific year, these will be adjusted later.

      j.   Project cost – Same as above

      k.  Gross square feet

      l.   Number of beds

Next enter in the data. Be clear, specific, and most of all, consistent with your definitions. 

You’ll see in the example above, we used the term “Block and Plank” to describe one structure. This term must have the same meaning for every project. Be as complete as possible with each description.

Follow these important tips in your spreadsheet when setting up your information:

1. Have only one top row for headings.  Don't use subheadings anywhere in your table.
2. You should (almost) never merge cells.
3. Never mix numbers that will be used in formulas with text in the same cell.  For example, while it’s fine to list something like “Building 17” in a cell to designate the name of the building, you would not put “100 SF” in one cell. Put the “100” in one cell and “SF” in another.
4. Never skip rows or columns.  This will complicate filtering and sorting data.

Adjusting for location

If your organization operates campuses in different geographic areas, you’ll have to take regional construction cost differences into account, such as materials, transportation, and labor. You can do this by using a location factor. 
For our purpose, we used information from RS Means Building Construction Cost Data. This provides a construction cost index for municipalities throughout the nation, based on national averages for materials and installation.The map at right lists some of the location cost factors in Reed’s 2014 edition. To adjust costs by location, multiply the base cost by the Reed factor and divide by 100. Your spreadsheet can be programmed to do this. If your project is located at the fringe of any of the listed metropolitan areas, you may need to adjust the factor by a percentage point or two to account for transporting materials from a nearby city or distribution center.

Adjusting for time

Next, factor in historical data. This is best done as a two-step process, first adjusting for known escalation using historic cost indexes to bring past costs to the present and then projecting the future cost with an escalation factor. 

Start by accounting for inflation. Again, the source we used for this was Reeds. Their index can be used to convert national average building costs from one year to another. For example, indices for costs every 10 years since 1970 include:

        1970 - 14.9

        1980 - 32.6

        1990 - 48.9

        2000 - 62.7

        2010 - 95.2   

To determine a cost in 1980 of a $200,000 building constructed in 1990, one would divide the index from 1980 (32.6) by the index from 2000 (62.7), then multiply the result (0.51993) by the 1990 cost ($200,000) to find the answer ($103,987.24).

   

     32.6 ÷ 62.7 = 0.51993 x 200,000 = 103,987.24

This too, can be programmed into your spreadsheet, enabling you to make estimates based on actual historical data. 

The table at left pulls all of this information together, listing the campus, the location factor, and the historical cost index. To project costs, you can derive a figure for escalation from the local region’s past performance then multiply it by the rate of inflation, which for the past decade has averaged about 2.4%. This figure tends to stay steady barring an unexpected occurrence.



Developing a forecast

Now, with your data and indices entered into your spread sheet and the formulas configured, you can use your old project data to forecast the costs of building the same structure in a different location in a different time period.

           

So, for example, if you’re budgeting for a new building in Atlanta to be completed in 2020, that will be similar to a structure you built in Chicago in 2010, you can estimate the cost of the new building by taking the data from your Chicago building and adjusting it for time and location.

By forecasting with this method, your department will provide more dependable data to all parties down the line who review and approve your budget requests. You have a more accurate picture of what costs will likely be based on what you know in the present and the trends of the past.

If you would like more information about organizing your facility data please contact us at capital.planning@truarchs.com  or call Mark Genovese in Marketing at (518) 785-5851, ext. 106.

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Writing budget requests

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How to write an executive summary

So you’re stressed about pulling together that big report next week? We can help you out!

You know you’ll have no problem preparing the sections with the numbers, charts, and specifics. But boiling it all down into an executive summary? You're not a writer!  Relax, this is going to be easier than you think.

Save it ‘til the end

It’s true that the executive summary is the most important part of a report. It will be the first page everyone reads, and maybe the only page. So it has to be thorough. But it shouldn’t be the first thing you write. 

In fact, you can’t write it until you know the results from all of your investigation and planning. Wait until you’ve finished everything else before you start.

Start simple

Organize your thoughts before you sit down to write.

