Finance and Administration

LBRE Annual Report

F&A prepares an LBRE Annual Report (the Year in Review), which includes the following information:

• Overview of Financial Results and Significant LBRE Initiatives
• Land & Buildings Operating Budget-to-Actual and Year-Over-Year Results
• Land & Buildings Beginning and Ending Reserve Balances
• Academic Capital Projects and Programs: Completions, Results and Final Accounting
• Annual Summary of the Board of Trustees – Land and Buildings Committee Actions
• Land & Buildings Capital Project and Program Descriptions
• Real Estate Overview
• Real Estate Financial Review
  • Actual-to-Budget Operating Results
  • Year-Over-Year Operating Results
  • Current Market Value – Real Estate Assets
• Real Estate Historical Performance
  • Income Growth
  • Value Creation
• Real Estate Capital Projects
• Real Estate Areas Managed

A comprehensive reporting of the above areas is available in the Land, Buildings and Real Estate Annual Report (SUNet ID required).

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Historical Cost Escalation Index

Escalation in construction costs can have a major impact on project budgets. LBRE utilizes the Lee Saylor Index (LSI) Material/Labor Index to track historical cost escalation. The LSI Material/Labor Index measures 23 selected materials and 9 selected labor rates and is published quarterly.

To mitigate volatility and higher than historical cost escalation, LBRE includes an Escalation Risk category in project budgets in addition to the standard 3% annual escalation.

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Annual Investment in Plant Assets

In fiscal year 2003, LBRE led a university-wide effort to establish a model to address the long term adequacy of the investment in Stanford’s physical plant. The central question from a fiduciary and management perspective was:

Are we investing enough capital to preserve and optimize our existing facilities?

The Annual Investment in Plant Assets model was developed based on the life cycle planning method. The key concept here is that if life expectancies are known, then maintenance schedules can be predicted.

In fiscal year 2004, the university implemented a database to centralize and store information about all campus buildings and infrastructure subsystems, along with their projected replacement costs at the end of their useful lives. The result of this implementation was a Maintenance database that assesses deferred maintenance and forecasts planned maintenance for 50 years.

The Maintenance database is updated annually by “resetting the clock” on subsystem lives that were replaced during the previous year and reassessing the remaining lives of subsystems through physical inspection by facilities managers. The results are updated annually in the capital planning process.

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Operating Budgets

F&A is responsible for the annual budget presentation to the Provost and his Budget Group, the overall LBRE operating budgets, mid-year reforecasts and year-end reporting.

F&A has two Budget Officers, one representing Land & Buildings and the other Real Estate. LBRE works directly with the University Budget Office on all budget related issues.

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Project Status Report

The Department of Project Management (DPM) within LBRE manages approximately 120 projects with a total budget of over $1.5 billion. F&A updates and summarizes these projects into a Project Status Report (PSR). The PSR is distributed to management within LBRE and to other university groups including Capital Accounting and Cost and Management Analysis.

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