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The real cost of deferred maintenance
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The real cost of deferred maintenance

Deferred maintenance can no longer take a backseat if colleges and universities want to remain competitive and hit their budgets. Here are five reasons why higher education institutions need to address their backlog and prioritize infrastructure upgrades.

It is a story that has become all too familiar for many colleges and universities across the country. Campus buildings need upgrades to infrastructure or energy assets. There are not enough resources in the budget to complete the work and, more often than not, the project goes into the backlog – also known as ‘deferred maintenance.’

Buildings and infrastructure at colleges and universities across the country are showing their age, with many having 75% of their campus facilities in the range of 30 to 40 years old. These facilities require renovations and retrofits – like lighting, HVAC, plumbing, electrical, and building envelope improvements like windows and roofing – to bring them to like-new condition and ensure compliance with various building codes.

Often having to do more with less, many institutions face the daunting task of managing a growing deferred maintenance backlog. In fact, APPA estimates that colleges and universities are facing an urgent deferred maintenance backlog of more than $112 billion.

Infrastructure upgrades are appealing because aging infrastructure and assets are inefficient and costly to maintain. Still, competing priorities usually mean that addressing outdated infrastructure takes a backseat in favor of funding other school resources. It’s easy for colleges and universities to push spending on facility improvements to the bottom of the priority list when this portion of the budget is competing against budget items that focus on student acquisition, faculty compensation, and retention of students and staff. It’s understandable, considering colleges and universities need to focus on attracting students and top talent – and competition is fierce.

However, when energy costs are high or unexpected maintenance on outdated equipment occurs, it forces you to make budget trade-offs that shift resources from other areas of your campus. The challenge is to hit your budget without shortchanging students, canceling programs, and negatively impacting staff. Therefore, delaying infrastructure upgrades cannot last forever, and addressing deferred maintenance is becoming more urgent to ensure the sustainability of your campus. Here are five reasons why your institution should take a hard look – right now – at tackling your growing backlog.

Reason 1. Aging infrastructure demands high energy costs

With college enrollment fluctuating, colleges and universities need to take a hard look at reducing operational costs and operating more efficiently to free up budget for student acquisition and retention. Aging infrastructure requires more resources to operate, and when buildings are not using energy efficiently, it has financial impacts, diverting budget away from students. According to the U.S. Department of Energy, higher education institutions spend over $6 billion on annual energy costs across 5 billion square feet of space – and the U.S. Environmental Protection Agency estimates that 30% of this energy is wasted.

Operating more efficiently will enable your institution to free up resources to create a better learning environment, offer more value to your students and faculty, and give you a competitive edge. Capturing energy cost savings from more efficient energy usage across your campus can directly translate into offerings that students care about, like your curriculum, dining options, student programs, scholarships – even landscaping of grounds. Energy cost savings can also translate to teacher salaries, enabling you to hire talent that attracts students to your institution. 

Reason 2. Aging infrastructure carries a high carbon footprint

Inefficient energy usage doesn’t simply affect your operational budget. High energy consumption and energy waste carry the additional price tag of carbon emissions. In today’s competitive landscape, a large carbon footprint is not a campus characteristic that will attract students. And their opinion matters – a Princeton Review study found that 75% of applicants say that a college’s commitment to the environment would affect their decision to attend that college.

To remain competitive, colleges and universities need to take a hard look at their infrastructure to boost the sustainability of their campus and reach net zero targets. From energy upgrades that reduce consumption to installing renewable technologies that generate clean power on-site to offset grid energy consumption, the options for boosting the efficiency and sustainability of your campus are endless.

Many institutions are already taking steps to mitigate their carbon emissions to reduce operational costs and attract students. They are developing sustainability and energy plans, disclosing carbon emissions, and receiving public recognition. Is your institution prepared to hit net zero by 2030?