Think about who’s going to read it – senior administrative professionals who make policy decisions. Some of them have a deep technical background, some may have only basic working knowledge. 

Regardless, they'll be busy. This is why your writing must be simple and direct:

• Use only non-technical language, there’s no guarantee that all readers will know the jargon.
• State the purpose of the report in one sentence.
• Sum up each section.
• Tell them where to find backup content if they want more detail.

Keep it short

An executive summary should be only one page. It doesn’t matter how complex the rest of the report is. Many times, your readers will give you their attention for only one page to make your case. This is why it’s called a “summary,” after all.  Instead of putting yourself in the mindset of constructing lengthy paragraphs, think in terms of:

• Short sentences.
• Bullet points (like this).
• Simple tables for financial information. 

Don’t be intimidated by the thought of a big report. In the history of
civilization, no one’s ever written more than one sentence at a time

.

Stay focused

If you have difficulty deciding where to start, a good rule of thumb is to look at the findings that led to your conclusions and recommendations. In a couple of sentences, summarize the:

• Project’s background and location.
• Purpose of your evaluation
• Methods you used
• Key findings

Be thorough

Even though you’re trying to keep it short, your readers are still relying on you for substantive information. This is why you must make sure your summary addresses:

• Key financial information
• Major deficiencies
• Options considered
• Specific drawbacks or compromises of the proposed solution.

Wrap it up

And now you have a finished report.
Wasn’t that easy?

Finally, end with your conclusions, explicit recommendations, costs and a proposed project schedule.

Remember – the purpose of your executive summary is to give a succinct answer to your reader’s question: “Why are you asking us to do this?”

At this stage, your reader may not yet be interested in the specific, technical details but rather in the purpose, the costs, and the results. Your job in writing an executive summary is to help your reader decide.

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Capital planning

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Planning your capital budget with confidence

Trudeau can help you successfully navigate the process

It takes a lot to manage a campus today.

You know exactly which buildings need upkeep, but you’re not sure which projects you should budget for next year and which can be deferred. How can you be confident – and demonstrate that confidence to your board – which projects are most important or the most urgent?

You need the data that only a comprehensive capital plan can provide.

Capital planning is Trudeau’s core business

The professionals at Trudeau Architects, pllc, can help you gather this information and analyze it. Whether your campus is one of higher education or healthcare, a capital budget is a major financial commitment. We can help you create a capital plan that maintains your infrastructure while keeping your budget under control.

The Trudeau team is unique because we understand every phase of the building cycle. We know that every building – whether it’s on a multi-building campus or a multi-campus institution – has its own needs in terms of security, aesthetics, energy use, and wear-and-tear. This is why we invest time and effort – integrating our staff with yours to work as one team – to conduct a meticulous examination of your physical plant and learn how your buildings are used.

Studying your facilities inside and out

Accountability is essential – the recommendations that come from your office need to be based on assessments that are thorough and information that’s reliable.

The Trudeau team will work with you to develop a formal procedure for documenting the condition of all building systems, including techniques, logistics, and scope. We will physically inspect property and interview those who use it every day.

Using this information, we’ll build a comprehensive database that lists necessary work items. Together, we’ll group these items into projects, based on the type of corrective action, priority and cost. We’ll help you assess whether repair or replacement would be more cost effective, offer options for each, and propose schedules for phasing them in over five and 10 year periods, estimating the capital needed each year. When the process is complete, you will have a better grasp of your facilities and the confidence to set budgets for maintaining them.

Capital planning brings results

Here are three different examples of how the Trudeau team has helped institutions devise strategies for capital repair and improvement:

Albany Institute of History & Art: A comprehensive plan for a small campus.

As part of a capital planning project at the Albany Institute of History & Art, Trudeau assessed the condition of the museum for safety, security and accessibility; and its mechanical, electrical, and plumbing systems. From this research, a plan was designed to a carry out a series of capital improvements, repairs and maintenance throughout the next decade. The team first put into place procedures to reduce energy use by adjusting air circulation, which has already saved more than 25% on energy costs. Then it resolved problems with paint adhesion and lighting to refurbish the popular Lansing Gallery and designed a canopy and new north entrance to address safety issues created by ice buildup. The plan is easily updated by staff and has been a vital piece in grant applications and fund raising.

