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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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Presentation Transcript
slide1

SUNY PPAAWinter Conference

Presented by theState University Construction Fund

January 28, 2014

Cooperstown, NY

slide2

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
slide3

2013/14 Response to Fiscal Challenges

  • Maximizing 384 funds
  • Bid Postponements
  • Construction Manager Reductions
  • Program Management Campus Meetings
  • Program Finance Presentations
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.

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

slide19

Construction Cost

&

Economics Update

slide20

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 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)