Reason 3. Aging infrastructure is risky and costly to maintain

While convenient, delaying infrastructure upgrades can lead to more problems down the road. Outdated equipment isn’t simply less energy efficient – as equipment reaches the end of its lifespan, you could be facing more frequent and expensive emergency repairs. For example, it’s tempting to postpone upgrades to aging HVAC systems, but what if these critical pieces of energy infrastructure fail during the hot summer months? You can no longer postpone maintenance and repairs, as the safety and comfort of your students and staff is of the utmost importance. Reactive maintenance usually comes with a price tag that perhaps you were not accounting for in the budget – which means budget may be diverted away from students to pay for costly emergency repairs.

Delaying upgrades can also carry safety risks. The comfort and safety of buildings are more important than ever. Infrastructure upgrades like modern HVAC and lighting systems not only increase the efficiency of your campus buildings, so you pay less for energy and maintenance. These upgrades create an optimal living, learning, and working environment by ensuring proper ventilation, indoor air quality, and lighting – so that students and faculty can perform their best.

Not to mention, constantly addressing failure after failure with outdated energy infrastructure is not the best use of a facility manager’s time and budget. Operating in a reactive mode is stressful and time-consuming. It’s time for a change.

Reason 4. Students want to see value in their investment

Students want to see value in their tuition investment, from cutting-edge buildings to curb appeal, student programs and scholarships, and a commitment to the environment. And colleges and universities need to provide amenities that will positively and directly impact their students – potentially even setting them apart from their competition.

Campus offerings are essential now more than ever. With 79% of college presidents considering the mental health of their students as the most pressing issue facing them today, having the budget to offer extracurricular programs to students enhances your learning environment and attracts students to your campus.

Unaddressed infrastructure upgrades can be frustrating on many levels – regarding outdated assets’ visual appearance plus issues that directly impact safety and comfort – like HVAC system failures, uncomfortable lighting, and even loss of power during power outages. Reactive maintenance is a vicious cycle of postponing and emergency fixing. Making infrastructure upgrades now frees up time and budget so you can invest in and prioritize your students.

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Reason 5. Funding options and the right partner make it achievable

Colleges and universities can no longer choose between their financial and environmental goals – the most successful institutions are developing energy strategies that deliver economic and environmental sustainability to ensure long-term success. Addressing your deferred maintenance backlog now and moving energy infrastructure upgrades up the priorities list has short and long-term financial benefits, helping you achieve your economic and environmental goals so you can stand out in a competitive market. Upgrading your aging energy assets and implementing cutting-edge integrated energy solutions can simultaneously deliver financial and decarbonization results, enabling you to unlock opportunities to monetize your energy infrastructure and reduce overhead costs.

Your institution’s deferred maintenance backlog and net zero targets may be daunting. Even more daunting is that while making infrastructure upgrades sounds very appealing, where do you find the capital to tackle the upgrades without diverting capital away from students?

The good news is that lack of capital is not a barrier to accessing these opportunities. A variety of financing mechanisms enable you to fund the infrastructure improvements you need to reduce your energy costs quickly, reduce your carbon emissions, and even generate revenue from your energy infrastructure – without taking on additional debt. In particular, off-balance sheet financing is a good option for institutions to leverage, requiring no upfront cost, no impact on your balance sheet, and enabling you to consolidate your upgrades into one simplified contract.

Working with the right partner is essential to ensure that you implement successful infrastructure upgrades while remaining aligned to your strategic and financial goals. As an integrator of sustainable energy solutions, Centrica Business Solutions works with higher education institutions like yours to remove complexity by delivering a full range of bundled, end-to-end energy solutions and services encompassing energy efficiency measures, renewable energy offerings, and demand response services

Our unique combination of strategic guidance, industry expertise, innovative technology, flexible funding, and full lifecycle support ensure you make the most of new opportunities, react quickly to market changes, and eliminate complexity and risk. We work with you step by step to develop a net zero pathway that makes sense for your institution, recommending infrastructure improvements that focus on energy conservation first to enable more cost-effective on-site generation solutions like solar.

Our process for working with you defines a clear and targeted approach to energy implementation – establishing your goals, identifying opportunities, installing solutions, and ensuring ongoing support and optimization over time. Each step is underpinned by expert resources, proven processes, and end-to-end accountability – ensuring that your institution is supported in delivering on your financial and environmental agenda.