Cheryl Keown is a principal of The Design Partnership of Cambridge, an architectural design firm also providing master planning, programming, educational technology, and interior design services. TDPC is located in Boston, Massachusetts; Keown can be reached at email@example.com. This article presents the results of a comprehensive survey of higher education facilities managers and business officers conducted by TDPC in alliance with APPA and the National Association of College and University Business Officers (NACUBO).
As an architect who specializes in design, planning, and programming for academic institutions, I have daily contact with facilities managers and business officers from North America's colleges and universities. One of their main concerns is outsourcing. Whether it is operations and maintenance or planning and construction, outsourcing is growing in popularity. At the same time, it can be a contentious issue for facilities professionals, business officers, and the campus community at large. In an effort to learn more about the issue and to understand the driving forces behind this phenomenon, I collaborated with APPA and the National Association of College and University Business Officers (NACUBO) to survey their members about their respective outsourcing needs.
The results of the survey confirm our initial hypothesis: the trend to outsource traditionally in-house services continues to grow. We were surprised, however, to find that the levels of outsourcing were virtually identical in public and private institutions, small and large colleges, and those in different geographical areas. Outsourcing is increasing almost evenly across the board.
Another surprise was to find that colleges and universities are not outsourcing as a means to reduce costs, but rather due to the expansion of existing facilities and the need for specialized skills that in-house employees increasingly lack as technology continues to advance. There was a consensus on this among business officers and facilities managers, yet a certain amount of historic animosity continues to exist between the two. Perhaps this conflict originated from the economic downturn in the late 1980s and early 1990s when outsourcing was used as a cost-saving measure and facilities managers were forced to reduce their in-house staff. I hope the results of this survey help the two sides to realize that there is now a consensus among them.
The content of the survey questionnaire was developed by The Design Partnership of Cambridge, Inc. (TDPC) in consultation with Lander Medlin, executive vice president of APPA and Larry Goldstein, senior vice president for accounting, finance and institutional management at NACUBO. Matt Adams, a consultant to APPA who is authoring a book on the topic, Outsourcing's Role in Facility Management, was also instrumental in the development of the questionnaire wording and the content of this article. The questionnaire was critiqued by facilities managers from large and small, public and private academic institutions including Philip Cox at Cornell University, John Dempsey at the University of Illinois, Lee Nason at the University of Massachusetts Boston, Gary Reed at Eastern Illinois University, and Norman Ricker at Haverford College. Victoria Ford, public relations coordinator with TDPC, analyzed the survey's data.
The survey questionnaire was distributed to NACUBO and APPA institutional members by e-mail and fax. Members also received a postcard that encouraged them to respond to the survey via its website. Responses to the survey were received by TDPC by e-mail, through the website, fax, and U.S. mail. Indicating that facilities managers and business officers are wired, 82 percent of the respondents submitted their answers through the website while 13 percent sent them by e-mail. The remaining 5 percent arrived by fax or U.S. mail.
Profile of Survey Respondents
The approximately 400 survey respondents represented the midwest United States and Canada. The areas with the largest share of respondents were the Midwest, Southeast, Northeast, and Mid Atlantic, accounting for 18, 16, 14, and 12 percent of all respondents, respectively.
Of the respondents, 56 percent were from public institutions while 46 percent represented private colleges or universities. Smaller schools, those with less than 2,000 full- time undergraduates, represent the largest share of respondents and those with the most students, 20,000 or more, represent the least. Institutions that tend to have smaller enrollments, liberal arts colleges and 2-year colleges, combined to represent 42 percent of those surveyed. Another 26 percent of our respondents were from a comprehensive college or university and 21 percent were from research or doctorate-granting universities. The remaining 11 percent indicated that they represented professional, specialized, combination, or another type of institution.
The average size of the campuses surveyed was 486 acres with 2.5 million gross square feet of facilities. The average annual planning and construction budget was $8.7 million. Of the two hundred thirty-five institutions whose respondents shared their average annual planning and construction budgets, the combined totals represent $2 billion in yearly planning and construction costs. The operations and maintenance costs averaged about $6.9 million annually with a combined total more than $1.7 billion. These figures are expected to increase as the majority of institutions continue to renovate and expand their campuses.
Of the respondents themselves, 71 percent were facilities managers, involved in plant operations or planning and construction while 29 percent were in the finance and administration department. Sixty-eight percent of those surveyed keep a comprehensive inventory and assessment of their facilities. Several participants included insightful comments and elaborated on their answers with statistics, reasoning, and qualifications. From these carefully crafted responses, we believe that this survey is a true representation of outsourcing trends in higher education as we head into the new millenium.
Overview of Operations and Maintenance Outsourcing
The level of operations and maintenance (O/M) services purchased by colleges and universities has increased over the last three years and is expected to continue growing during the next year. Several factors contribute to this trend. Among them are the high-tech components used in new and upgraded facilities. With the continual advancement and digitization of mechanical and electrical systems for everything from heating and cooling units to computer networking and media classrooms, facilities managers are being forced to rely more heavily on the expertise of outside vendors to maintain their campus' systems.
