Financial Planning Guidelines for Facility Renewal and Adaption (PDF)

prepared by John A. Dunn, Jr.

Skillful management of an institution's physical assets is crucial to the institution's financial well-being. This publication provides executive managers and trustees with guidelines for long-term financial planning for plant renewal and adaption. It provides these strategic decision makers with a better understanding of the financial planning requirements necessary to protect the value of their institution's plant assets in relation to evolving institutional missions by giving them a clearer way to think about those assets. Readers are furnished with guidelines, examples of campus plans that incorporate them, and analytic tools.

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©SCUP 1989

 (PDF 4.1 MB)

Table of Contents

FOREWORD

EXECUTIVE SUMMARY

INTRODUCTION
    Purpose
    Working group members
    Reviewers

THE CONCEPTUAL APPROACH
    Introduction
    How did colleges and universities get into this problem?
    What is at risk?
    The overall facilities planning cycle
    Two institutional decision-making processes: identifying the projects and creating the funding
    Some terminology and a context
    Approaches to projection of plant renewal and adaption funding that do not work
    The analogy to endowment management
    Part One: Plant renewal and the facility subsystem approach
    Part Two: Plant adaption: dealing with the reality of institutional change
    Part Three: Catchup maintenance and the transition to equilibrium
    New construction
    Summary of the conceptual approach
    A balance of systematic information and institutional judgment
    Where can institutions find the money?
    Use in projecting downstream costs of new projects
    The importance of leadership and discipline

APPLYING THE CONCEPT

APPENDICES
    A. The best of current practice
    B. Formula approaches to financing plant renewal and replacement
    C. Leveraging new depreciation requirements to facilitate financial planning for capital maintenance and renewal
    D. Financial equilibrium planning
    E. Glossary of terms
    F. A facility age model
    G. Bibliography

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About the Editor

Prepared by John A. Dunn, Jr. of Tufts University—SCUP, APPA, and NACUBO, separately and jointly, are committed to providing campus managers with the information and tools they need to address the problem of capital maintenance, upkeep, and renewal. The associations strive to give strategic decision makers a better understanding of the financial planning requirements necessary to protect the value of their institutional missions by giving them a clearer way to think about those assets.