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SUNY PPAA Winter Conference

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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  1. SUNY PPAAWinter Conference Presented by theState University Construction Fund January 28, 2014 Cooperstown, NY

  2. 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

  3. 2013/14 Response to Fiscal Challenges • Maximizing 384 funds • Bid Postponements • Construction Manager Reductions • Program Management Campus Meetings • Program Finance Presentations

  4. 2014/15 Executive Budget Summary: Capital Program

  5. 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

  6. 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

  7. 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)

  8. 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.

  9. Spending Targets Reflect Debt Limitations: Total Debt Outstanding & Corresponding Available Bond Cap Room

  10. Plan Management(in a Post-2014 Executive Budget World) • Factors & Issues • Approach • Actions • Requirements • Cautionary Notes • Important Updates

  11. Plan Management • Factors & Issues • Fiscal Plan • Current Obligations • Appropriations

  12. 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

  13. 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

  14. Plan Management • Actions (Immediate) • Make 2014 MCM Funds Available • Issue New Coding for Priority Summer Work • Process Eligible Year-End Transactions for FY 2014

  15. 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!

  16. Plan Management • Cautionary Notes • “Maintenance of Existing Infrastructure” • “Multiple,” “Various,” & “Bank” Projects • “Charging Staff to Capital Funds” • “B-1184” • Expect Data, Metrics, & Benchmarks!!

  17. 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

  18. Construction Cost & Economics Update

  19. 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

  20. Regional Results Breakdown (1)

  21. 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

  22. 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.

  23. 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.

  24. 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

  25. 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

  26. Where are we going? M2 – total supply of money, USA, 30 years M2V – velocity of total money, USA, 50 years+

  27. Where are we going? • Commodity prices have been surprisingly stable over the last 12+ months.

  28. 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

  29. 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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