Plant Operations

Facilities Users Network - FUNFacilities Users Network - FUN

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Recharge MethodologyRecharge Methodology

Recharge Methodology

Accounting ModelAccounting Model CalculationCalculation Components Components What’s Customer Pay/What’s General FundWhat’s Customer Pay/What’s General Fund

Accounting Model

Plant Operations is run like a business with Plant Operations is run like a business with multiple customersmultiple customers

Customers include Auxiliaries, B&F Customers include Auxiliaries, B&F Departments, Construction Projects, Departments, Construction Projects, Schools, Colleges and Institutes.Schools, Colleges and Institutes.

The Biggest Customer is the General FundThe Biggest Customer is the General Fund

Accounting Model

Each Department within Plant Operations Each Department within Plant Operations operates an Enterprise Operationoperates an Enterprise Operation

All the costs that Plant Operations incurs All the costs that Plant Operations incurs are rolled into the establishment of a set of are rolled into the establishment of a set of rates for work performed.rates for work performed.

Customers including the General Fund are Customers including the General Fund are Billed with these rates.Billed with these rates.

Accounting Model

Calculation

Unit Cost $/Unit = Unit Cost $/Unit = Unit Costs + OHUnit Costs + OH

Available UnitsAvailable Units

Units can be Person- Hours or Material Units can be Person- Hours or Material ItemsItems

Calculation – Numerator

Costs includedCosts included

1.1. Wages [Classification based]Wages [Classification based]

2.2. Benefits [Standard HR package]Benefits [Standard HR package]

3.3. Tools and Equipment [shop tools, Tools and Equipment [shop tools, trucks, consumables, uniforms]trucks, consumables, uniforms]

4.4. Overheads [supervision, payroll, Overheads [supervision, payroll, HR, GC, Administration]HR, GC, Administration]

Calculation – Denominator

Available UnitsAvailable Units

1.1. 2080 hours per year2080 hours per year

2.2. Subtract vacation, holidays, average Subtract vacation, holidays, average lost timelost time

3.3. Resultant is approximately 1750 Hours Resultant is approximately 1750 Hours per year available hours per personper year available hours per person

Sample WorksheetName Maint Svc - Cabinet Shop Shortcode Fund Org Subclass Prog/ShopForeman T. Rumple 950821 50000 681620 92320 M4100

Cabinet Maker

Job Class 73028Head Count: TRADES/AFSCME 7 7Head Count Total / Grade 7 T6Wage Rate 24.42$ Base Hours 2,080 2,080OT 1 Hrs Overtime 2 FY 99 513 used 70% of FY 99 per GuttmanOT 2 Hrs 73 Averge per person 73Sick Hours (72)Training Hours (16) # Rate TotalUniversity Function (20) 4 192 768Vacation Hours (151) 3 96 288Inclement Weather Hours (8) 7 1,056Holiday (11 day @ 8 hrs) (88) vacation average 151Billable Hours 1,798Annualized

Wages 50,794Shift (see note on file)STANDBY or On-CallLead PayLongevity 517

Base Cost 51,311Fringe Ben & Overheads

(A) Flat Rate Benefits 4,351 7,459592500 FICA 7.65% 3,925592750 Retirement 10.00% 5,131597750 OSB 1.69% 867

Annual Shop Overhead/man 20,538 20,538General Foreman Allocation 13,220 13,220

Annual Cost w/o OT 102,451

Regular Rate $56.97Overtime Rate 71.54

Totals GF Labor CustomerCost per 8 hour work day (no overtime) $3,190 $3,190Annual cost of all billable time $724,645 $724,645 $17,000 $707,645General Fund vs Customer Billing 2% 98%FTE allocation 7 0.2 6.8

(A) 588200 Flex Ben, 590750 LTD, 591500 GI, 593500 Hlth Ins, 596250 Dent, 596750 Prkg

Calculation for Material’s OH

Material OH is only applied to Construction Material OH is only applied to Construction Services.Services.

All costs to obtain materials are summed up All costs to obtain materials are summed up and divided by the expected dollar volume and divided by the expected dollar volume for the coming year.for the coming year.

Typical Cost include, expeditor cost, Typical Cost include, expeditor cost, stocking cost, distribution including stocking cost, distribution including vehicles.vehicles.

What’s Customer Pay vs. GF

There will shortly be a Service guide posted on the There will shortly be a Service guide posted on the Plant Operations Web Page.Plant Operations Web Page.

Generally speaking components attached to a GF Generally speaking components attached to a GF building when it was constructed or acquired are building when it was constructed or acquired are included as a General Fund repair items.included as a General Fund repair items.