Contrary to prevailing opinion and past trends in the industry, the survey suggests that the increase in outsourcing is not primarily motivated by business officers trying to cut costs. Only eleven percent of all respondents rated it the number one reason for increasing the level of purchased O/M services while four times as many respondents indicate that a shortage of trained staff and the need for specialized services are the main reasons for outsourcing. In fact, of the business officers who were surveyed, only 14 percent rated cost savings as a primary contributor to outsourcing, ranking it fourth behind an increase in facilities, access to specialized services, and a shortage of trained staff.
Conversely, for those seven percent of respondents who expect the total volume of O/M services purchased to decrease next year, their number one reason for doing so was cost savings they can accomplish the task for less using in house forces. This is conversely related to the causes of outsourcing's growth. Other important factors for those who are decreasing their outsourcing include poor contractor performance, lack of discretionary funds, and shortage of qualified or local service providers.
A few institutions have indicated that they are attempting to rectify their shortage of trained staff by either sending in-house employees for training, hiring specially-trained technicians or both. However, these attempts do not seem able to keep pace with the increasing amount of facilities to maintain and the ever-changing technology used to run them.
Of the technical O/M services, elevator maintenance and roofing (and its associated structural trades) are the most heavily outsourced at 87 and 69 percent of volume, respectively. Contributing factors include liability and warranty issues for both elevator and roofing services as they often require the use of licensed professionals and/or the use of the vendor who installed the equipment to complete repairs and maintenance. In addition to new roof systems, which require specialized expertise and equipment to install, major roof repairs or upgrades can require the building to be brought into structural compliance with new state seismic codes that also require outside expertise.
For the other services that have witnessed significant technological advancement in the past three to five years, such as life safety and HVAC systems, none are currently outsourced more than 35 percent of the time. However, a closer look at the survey data demonstrates an increasing trend toward outsourcing in these areas. Fifty percent of institutions surveyed say these services are being outsourced more now than they were just three years ago and 54 percent expect the volume of services purchased to grow in the next year.
For the non-technical or less technical services, reasons for increases in outsourcing, in order of importance, include the expansion of facilities, cost savings, the ability of outside vendors to provide more effective services, and an irregular demand for the service. However, even such traditionally non-technical services such as landscaping and grounds, key-making and locks, and plumbing are experiencing the effects of modernization.
Colleges and universities are increasingly using electronic entry devices for such areas as dormitories and laboratories; installing automatic flush valve toilettes and electronic sink faucets; and landscaping and grounds often require expertise for sprinkler systems and environmental consultants for fertilizer use and general landscaping issues due to environmental regulations. For smaller or urban campuses with less ground to maintain, the service contracts offered by landscape contractors can be an attractive option.
Overview of Planning and Construction Outsourcing
The verdict is in, colleges and universities are building and renovating more today and expect to continue this trend into at least the next year. A growing campus is the single most influential factor when institutions consider purchasing planning and construction services (P/C). The most commonly purchased services are architecture, construction, and systems engineering, at 81 percent, 74 percent, and 55 percent of volume, respectively.
Once again, cost savings barely registers when colleges and universities consider outsourcing their planning and construction services. In fact, it came in last in our survey, even among the business officers. Other reasons for outsourcing planning and construction services include access to specialized services, shortage of trained staff, and irregular demand for these services.
Colleges and universities need additional staff to pull-off some of the fastest-tracked construction in the industry. In order to avoid losing vital space when schools are in session, the majority of construction projects take place while students are on breaks or away for the summer. These are short windows of time that require a maximum effort if a project is to be completed on time. Independent architects, engineers, and contractors can better realize these goals for the institution.
Construction management and planning and programming are outsourced approximately one third of the time while real estate and leasing, space management, program management, and departmental management account for less than 15 percent of the total volume purchased. While most of these services have a history of being handled in-house, more institutions are experimenting with outsourcing such services as property and departmental management.
A small women's college in the Midwest has found that outsourcing its facilities management has added value as the vendor has greater expertise and resources on which to rely. On the other end of the scale, the University of Pennsylvania, a co-ed campus with more than 20,000 students, outsourced the maintenance of all its facilities to a property management company.
Several respondents commented that planning and construction outsourcing was increasing due to a renewed effort to remedy deferred maintenance issues. In an effort to maintain a strong in-house force for operations and maintenance services, some assign their tradespeople exclusively to deferred maintenance projects and outsource for planning and construction needs. Others need to provide their local zoning boards with documentation and plans from architects even on smaller projects that they typically would have handled in-house without complete drawings.
Analysis by Region, Type, Size, and Role for O/M Services Outsourcing
Breaking the survey data down by region, type (public or private institution), size, undergraduate enrollment, and the role of the respondent (facilities manager, business officer, or plant operator) revealed that all institutions are increasing their outsourcing for mostly the same reasons. In nine out of ten regions of the United States, institutions of higher education are increasing the outsourcing of operations and maintenance services. The Pacific region has seen the broadest increase in the past three years (62 percent) and about the same number of institutions (66 percent) expect to continue increasing purchased O/M services next year. The Northeast differs from this pattern as a majority of schools (52 percent) have seen the level of outsourcing remain the same during the past three years and 47 percent expect no change in the coming year. For Canadian institutions, only 31 percent have experienced a growth in O/M outsourcing and another 46 percent have seen no change in three years. Almost a quarter of all Canadian institutions have experienced a decrease in outsourcing during the past three years.
