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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

    OUT:

    Strategic Initiatives

    Appropriations

    Funding

    PBE

    Bob

    IN:

    SUNY 2020

    Fiscal Plan

    Disbursements

    e-Builder

    Tom


    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)

    Ethanol


    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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