Because the University has a $700+ million Because the University has a $700+ million deferred maintenance need low priority items are deferred maintenance need low priority items are not likely to be repaired any time soon. not likely to be repaired any time soon.

Plant OperationsPlanned Budget Control Planned Budget Control

StrategiesStrategies

Plant General Fund

Background

Plant OperationsPlant Operations Facilities Maint.Facilities Maint. Building ServicesBuilding Services Construction ServicesConstruction Services Grounds & Waste Mgmt.Grounds & Waste Mgmt. Work ControlWork Control Administrative ServicesAdministrative Services

General Fund 46%

Other Revenue54%

$46.7

$55

Assumptions

Plant Operations is a business enterprise Plant Operations is a business enterprise that provides multiple services to the U of that provides multiple services to the U of M communityM community

A 5% base budget reduction is required in A 5% base budget reduction is required in the present situation. This equates to the present situation. This equates to $2,300,000 on a $46.7M PGF budget.$2,300,000 on a $46.7M PGF budget.

Assumptions There are no excess funds in the Plant General There are no excess funds in the Plant General

Fund (PGF) BudgetFund (PGF) Budget

All resources are used in the care and maintenance All resources are used in the care and maintenance of U of M GF facilitiesof U of M GF facilities

The Customer Pay (CP) work load will remain The Customer Pay (CP) work load will remain stable over next three yearsstable over next three years(We are also modeling a decrease in CP work)(We are also modeling a decrease in CP work)

Assumptions Personnel can be transferred from PGF to Personnel can be transferred from PGF to

CP work to control spending levels on CP work to control spending levels on general fund. general fund.

Natural attrition can provide flexibility to Natural attrition can provide flexibility to balance any unexpected reduction in balance any unexpected reduction in customer pay work [beyond 2-3 years out] customer pay work [beyond 2-3 years out] should it occurshould it occur..

Assumptions

We can balance sources of revenue to still We can balance sources of revenue to still serve the community during times of budget serve the community during times of budget scarcityscarcity

Striving to include an FY 2004 salary Striving to include an FY 2004 salary program in our reductions. Ultimate program in our reductions. Ultimate decision rests with Provost.decision rests with Provost.

Specifics1. Reduce Overhead Where Possible

Open PositionsOpen Positions Seek to consolidate duties of open Seek to consolidate duties of open

overhead positions overhead positions Consider upcoming retirements and Consider upcoming retirements and

consolidate duties where opportunities consolidate duties where opportunities existexist

Transfer one supervisor to Hospital Transfer one supervisor to Hospital contractcontract

Specifics1. Reduce Overhead Where Possible

Travel & MiscTravel & Misc Reduce travel related to training and Reduce travel related to training and

conferencesconferences Reduce on-call coverageReduce on-call coverage Reduce the number of business and Reduce the number of business and

service vehiclesservice vehicles Reduce hosting for in-house events costsReduce hosting for in-house events costs

Specifics 2. Redefine Base Level Services

Lengthen IntervalsLengthen Intervals

Lengthen intervals of Custodial Lengthen intervals of Custodial cycles.cycles.

Lengthen intervals Grounds cycles. Lengthen intervals Grounds cycles.

Specifics 2. Re-define Base Level Services

Eliminate Some ServicesEliminate Some Services Divert Skilled trades positions from PGF to Divert Skilled trades positions from PGF to

Customer Pay WorkCustomer Pay Work

Reduce volume of >$5,000 project on PGFReduce volume of >$5,000 project on PGF

Reduce number of Grounds’ Student Reduce number of Grounds’ Student PositionsPositions

Specifics 2. Redefine Base Level Services

Make Some Services Customer PayMake Some Services Customer Pay Shade and Blind Cleaning Shade and Blind Cleaning

Indoor plant maintenanceIndoor plant maintenance

Non-emergency overtimeNon-emergency overtime

Conclusions The strategies outlined will result in PGF The strategies outlined will result in PGF

savings of $2.3M. savings of $2.3M. Savings are sufficient to carry Plant Savings are sufficient to carry Plant

Operations through budget crunch.Operations through budget crunch. Additional options continue to be evaluated.Additional options continue to be evaluated.

Conclusions

A FY2004 Salary program is planned in the A FY2004 Salary program is planned in the analysis, but ultimate decision rests with analysis, but ultimate decision rests with Provost.Provost.

Continuity of service to the community is Continuity of service to the community is altered but maintained.altered but maintained.

Safety as an ongoing concern is not Safety as an ongoing concern is not compromisedcompromised