The primary reasons that colleges and universities in the various regions are increasing purchased O/M services are the need for specialized services, an increase in facility size, and a shortage of trained staff. Only the Mid Atlantic states placed any significant importance on cost savings while the second most popular reason from the Northeast is increased effectiveness in providing services. Public and private institutions are experiencing an increase in outsourcing O/M services at the same rates. In the last three years, 52 percent of public and 51 percent of private institutions have seen an increase in purchased services. Eleven percent of each has seen a decrease, and the remaining 37 and 38 percent have experienced neither an increase nor a decrease. Fifty-eight percent of public institutions expect to see the volume of outsourced O/M services to increase in the next year, while 52 percent of private institutions make the same prediction.
When looking at the survey results by size, according to the institution's full-time undergraduate enrollment, what stands out is that for every category an increase in facility size is the second-leading cause for the increase in outsourcing of O/M services. Colleges and universities with less than 12,000 undergraduates cite access to specialized services as the number one reason to outsource while institutions with more than 12,000 undergrads cite a shortage of trained in-house staff as their number one reason. Access to specialized services was third among the large institutions while the small and mid-sized schools were split on their third-leading cause between better service from vendors, shortage of trained in-house staff, and cost savings.
While there has been some division (perceived or otherwise) between facilities managers and business officers over the merits of outsourcing, our survey indicates that both groups are on the same page whether they know it or not. When asked why outsourcing of operations and maintenance services is on the rise at their institution, 23 percent of business officers cited more facilities and 22 percent access to specialized services. Twenty-one percent of facilities managers cited the increase in facility size and 22 percent access to specialized services with 23 percent noting a shortage of trained in-house staff. Only 14 percent of all business officers felt that cost savings was a significant reason for outsourcing O/M services.
Analysis by Region, Type, Size, and Role for P/C Services Outsourcing
The total volume of purchased planning and construction services is growing in all regions of the United States and Canada. Only Canadian institutions have experienced a decrease of more than 10 percent in purchased P/C services during the last three years. Of the 31 percent of Canadian institutions that experienced a decrease, the most commonly cited reason was the lack of funds and even the freezing of capital outlays from provincial governments. Still, 54 percent of Canadian institutions have seen an increase in planning and construction purchasing during the last three years. None of the regions had more than 15 percent of institutions predicting a decrease in the outsourcing of P/C services in the next year.
All regions cite the increase of projects as the number one reason to expand the purchase of P/C services. The second most commonly cited reason was access to specialized services followed by shortage of trained staff and irregular demand for services. Seven out of the 10 regions expect their outsourcing of P/C services to increase next year while the other three expect it to remain at current levels.
Both public and private institutions have experienced an increase in the purchasing of P/C services in the past three years at virtually the same levels with 62 percent of public and 58 percent of private institutions in this category. Only seven and nine percent of public and private institutions, respectively, expect their outsourcing to decrease next year while 53 and 50 percent expect their outsourcing to continue to increase.
When looking at the data by college size, the majority in all five categories experienced an increase in the outsourcing of P/C services and expects that increase to continue into next year. The schools in the largest two categories, those with full-time undergraduate enrollments of 12,000-20,000 and 20,000 or more, have witnessed the largest increases at 78 and 71 percent, respectively. These numbers repeat when asked if the total volume of P/C services purchased will increase or decrease in the coming year. Sixty-seven percent of the 20,000-plus-student institutions and 63 percent of the 12,000-20,000-student institutions say outsourcing will increase next year compared to 48 percent of those with 5,000-12,000 and 2,000-5,000 students and 49 percent of those with less than 2,000 students.
All size institutions report that the single most influencing factor in this increase is the growth in the number of projects on their respective campuses. The second most cited reason is access to specialized services followed by a shortage of trained staff.
Whether the respondent was a business officer or involved with facilities management, the reasons given for increases in purchased P/C services were the same. Fifty-two percent of business officers and 41 percent of facilities managers say the number one reason to outsource is to keep up with the increasing size of the facilities. The second most common reason is access to specialized services and the third is a shortage of trained staff. Only three percent of business officers and two percent of facilities officers cited cost savings as a significant reason to outsource P/C services.
Outsourcing is a major part of facilities management and administrative services at institutions of higher education and it will continue to be in the future. The main impetus of its prevalence has evolved from being cost-based to service-based, seeking ample technical expertise as campuses in an era of expansion and technology. Campus size, public or private control, and geographic location have little effect on this trend. The majority of all schools are experiencing the same issues of growth, technology, quality of service, and the ever-present budget. And, as the results of this survey demonstrate, facilities managers and business officers are making similar decisions about how and why use outsourcing as another tool in maintaining and expanding their facilities.