1 Costing Space Reynold Dias Financial Resources Management Monash University

2 Presentation Overview Monash’s strategy – charging for services Prerequisites for costing space Costing methodology Costing outcomes Policy development and review Key factors for a successful project Summary

3 Monash’s Strategy – charging for services 100% of revenue directed to areas that earn the revenue All centrally provided services are charged to areas that use or gain a benefit from these services (Services include payroll, IT support, provision of space, security, cleaning,…...) Areas that are charged include: –Faculties, schools and departments –Central support divisions –Monash entities with a commercial focus –Non Monash entities Matching of revenues and expenses easily against each entity

4 Non financial prerequisites for costing space A space information database – to understand the space types, square metres, buildings, occupancy, etc. A space quality classification system - premium quality, high quality, etc. A space cost classification system - high cost, low cost, etc. Programmed spaces and their utilisation in hours

5 Costing Methodology No profit component – just cost recovery Includes full costs: –Direct costs - maintenance, insurance, OHS, capital costs, space management costs, etc –Indirect overhead costs – payroll, HR services, IT support, financial management, space, etc. Life cycle approach to recognising capital costs Use of accrual accounting principles

6 Costing Outcomes Cost of dedicated space - $rate/m 2 based on: –Space quality (4 quality types) –Cost type (2 cost types) Example: A premium quality office space is $150 per m 2 Cost of programmed space (lecture theatres, classrooms, etc) - $rate/hour based on : –Technology of space (2 types) –Seating capacity (5 types) Example: A high tech. lecture theatre with seating capacity between 100 and 150 is $50 per hour

7 Policy development and review Keep policy at a high level – Monash’s space charging policy is just 6 pages. It includes: –Detailed description of cost components included in the space charge –Calculation of charges for different types of space –Definition of quality and cost classifications –Exceptions, transition arrangements, timing of charges etc. Constant review and feedback – iterative process of review by space users Communication and discussion at all levels across the university

8 Key factors for a successful project Need strong commitment and support from university executive and needs alignment to the university’s strategic goals Don’t get caught up in detailed costing or policy development - deal with the exceptions as they emerge. Need to have an open and transparent approach Communication of strategy and benefits as well as dealing with emerging issues and situations raised by customers is important – around 80% of the effort

9 Summary Non financial Information for costing Alignment with university strategic directions Space charging policy Costing Outcomes Costing Methodology Involvement of customers