1. Total Cost of Ownership
New Construction:
30 year – vs - 75 year
ACUHO-I 2017
Gary Thompson, EFP
Director of Facilities
University Housing
University of Georgia

2. “tudes”! Longitude/Latitude Multitude Platitude Rectitude Ineptitude
Attitude
Aptitude
Gratitude
Fortitude
Altitude
Amplitude
Longitude/Latitude
Multitude
Platitude
Rectitude
Ineptitude
MAGNITUDE!!!!

3. What is The Total Cost of Ownership?
Cradle to grave costs
Assumptions based upon current cost evaluations and knowledge
Concept to Demolition
A way to challenge LBDM!

4. Rationale for Construction: 30-Year
Pros
Cons
Overall fit to pro forma
Design flexibility
Cheaper to construct
Shorter construction schedule
Other?
Build 3 times in 75 years
Often built using cheaper materials and methodologies
Typically higher M&O costs
Other?

5. Rationale for Construction: 75-Year
Pros
Cons
Build only once in 75 years
Build for long-term to support type of use
Built to last
Other?
Construction method takes more time and money
Forced to deal with aging building issues
Chance it will not fit with future desired residence life program models
Other?

6. How To Decide Which Way To Go
Resource Availability
Reserves
Bonding Authority
Land
P3 Initiatives
Campus Standards
Campus Political Climate
Criticality of Need

7. Evaluating Your Decision Utilizing….
30-YEAR
75-YEAR
TOTAL COST OF OWNERSHIP

8. When you are called to the “Numbers Office”
They Have:
You Have
Projection numbers
Debt numbers
Pro-forma numbers
Numbers you have never seen before numbers
Numbers to provoke a reaction numbers
Assessed Qualitative data:
Survey data
Satisfaction percentages
Assumed retention impact
Statistical reference
NO Relevant Numbers!!!

9. Total Cost of Ownership Formula
(Rr + Sr)-(Ca + Cc + Co + Cm + Cf + Cd+ Ds) = TCO

10. TCO Terminology
Ca – Cost of Acquisition (Design, Construction, Installation)*
Cc – Cost of Commissioning*
Co – Cost of Operations (Personnel, Supplies, Insurance, Equipment)*
Cm – Cost of Maintenance (Repairs, Supplies, Vehicles, Utilities)*
Cf – Cost of Life Cycle Replacement (Building Systems)*
Cd – Cost of Demolition*
Ds – Cost of Debt Service
Rr – Rent Revenue
Sr – Summer Revenue
*(From Dana K. Smith’s article in APPA’s Facility Manager magazine – July/August 2016)

11. 30-YR vs 75-YR: Basic Assumptions – Year 1
30 Year Building
75 Year Building
Double loaded corridor
# of Beds = 250
GSF = 80,000
GSF/Bed = 320
Budget Cost/Bed = $65,000
Total Project Budget = $16,250,000
Design and Contingency = $2,925,000
Total Construction Cost = $13,325,000
Cost/GSF = $203
Double loaded corridor
# of Beds = 250
GSF = 85,000
GSF/Bed = 340
Budget Cost/Bed = $100,000
Total Project Budget = $25,000,000
Design & Contingency = $4,500,000
Total Construction Cost = $20,500,000
Cost/GSF = $294

12. Assumptions Cont. 75-Year Building 30-Year Building
Rebuilt in years and 62-63
Commissioned 3 times
71 years of M&O - no M&O costs incurred in years or 62-63
2 Demolitions (Years 31 and 62)
25 Year Debt Service for each construction
Debt Service rate at 3%
Inflation rate = 3%/year
71 years of revenue - no revenue in years and 62-63
Initial room rate = $7,000/9 mo.
Initial summer revenue = $130,900/summer
Built 1 time
1 Commissioning
75 years of M&O
1 Demolition
25 Year Debt Service
Debt Service rate at 3%
Inflation rate = 3%/year
75 years of revenue
Initial room rate = $7,000/9 mo.
Initial summer revenue = $130,900/summer

