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News release


Tertiary Education: Meeting the funding challenge – opportunities for efficient real estate solutions

Energy management costs, supply chain management, design standardisation and space utilisation (including alternative work strategies like ABW) are needed to create efficiencies

AUSTRALIA, 1 JULY 2013 – The way tertiary institutions manage their buildings and facilities is needing to change as a result of the rapid transformation of their operating environment in recent years.

A new report by property asset and facilities manager Jones Lang LaSalle, titled ‘Tertiary Education: Meeting the funding challenge – opportunities for efficient real estate solutions’ examines changes to the tertiary operating landscape, including Federal Government reforms, globalisation and a different demand dynamic.
Australasian Head of Education Business at Jones Lang LaSalle, Naomi Nielsen said many tertiary institutions are faced with a funding challenge and have become increasingly vigilant in creating efficiencies and cost control in the management of their real estate assets.
“One of the most significant Federal Government reforms was the introduction of a demand driven funding model in 2012.  This has forced a major structural change in the sector for universities to achieve cost savings in an increasingly competitive environment.
”The impact of this new funding model has been compounded by the changes in last year’s Federal Budget to the research funding formula which resulted in $500 million in cuts over four years.  This reduction in funding will hit the research-focused ‘group of eight’ hardest,” said Ms Nielsen.
The report says in the budget-constrained environment that tertiary education institutions find themselves operating in, there are many opportunities to achieve costs savings and cost avoidance.
“A strategy that includes space planning, capital works, maintenance and operations and sustainability are areas where costs savings can be achieved,” said Ms Nielsen.
“In terms of maintenance and operations, robust processes around areas such as cleaning requirements can results in significant costs savings.  Cleaning costs on average have increased from $13.50 per square metre to $16 per square metre over the past five years.  These rising costs mean it is a good time to review cleaning requirements between semester periods versus non-semester periods and also annual cleaning requirements versus discretionary cleaning requirements.
“Similarly, security costs have increased by an average of $7.50 per square metre to $9.00 per square metre over five years.  There is opportunity for savings through investment in security infrastructure such as the introduction of proximity cards and readers, thereby reducing labour and unnecessary re-keying costs.
“Greater investment in technology such as CCTV and swipe-card access will provide a more cost effective and less invasive security solution.
“In terms of the overall maintenance program, red flags should be raised when there is little or no preventative maintenance taking place, limited recording of maintenance activities and only ad-hoc contractual arrangement in place.  All of this can result in institutions paying too much for their maintenance requirements,” said Ms Nielsen.
Sustainability and energy management costs savings:
“Focusing on energy management, the first step is to have a clear picture of facility usage hours considering weekday versus weekend, term versus semester break, scheduled versus after-hours and this needs to be tabulated for every building and floor,” said Ms Nielsen.
Questions that should be asked include:
• Are the systems on just in case someone comes in?
• How many staff and students are using the facility – is the HVAC running across the whole floor or whole building for minimal users?
• Can skeleton staff during holidays share workspaces so that other office areas or zones can have the lighting and HVAC off?
The report says quick-win cost savings that can be made in the area of sustainability include:
• Transferring green waste into composting for gardens and grounds
• Utilising recycled paper products which can reduce the cost of consumables by up to 40%
• Installation of power factor correction equipment which can increase power efficiency by 15-20%
“A University’s student population provides a unique resource to achieve competitive sustainability outcomes. Generation Y and Z have a heightened sense of focus on the environment and contributing to reduce their personal carbon footprint as well as that of the built environment,” said Ms Nielsen.
Space planning and Utilisation, including ABW:
The report notes that Universities that are leading edge have a space management unit that engages with faculties and business units to understand their changing requirements.  Regular audits need to be carried out to maximise the use of teaching learning spaces.
Space management should also extend to academic and administrative areas and testing new space models such as open plan environments and even Activity Based Working (ABW) in appropriate faculties and business units.
Data in the private sector shows that office space across all industries at any given time has a vacancy rate of between 30-40%.  This represents a significant opportunity to reduce the costs of real estate.
“It is those institutions that are able to reduce the number of purpose built facilities on campus that only suit a specific discipline that will be able to create a greater utilisation of space. A larger, general-purpose facility that can accommodate growth and change more cost effectively should be aspired to from a design-perspective. Universities that make buildings work harder through discouraging excess space and encouraging adaptive use will show a higher ROI on their capital investment,” said Ms Nielsen.
Capital works efficiencies:
The report notes that Universities tend to be long-term holders of property, in many cases with tenure of more than 50 years.  To ensure the efficient use of funding and to generate savings within capital works programs, a robust project management process is therefore critical.
Aspects of this project management process could include:
• Design standardisation can result in savings in design consultancy costs as a set of standard design specifications are developed that define materials to be used on all projects
• Implementing modularisation in designs where a generic spatial element, such as kitchens, bathrooms, small office spaces and workstation areas can be designed and then modified to fit individual project requirements. Design flexibility is critical due to 50 years+ holding period for the asset in many cases
• Cost savings can be achieved through the bulk procurement of materials for similar projects with suppliers willing to provide lower rates if they are guaranteed to be preferred supply over a period of time.  Significant management costs and program savings may be achieved with the reduced need to tender for multiple type of materials from multiple suppliers for multiple projects​