The intent of operations and maintenance (O&M) cost modeling is to create a model with which an institution can meet reporting requirements to estimate O&M costs for the initial occupancy year and projected costs for the succeeding five-year period for new facilities being planned for the campus. By producing realistic projections of these costs, an institution can clearly identify the necessary funds required to ensure the appropriate levels of services are provided for projected new buildings.
Draper & Associates performs an estimated cost analysis that identifies costs per building for a five-year period, including:
- General assessment of the maintenance, utilities, and janitorial costs per building being planning for the campus.
- The estimated operational costs by type of space by assignable square footage (ASF) of Resident Instruction, Auxiliary Enterprises and Other Purposes buildings.
- The expected operational costs based on major repair and rehabilitation (MRR) fund rates.
The model provides the ability to calculate the costs for 10 different categories of expenses within 10 different classifications of space over a five-year period. In creating the model, base rates are developed for each category of expense within each classification of space. Base rates are developed using a synthesis of industry benchmarks and internal institution cost analysis. Industry benchmarks used for the model are obtained from the Operational and Maintenance Benchmarks by the International Facility Management Association (IFMA), the Experience Exchange Report by Building Owners and Managers Association (BOMA), and the Facilities Performance Indicators Report by the Association of Physical Plant Administrators (APPA).
Data is gathered and analyzed in order to compare and contrast the operational and maintenance costs with that of industry best practices. This Benchmark Analysis involves quantitative indicators of performance, including maintenance, utilities, and janitorial costs, as well as financial indicators.
This combination of fact-finding and analytical activities, along with the engagement team’s prior experience in conducting similar evaluations of operational and maintenance costs and other programmatic areas within the higher education environment are used to:
- Conduct a comprehensive and integrated analysis of the forecasted operational and maintenance costs as it relates to facilities planned for The University campus.
- Prepare an Estimated Operational Costs table representing the costs to operate by type of space by ASF using operational cost rates obtained from the Operational and Maintenance Benchmarks by the International Facility Management Association.
- Compare the estimated costs for operations and maintenance and the expected recovery costs of MRR funds to maintain the new facilities.
The Model has an added benefit. It can also be used to project O&M costs for existing facilities. A common means of developing next year’s budget is to make adjustments to the current budget. By forecasting the O&M costs for each existing building on a campus using the Model, the resulting calculation can serve as an objective benchmark against which to budget.