13. Ca – Cost of Acquisition
30-Year Building
75-Year Building
16,250,000 (yr. 1) 39,443,015 (yr. 32) 98,610,706 (yr. 62) 154,303,721 = Total Ca
25,000,000 = Total Ca

14. Cc – Cost of Commissioning
30-Year Building
75-Year Building
75,250 (yr. 1) 181,131 (yr. 32) 456,643 (yr. 62) 713,024 = Total Cc
80,250 (yr. 1) 232,587 (yr. 37) 312,837 = Total Cc

15. Co – Cost of Operations 30-Year Building 75-Year Building
$71,608,198 (71 yrs.)
3.50/sf x 80,000 sf = 3% for 75 years (not including years 31, 32, 62, 63) = 71,608,198
$81,107,680 (75 yrs.)
3.50/sf x 85,000 sf = 3% for 75 years = 81,107,680

16. Cm – Cost of Maintenance
30-Year Building
75-Year Building
$81,949,410 (71 yrs.)
4.00/sf x 80,000 sf = 3% for 75 years (not including years 31,32,62,63)= 81,949,410
$81,107,680 (75 yrs.)
3.50/sf x 85,000 sf = 3% for 75 years = 81,107,680

17. Cf – Cost of Life Cycle Replacement
30-Year Building
75-Year Building
3,331,250 (1st 25 yrs.)
11,000,353 (2nd 25 yrs.)
26,700,745 (3rd 25 yrs.)
42,101,098 = Total Cf
25% x Total Construction Cost/25 yrs.
5,125,000 (1st 25 yrs.)
12,832,013 (2nd 25 yrs.)
26,084,840 (3rd 25 yrs.)
45,229,353 = Total Cf
25% of Total Construction Cost/25 yrs.

18. Cd – Cost of Demolition 30-Year Building 75-Year Building
4,854,525 (Yr. 31) 12,500,803 (Yr. 63) 17,355,328 = Total Cd
17,823,157 (Yr. 75) 17,823,157 = Total Cd

19. Ds – Debt Service 30-Year Building 75-Year Building
23,117,700 (1st Construction) 56,112,900 (2nd Construction) 67,337,712 (12 yrs. of 3rd Construction) 162,858,216 = Total Ds
35,565,000 (1st Construction) 35,565,000 = Total Ds

20. Rr – Rent Revenue 30-Year Building 75-Year Building
447,551,227 = Total Rent Revenue (71 yrs.)
447,551,227 = Total Rr
$7,000 x 250 residents = 3% for 71 years
477,103,997 = Total Rent Revenue (75 yrs.)
477,103,997 = Total Rr
$7,000 x 250 residents = 3% for 75 years
U Penn $420 Room Rate/Year

21. Sr – Summer Revenue 30-Year Building 75-Year Building
33,429,864 = Total Summer Revenue (71 yrs.)
33,429,864 = Total Sr
3% for 71 years
35,687,379 = Total Summer Revenue (75 yrs.)
35,687,379 = Total Sr
3% for 75 years

22. Total Cost of Ownership Numbers – vs - Numbers
30 Year Building
75 Year Building
Revenue
Rr ,551,227
Sr ,429,864
Total Revenue ,981,091
Expenditures
Ca ,303,721
Cc ,024
Co ,608,198
Cm ,949,410
Cf ,101,098
Cd ,355,328
Ds ,858,216
Total Expenditures ,885,995
Residual ,904,904
Revenue
Rr ,103,997
Sr ,687,379
Total Revenue ,791,376
Expenditures
Ca ,000,000
Cc ,837
Co ,107,680
Cm ,107,680
Cf ,229,353
Cd ,823,157
Ds ,565,000
Total Expenditures ,145,707
Residual ,645,669

24. TOTAL COST OF OWNERSHIP
Numbers - VS - Numbers
30-YEAR
75-YEAR
TOTAL COST OF OWNERSHIP
“Made You Look!”