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SUNY PPAA Winter Conference. Presented by the State University Construction Fund January 28, 2014 Cooperstown, NY. 2013/14 Response to Fiscal Challenges. Fiscal Plan Adjustments Payment Predictability Coding Scrub Project Evaluation/Prioritization B-1184 reviews

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SUNY PPAA Winter Conference

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Suny ppaa winter conference

SUNY PPAAWinter Conference

Presented by theState University Construction Fund

January 28, 2014

Cooperstown, NY

Suny ppaa winter conference

2013/14 Response to Fiscal Challenges

  • Fiscal Plan Adjustments

  • Payment Predictability

    • Coding Scrub

    • Project Evaluation/Prioritization

  • B-1184 reviews

  • Re-evaluation of Staff Charged to Capital

  • Suny ppaa winter conference

    2013/14 Response to Fiscal Challenges

    • Maximizing 384 funds

    • Bid Postponements

    • Construction Manager Reductions

    • Program Management Campus Meetings

    • Program Finance Presentations

    Suny ppaa winter conference

    2014/15 Executive Budget Summary:

    Capital Program

    Educational facilities

    • New Funding:

      • $500M for critical maintenance

      • $10M for new School of Pharmacy at University at Binghamton

      • $55M for NYSUNY 2020 Round IV

      • $15M for a facility to house the College of Emergency Preparedness, Homeland Security and Cyber Security

      • $50M for New York Genome Center at the University at Buffalo

      • $5Mfor Cornell College of Veterinary Medicine

      • $180M for Nano Utica (SUNYIT)

      • $150M to support campus-funded projects (384 appropriation)

    Educational Facilities

    Educational facilities1

    Educational Facilities

    • Other Items of Interest:

      • New critical maintenance funding restricted to existing facilities

      • Allocated to each State-operated campus based on current methodology

      • All spending from new appropriations must be accommodated under existing 2014/15 limit ($887M)

    • Prior Year Funding:

      • All prior year appropriations are recommended for reauthorization

    Community colleges

    Community Colleges

    • $32.1M (State share) was provided for 50 critical maintenance projects which obtained local sponsor support at 20 community colleges

    • $57.3M (State share) for 13 strategic initiatives or related critical maintenance projects at 9 colleges was not included

    • Colleges have the opportunity to apply for funding through the local Regional Economic Development Councils ($150M) and NY-SUNY 2020 ($55M)

    Disbursement targets

    Disbursement Targets

    Limits total spending in a fiscal year for each state-supported program.

    Includes all spending within a program, including from new and prior year appropriations, but DOB disbursement target for Educational Facilities bonded program for 2014/15 was not adjusted upward. Targets for 2015/16 and 2016/17 targets were reduced, however, 2017/18 was increased and a 5th year was added at $600M.

    Spending from new and existing appropriations will continue to be carefully monitored.

    Suny ppaa winter conference

    Spending Targets Reflect Debt Limitations:

    Total Debt Outstanding & Corresponding Available Bond Cap Room

    Plan management in a post 2014 executive budget world

    Plan Management(in a Post-2014 Executive Budget World)

    • Factors & Issues

    • Approach

    • Actions

    • Requirements

    • Cautionary Notes

    • Important Updates

    Plan management

    Plan Management

    • Factors & Issues

      • Fiscal Plan

      • Current Obligations

      • Appropriations

    Plan management1

    Plan Management

    • Approach

  • Determine System Spending Capacities

  • Identify Campus Priorities

  • Address Plans Disrupted by Last Year’s Fiscal Issues

  • Take Timely Actions to Support Campus Calendar

  • Plan management2

    Plan Management

    • Actions (Next 60 Days)

      • Establish Campus Capital Priorities

      • Complete Status Review of All Active Projects

        • Campus Lets – Unexpended Coding

        • Fund – In Design, In Construction

        • Equipment

      • Verify / Update Associated Spending Projections

      • Calculate Capacity for New System-Wide Spending

      • Authorize Priority Projects within Fiscal Capacity

    Plan management3

    Plan Management

    • Actions (Immediate)

      • Make 2014 MCM Funds Available

      • Issue New Coding for Priority Summer Work

      • Process Eligible Year-End Transactions for FY 2014

    Plan management4

    Plan Management

    • Requirements

      • Existing Coding ‘Accounted for’ First (including MCM)

      • Appropriate Project Scopes

      • Realistic Project Values

      • Reasonable Project Schedules

      • Demonstrated Project Readiness

      • Flexibility, Adaptability, and Predictability!