Albany Law School: A subject-specific plan.

Trudeau was contacted by Albany Law School for a specific planning study that looked at options for replacing its historic windows while improving their performance, based upon set criteria establish by the college. The windows had generally exceeded their useful lives. A system was developed separating the various window systems into sets that were graded according to functional criteria. Each window set was then best matched against the attributes of several window construction types. The first phase has already been completed, preserving the overall tightness of the building envelope without compromising its aesthetics.

Binghamton University: A comprehensive plan for a large campus.

Binghamton University hired the Trudeau team to develop a comprehensive capital plan for more than 6,000 beds of student housing. During the process of assessing the student housing inventory, Trudeau determined that two of its oldest dormitory communities were in need of replacement. After the Trudeau team had completed the capital plan, it was hired back to develop a master plan for replacement of two of the existing housing communities. The master plan was completed by Trudeau in association with Burt Hill Architects (now Stantec) and used as the basis for the design and construction of more than 3,000 new student housing beds and associated buildings. These state-of-the art buildings have given Binghamton University a clear competitive recruiting edge in the region.

A well-thought out capital plan can help you make sure your campus is in the condition it needs to be to fulfill your institution’s mission. To do this effectively, you need a comprehensive look and a methodical approach. Trudeau Architects can guide you through the process so that you can address your campus’ immediate needs and build for the future.

Give us a call at (518) 785-5851 to find out more.

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Roofing design

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Roofing: A core competency

Institutional long-term study, design, and construction management

For more than 20 years, building envelope design has been a mainstay of our practice at Trudeau Architects. Our professionals work with institutional clients who need long-term solutions that meet the goals of long-term performance – such as sites with difficult access, buildings with sensitive occupants who cannot move out during the interim, meeting tight budgets, and short construction schedules.

Wide range, many locations

Our team has a long history of working with healthcare and education facilities, creating plans for maintenance, repair and replacement. Projects have included a wide range of roof types and conditions, from traditional built up systems, and single-ply systems such as EPDM and TPO, to metal. 

We have replaced roofing at Ellis Hospital in Schenectady, St. Peters Hospital in Albany, and at 16 New York State Office of Mental Health psychiatric campuses – including centers in Buffalo, the Capital District, Central New York, the Bronx, Elmira, and in the Mohawk Valley. We've completed well in excess of 700,000 square of medical building roof replacements in Upstate New York alone. 

Most projects have included asbestos abatement and hazardous material reviews, which we perform with a consultant team that includes firms with skills in engineering, nuclear and infrared roof scanning, hazardous material inspection and testing, and other specialties as required.

Knowledgeable, experienced staff

More than half of our staff is LEED certified and all of our staff is experienced with EO-111 and knowledgeable in EO-88 Build Smart NY. We regularly meet with manufacturers for updated training and information on changes in products, installation, and maintenance procedures, including Carlise-Syntec, Firestone Building Products, Versico Roofing Systems, Garland,Tremco, Mule-Hide, and several specialty manufacturers.

Do NOT disturb...

We're experienced with the sensitivities involved in working on projects over occupied spaces at schools and health care campuses. We understand the importance of coordinating mechanical systems and disruptive removal operations with continued occupancy requirements. As a small and specialized firm, we have a strong knowledge base and the competence to give you the quality final product you need with the professionalism you demand.

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Smart use of energy

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The Institute's newly renovated Sculpture Court. Robert Kerr Photography

Helping Albany Institute save energy & reduce operating costs

The smart use of energy has saved money for this past year for the Albany Institute of History& Art.

The Institute worked with Trudeau Architects for 18 months in 2011 and 2012 to review overall facilities, energy performance, and capital project planning. The Trudeau team identified areas for saving energy, improving program development, and budgeting long-term for facility upgrades.

