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ancient chemistry building that has been heritage-designated by the state, and an FMD crew repairing an aging water main. These images symbolized what was good and bad at State U. The oldest public university in the state, it was a beautiful campus struggling to meet the demands of tomorrow's students with yesterday's infrastructure. Returning his gaze from the window, Milton began to consider what was troubling him. He had received a phone call from the provost of the university asking him to prepare a presentation to the university's board of governors in six weeks. In the past three years, the university had regularly cut FMD's annual operating budget, putting pressure on his division to reduce costs while at the same time continuing to satisfy its stakeholders. Milton knew that State U's students, faculty, and administrative support staff expected three things from his division: (a) a safe, comfortable, clean, reasonably attractive, and reliable physical environment; (b) timely responses to service repair requests (such as fixing leaking roofs and toilet repairs, for which users are not charged), and fairly priced, on-time fee-for-service work (such as office renovations and rekeying of doors, for which users are charged); and (c) professional services relating to campus planning, construction and renovation project management, and building and grounds design. If FMD exceeded these expectations, then his division would be seen as strongly supporting State U's strategic direction (see Exhibit 1 for an overview of State U's vision and goals). As a result of reductions in state and federal funding and a reluctance to push through additional tuition increases, Milton knew the university was facing severe pressure to further cut expenditures. If cuts occurred to FMD's budget, it would be for the third time in recent memory. This would make it very difficult for FMD to maintain existing service levels, not to mention its ability to renew State U's physical plant and reduce the substantial deferred maintenance backlog.' In the last round of cuts, the frequency of cleaning faculty offices was reduced to once a week, much to the chagrin of faculty. Milton knew that FMD's staff was doing a good job completing their activities (see Exhibit 2 for an overview of FMD's activities). However, Milton feared that further erosion in service levels, even through no fault of its own, could set up FMD for additional rounds of cuts. His biggest fear, though, was that further cuts could cause dissatisfaction among FMD users, and ultimately lead to calls for his job. To add to his worries, Milton had just received from the provost's office a report that provided an overview of the custodial, maintenance, and heating costs at 36 North American universities (State U is #1 in Table 1). State U fared well with respect to heating and custodial costs, but was significantly higher than most of the other surveyed universities with respect to maintenance costs per square foot. Furthermore, State U's maintenance costs per square foot were almost double the International Facilities Management Association (IFMA) benchmark. Milton knew the university's board of governors had already been provided

1. For example, as part the university's maintenance plan, the replacement maintenance schedule dictates that all campus roads be resurfaced every eight years. If at the end of the eight-year period there is no funding available, the resurfacing is postponed and the job is added to the deferred maintenance schedule. Note that FMD will still incur maintenance expenses for repairing the largest cracks and potholes in the pavement while the project is on the deferred maintenance schedule.
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EXHIBIT 1 Vision and goals for State U and FMD

State U was founded by the state government over 100 years ago and still relies on the state to fund over 40 percent of its $285 million operating budget and most of its capital budget. State U's vision is as follows: "Strive to meet international standards. Achieve academic pre-eminence. Forge a sense of place in the world.' To bring this vision to life, State U outlined four strategic goals it will vigorously pursue: 1. attract and retain outstanding faculty; 2. increase commitment to research and scholarly work; 3. establish State University as a major presence in graduate education; and 4. recruit and retain academically promising students. IMD's newly revised mission and strategic goals: FMD's mission is to provide world-class, sustainable facilities in support of teaching, learning, and research. FMD's strategic goals are: - enhancing the quality of service to the university community; - improving the quality of life for our employees; - excelling in accountable management practices; - intensifying communications efforts; and - advancing State U's academic and research goals.

EXHIBIT 2 An overview of Facility Management Division's activities at State U

FMD affects all aspects of campus life including: cleaning university buildings; performing the trade work needed to maintain university buildings; maintaining campus grounds including landscaping, roads, sidewalks, exterior lighting, and street fixtures; completing fee-for-service work, such as office renovations (i.e., installing new bookshelves in faculty offices), which it charges for (and competes with external contractors); designing and overseeing construction of new and renovated campus facilities; managing State U's physical plant, including managing replacement (keep-up) maintenance and deferred (catch-up) maintenance; developing engineering and maintenance guidelines and standards for all university-owned buildings; and undertaking other activities, such as ensuring campus security, monitoring parking violations, and manning the university switchboard.

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TABLE 1 Facility management costs for selected North American universities #

1 6 12 20 24 31 33 Age of facilities 60% over 30 years 65% over 30 years 60% over 30 years 50% over 30 years 50% over 30 years 10% over 30 years 75% over 30 years Type of institution State comprehensive Private comprehensive Private undergraduate State comprehensive State comprehensive State comprehensive State comprehensive Open hours 17-24 hours 7 days 17-24 hours 7 days Less than to hrs 5 days 17-24 hours 7 days Less than 10 hrs 5 days 17-24 hours 7 days 17-24 hours 7 days Number of users 20,000-30,000 3,000-5,000 3,000-5,000 5,000-8,000 10,000-20,000 30,000-50,000 10,000-20,000 Custodial Maintenance Heating cost/sq. ft. cost/sq. ft cost/sq. ft. 1.73 2.04 2.52 2.08 1.96 3.54 1.37 2.01 3.71 1.46 3.97 0.92 2.97 2.09 1.16 1.89 2.25 3.41 0.40 1.17 1.33 1.59 1.62