    Plan management5

    Plan Management

    • Cautionary Notes

      • “Maintenance of Existing Infrastructure”

      • “Multiple,” “Various,” & “Bank” Projects

      • “Charging Staff to Capital Funds”

      • “B-1184”

      • Expect Data, Metrics, & Benchmarks!!

    Plan management6

    Plan Management

    • Important Updates

    • Fund Terminology in the New Paradigm


    Strategic Initiatives






    SUNY 2020

    Fiscal Plan




    Suny ppaa winter conference

    Construction Cost


    Economics Update

    Suny ppaa winter conference

    FY 2013 Bid Results(January 2013 to January 2014)

    • Total value of bids taken for this period is $497,735,000

    • Bids are 6.5% below established budgets

    • Bids are 0.6% above median budgets

    • 33 bids have been taken

    • Average number of bidders per project statewide is 7.2, below recent trends

    Regional results breakdown 1

    Regional Results Breakdown (1)

    Regional results breakdown 2

    Regional Results Breakdown (2)

    • South (Downstate) Region: $267.8 million bidsLvB -10.5%, MvB +0.8%, 9.5 bids each project

    • Central Region: $47.7 million bidsLvB -6.0%, MvB -2.7%, 7 bids each project

    • West Region: $172.3 million bidsLvB +0.8%, MvB +4.1%, 6 bids each project

    • East Region: $9.9 million bidsLvB -12.0%, MvB -1.1%, 6.3 bids each project

    Current comparison to fy 2012

    Current Comparison to FY 2012

    • Comparison of Bid Ranges, all bids FY2012 to Current Point of FY 2013:

      • 2012 Statewide: LvB -16.1%, MvB -8.4% = Range of7.7%

      • Current Statewide: LvB -6.5%, MvB +0.6% = Range of 7.1%

      • 2012 Volume $312M vs. Current Volume $497M = Net Increase of 59%

    • Differences in Bid Range:

      • Current bid range is superior compared with previous results in the 10-11% area.

      • Halting of bids for 2012 created a data gap that was damaging to our internal tracking.

      • As always, there are specific projects that have results outside of these averages.

    What do the bid results tell us

    What Do the Bid Results tell us?

    • The construction market in western NY has become very tight. GC’s, certain specific trades and union labor availability are driving prices up.

    • Similarly, Downstate markets have an increase in cost due to permanent Sandy recovery work, although their increases are smaller due to the depth of the market.

    • Increases in labor costs, while small, are being passed on to owners. Material costs appear to be stable, although long term indicators suggest higher trends…. Someday.

    • Beware the desperateshrewd bidder – don’t spend your savings.

    Where are we going

    Where are we going?

    • Global manufacturing has spotty and limited signs of growth

    • There are no economic paradigm-changers available – Live the New Normal

    • USA wholesale inventories have increased by +/- 50% in the last 4 months

    Baltic Dry Index, 3 Year Chart

    Where are we going1

    Where are we going?

    • Harper-Petersen Index (right) reflects container shipments, i.e. finished goods.

    • North American railroad car shipments have declined about 3% from 2012-2013.

    HARPEX, 5 Year Chart

    Where are we going2

    Where are we going?

    M2 – total supply of money, USA, 30 years

    M2V – velocity of total money, USA, 50 years+

    Where are we going3

    Where are we going?

    • Commodity prices have been surprisingly stable over the last 12+ months.

    Where are we going4

    Where are we going?

    • Energy pricing has assumed “typical” seasonal and political peaks and valleys without any surprises.

    • Food pricing is mixed and “peaky.”

    Natural Gas

    Crude Oil (WTI)


    So all this means

    So, all this means…

    • Construction cost trends already established can be expected to continue without any dramatic change.

    • All construction work takes place in a local market; budget issues must be anticipated, monitored, adjusted and managed.

    • “Eternal vigilance is the price of getting a good deal.”

      • (a misattribute of Thomas Jefferson, actually a misquote of John Philpot Curran)

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