“We’ve seen a decrease in kilowatt use and end-of-the-month billing totals,” said Joseph Benassi, the Institute’s director of facilities operations. “This past June, for example, we saved 22,000 kilowatt hours, compared to that same time last year. In July, we saved 51,000 kilowatt hours. These savings are impressive, considering how hot it was that summer. The changes have really made a difference and have helped our overall budget considerably.”

Reducing energy use



Climate control system. This diagram shows  the basic mechanical systems

controlling the indoor environment for the galleries and storage areas. Initial

energy initiatives included slowing the base fan speeds and fresh air intake by 50%.

The Trudeau team started by examining the facility, preparing budgets for the work, and assisting with securing the outside funding needed to carry it out.

The popular Albany landmark, one of the nation’s oldest museums, has high visitor traffic, so the Trudeau team made it a priority to minimize the construction related activities. The first phase of work was completed quietly without any noticeable change by the occupants, visitors, or sensitive collection artifacts – some of which can have a much narrower “comfort” range than the occupants.
First, the engineering team slowed the fan motors that circulate air throughout the facility. Museum mechanical systems often operate at full speeds, as though rooms are fully occupied. But all this circulation isn’t needed. Slowing air flow by 50% to spaces that are not fully occupied can reduce net power consumption by 88%, a significant cost savings.

Additional carbon dioxide sensors, which detect occupancy volume, were installed to assure the system motors would accelerate should environmental conditions warrant it. The team also reduced the volume of fresh air that came into the system from outdoors by half. This system, too, was working at rates required for peak design loads.

“Functionally reducing the fresh air intake reduces the amount of outside air that has to be conditioned to meet the very specific climate needs of the museum’s collections and occupant comfort,” said Bart Trudeau, the firm’s principal architect and chair of the Institute’s Facilities Committee. “Now the system takes in air only when required. And this doesn’t impact interior air quality during typical daily operations.”

Saving money through efficiency



Savings in Monthly kWh. This column chart shows the relative amount of power,
measured in kWh, from late Summer through Fall of 2012 compared with the prior
year. The initial measures of the energy initiative were implemented at the start of
August 2012. Heating and Cooling Degree Days were slightly greater in 2012
than 2011.

Improvements were also made to the software program that controls the Institute’s operating systems. Benassi and Michael Richards, a programmer from the Siemens, USA, office in Latham made adjustments to the software over the course of several days, monitoring the equipment via radio to verify that each speed drive/air unit did indeed slow or increase to the changed rate.

These changes allowed the water supply, which is chilled by the heating, ventilating and cooling system, to change temperature more efficiently in response to building’s load conditions. For example, if the building has a “low load,” the temperature can increase by a few degrees to save energy. With work completed in the summer of 2012, the projected savings in energy cost already began to accrue at the projected rates

The team projected, based on four months of actual data, that the estimated annual electrical savings of would be 30%. The greatest energy savings occurred in the moderate temperature months of spring and fall. Additional savings came from prolonging the life of its carbon and potassium filters, varying speed drives, and reducing wear of other mechanical system components.

For the next phase, the Institute is continuing to work with Siemens to study the set points, or drift boundaries, of the fresh air and main air handlers. They are working to determine the most cost-effective “space” between set points in the systems that can permit the mechanical systems to “coast” between upper and lower limits.

Sensors now monitor occupancy to adjust the environment.

“Once the data is programmed, we monitor the system approximately three times a day, keeping tabs on the temperature and humidity ranges,” Benassi said. “The system is self-sufficient, but will make adjustments if necessary here and there, which can include chill-water temperature. The chillers use the most electric, so monitoring them and streamlining the entire system regularly can really save money.”

Further work is being studied to improve the efficiency of the lighting systems without impacting the quality of the lighting required for displays.

“Collections and exhibits should be the priority of a museum’s operating budget,” Trudeau said, “not directing such funding toward facility improvements. With the changes we’ve helped introduce, the Institute can remain a vital cultural force in our community.”

Trudeau Architects, PLLC, is a facility master planning and architecture firm based in Latham, NY. This project was collaboration with the Exergen Corporation of Watertown, MA; Odyssey Energy Solutions of Delmar, NY; Siemens; and the Sano-Rubin Construction Company of Albany, NY.

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