On the Road to Fiscal Sustainability: Strategies for Addressing Deferred Maintenance

Deferred maintenance of aging college campuses is a growing challenge for academic leaders nationwide. Across the US, the estimated cost of deferred maintenance on college campuses has soared beyond $110 billion. How can educational institutions navigate this financial hurdle and ensure their campuses remain functional, safe, and attractive to current and prospective students? This staggering figure underscores the urgent need for strategic planning and proactive measures. 

With operating budgets tightening and enrollment numbers declining on many college campuses, the pressure to maintain and modernize facilities is intensifying. Implementing a Facilities Conditions Assessment (FCA) emerges as a pivotal strategy, enabling institutions to identify, prioritize, and develop a comprehensive long-term plan to tackle deferred maintenance. 

In this blog, we delve into effective strategies for addressing deferred maintenance, providing a roadmap to fiscal sustainability for academic institutions. I will share the tools and knowledge necessary for campus leaders to overcome this escalating fiscal crisis by leveraging insights from industry experts and a successful case study from a recent higher education client.

Evaluating Building Conditions Through an FCA 

Many college campuses have experienced construction "waves" over the decades: the post-WWII boom in the late 1940s and 1950s to educate returning veterans, the 1980s and 1990s to replace aging post-war buildings, and the current post-COVID surge to accommodate a new generation of learners. As new buildings are completed, older ones remain, presenting a significant challenge. How should institutions handle these aging structures? The answer lies in objectively evaluating them.

The FCA is a rigorous process to evaluate the condition of a building by placing a grade on each building system asset (structural, architectural, HVAC, electrical, plumbing, fire protection, fire alarm, and accessibility). A Facilities Conditions Index (FCI) is calculated by taking the total cost of existing repairs and dividing this number by the total estimated replacement value. For example, an FCI of 0.1 signifies a 10% deficiency, which is generally considered low. An FCI of 0.4 is a 40% deficiency, meaning the building needs extensive repairs or replacement. FCIs can be used to compare a facility’s condition to those of peer institutions. The FCA provides the owner with the following helpful data points:

1. Current conditions of building assets.
2. Forecast of each asset’s age and projected lifespan. 
3. Cost estimates to assist in capital project and deferred maintenance budgeting.
4. Identification of code or life-safety concerns.
5. Building replacement value.
    

BHDP recently worked with one of our higher education clients to complete an FCA and assess the overall condition and FCI of twenty-six existing buildings on campus. We also provided an assessment of campus accessibility and the general condition of parking lots and walkways.

Interviews with facilities managers enabled BHDP’s team to gain additional insight beyond visual inspection and understand functional and operational challenges. The final 997-page FCA report extensively documented deferred maintenance issues with narrative descriptions, supporting graphs and photographs, and the overall deferred maintenance cost for each building and the campus as a whole.

Utilizing the FCA to Develop a Long-Term Deferred Maintenance Strategy 

It is not uncommon for FCA findings to identify tens of millions of dollars in deferred maintenance on a typical college campus. This problem did not happen overnight and will not be solved overnight. Institutional leadership must adopt a strategic, forward-thinking mindset to address deferred maintenance effectively.

1. Proactively Prioritize

Comb through the long list of needs in the FCA to identify the systems that, if left unrepaired, could cause severe damage to other building systems due to failure. This deferred maintenance shortlist should be the recommended capital request for academic leadership’s approval to ensure that further building deterioration does not occur. For example, when working with our client, BHDP’s FCA team identified several critical life-safety issues requiring immediate attention and several building systems concerns that, if left unaddressed, would lead to significant future failures. By addressing these priorities, the University enhanced campus safety and avoided the need for additional deferred maintenance expenditures.

2. Right Size Your Campus

On some campuses, certain buildings may be in such disrepair that they no longer meet the institution's academic needs. An FCA might recommend selling, demolishing, or replacing these buildings. One effective strategy to address this is campus rightsizing: consolidating teaching functions into fewer, more efficient buildings and offloading surplus structures to reduce deferred maintenance costs. This approach necessitates a space utilization study to assess how efficiently academic buildings are used and ensure optimal scheduling and usage. In the case of our client, BHDP recommended selling or demolishing several small residences and a large residence hall to reduce deferred maintenance and operating costs. Other buildings were deemed too difficult to update due to accessibility or ill-fit for current academic use.

Key Takeaways for Managing Deferred Maintenance

Deferred maintenance is a problem on virtually every college campus and can be addressed through the FCA by:

1. Fully understanding the deferred maintenance budget by building and across campus.
2. Developing a proactive and prioritized approach to addressing life safety and costly repairs to building systems at the end of their useful life. 
3. Carefully considering rightsizing the campus by ensuring that buildings are as efficiently scheduled for use as possible and divesting in those that are either too expensive to update or no longer serve the academic needs of the institution.

Addressing deferred maintenance is essential for maintaining safe, functional, and attractive campuses that can continue to serve students and faculty effectively. It’s never too late to implement an FCA and develop a roadmap for fiscal sustainability. By taking these steps, academic leaders can reduce sleepless nights and foster a more sustainable future for their institutions.

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