IFMA benchmark

N/A

with the report. He anticipated that the report's findings would play a key role in discussions he would have at the board meeting. FMD collects data on a number of performance areas (see Table 2), but Milton is unsure how to use these data, or even whether they can be used to develop an accurate and complete report on the performance of FMD. In the past, FMD's managers had been repeatedly told to focus on beating the previous year's numbers for each of their measures. Milton has come to the conclusion that these reports do not describe how FMD contributes where it counts namely, in enabling the university to achieve its strategic vision. Milton felt that FMD's recently revised mission and strategic goals (see Exhibit 1) strongly aligned with the vision and goals of State U. The problem was that he could not satisfactorily document that FMD was making progress reaching its revised mission and strategic goals. If Milton could show that FMD's measures linked to its mission and strategic goals, and that FMD had been achieving its measures, then perhaps Milton could save FMD from another round of cuts, not to mention his job. Milton had been exposed to Kaplan and Norton's balanced scorecard (BSC) while doing an MBA a decade ago. He recalled that the BSC was a tool for integrated performance management a tool that linked measurement of performance to strategy. The BSC was designed to portray a business unit's performance from a variety of different perspectives not just a financial one and relate its performance to an organization's overall objectives. However, Milton had only heard of the BSC being used in for-profit businesses and was uncertain whether it could be gainfully applied in a governmental setting. Milton knew that he had to raise all of the issues, both quantitative and qualitative, in order to provide
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TABLE 2 Measures currently collected by State U's Facility Management Division

Safety hours as a percentage of total hours worked Percentage of fee-for-service work to total Communication level achieved Employee well-being Employee work attendance Faculty retention (%) Student retention (%} Percentage on-time delivery Employee turnover Annual facilities expenditure as a percentage of gross institutional expenditures Percentage of defections among fee-for-service customers Inventory turnover Heating consumption per department Number of work processes re-engineered Number of new faculty hires Budget variance by department ($) Percentage of revenue from new customers Percentage of employees qualified for key jobs relative to anticipated requirement Number of employee suggestions received Number of employee suggestions implemented Custodial cost per sq. ft. ($) Response time for service calls Work request backlog ($) Maintenance cost per sq. ft. ($) Percentage of work requests requiring rework Number of scholarly articles published Idle employee hours Nonavailable employee hours Number of customer complaints Heating cost per sq. ft. ($) Percentage of lost hours.due to job-related injury Percentage of customers indicating they are satisfied Net cash on hand ($) Number of former high school honor roll students enrolled in first year at State tJ Employee survey regarding participation in decision making Employee survey regarding participation in safety Employee survey regarding participation in teamwork Operating expenditures as a percentage of current replacement value Profit per fee-for-service job ($) Deferred maintenance backlog as a percentage of current replacement value Customer satisfaction with reliability Customer satisfaction with responsiveness Number of research grants won by faculty Research grants won by faculty ($) Customer satisfaction with cleanliness Customer satisfaction with comfort Customer satisfaction with price Customer satisfaction with workmanship quality Customer satisfaction with personal safety Percentage of tuition fees earned from foreign students Customer satisfaction with timeliness (duration versus budget) Physical plant renewal expenditures as a percentage of current replacement value Preventive maintenance as a percentage of total maintenance work Training hours as a percentage of total hours worked Training expenditures as percentage of total expenditures Breakdown maintenance as a percentage of total maintenance work Number of lost days to accidents Percentage of graduate students enrolled of total student population Percentage of employees attending meetings Number of campus planning meetings held per year to update long-term campus plan

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FIGURE 1 Partial organization chart for State U's Facilities Management Division
Milton Keys Vice-President, Facilities Management Division

Tracey Dem Manager, Planning and Development % of FMD operating expenditures 6% Develop long-term campus plan Design services Capital project development and management

Bill Johnson Manager, Operations and Maintenance % of FMD operating expenditures 84% Custodial work 14% Maintenance work 30% Utilities (heating, cooling, electrical, water) 40%

Brook Dalhi Manager, Business and Support Services % of FMD operating expenditures 9% Administrative support for FMD including purchasing, materials management, and recycling

Joan Parski Manager, Finance and Accounting % of FMD operating expenditures 1% Financial reporting Accounting Payroll Budgets

the university's board of governors with the complete picture of FMD's performance. After that, it would be out of his hands. FMD has 400 employees including tradespeople, custodians, professional engineers, construction project managers, architects, accountants, clerks, safety managers, campus security officers, and administrators. The division has assets with a current replacement value of over $1.3 billion under its stewardship, an annual capital budget of $30-35 million, and an annual operating budget of $55-56 million (see Figure 1 for a partial organization chart for FMD and a breakdown of its operating budget). Some statistics relating to its activities and services include: Each day State U's campus has over 25,000 users comprising students, faculty, support staff, and visitors. State U's physical plant includes 65 buildings with a total floor space of almost 4.5 million square feet. State U's campus covers 2,400 acres and has 20 miles of roads and walkways, 50 miles of electric and sewer lines, and 3,000 toilets. The division owns or leases 95 vehicles and has its own garage and mechanics. There are 15,000 doors on campus and 6,000 keys are cut each year by FMD's locksmiths. 30,000 annuals are planted each year, over half of which are grown in FMD's greenhouses.
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FMD performs 250 service calls each day, and 2,000 carpentry and plumbing jobs each year. FMD receives 45,000 work requests each year and completes 250 minor capital projects (less than $250,000) each year. The state government has designated several of the grandest, century-old facilities as heritage buildings, limiting how these buildings can be renovated and used. State U's current deferred maintenance backlog (i.e., the amount of catch-up maintenance required) is $105 million.

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