The Utilization Cost Savings Opportunity
Over the past decade, most institutions have taken a “build-to-grow” approach to space, constructing new facilities to keep pace with increasing levels of activity rather than seeking greater efficiency. The high costs of this approach are increasingly untenable in the current economic environment.
When planning for future space needs the simplest assumption is that the institution must maintain the current ratio of space to students. Yet the above estimates show just how expensive such an approach can be. Using the median cost per square foot for an academic building ($295), the cost to add enough new classroom space for 100 students ranges from $230 K (at a large public university) up to $776 K (at a small private college with a high ratio of classroom space to students). And those costs do not include the non-classroom spaces required in a new academic building or the costs of maintenance and debt service.
While these figures are rough estimates based on an idealized situation they indicate the often ignored costs of a “build-to-grow” approach that strives to hold productivity constant rather than improving productivity through better utilization of space.
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Improving space utilization—generating more activity with the same amount of space—can avoid significant new construction costs. Even relatively small improvements in space productivity can have a large impact.
For a large public research university with 20,000 students, 1,000 faculty members, and $100 M in research expenditures, even small improvements in space utilization can generate signifi cant cost avoidance. Reducing the average faculty offi ce size from 160 square feet to 140 square feet would free up 20,000 square feet of office space, avoiding almost $6 M in construction costs. Improving overall classroom utilization from 65 percent to 85 percent saves 36,400 square feet of space, which would have cost almost $11 M to build new. And increasing research productivity from $334 per square foot (the average for universities with more than $1 M in research funding) to $420 per square foot (one of the highest values for large research universities), would free up 61,000 square feet or $24 M worth of space.
For smaller institutions the utilization improvement opportunity is smaller but still signifi cant. For a baccalaureate college with 1,700 students and 155 faculty, reducing average faculty offi ce size from 160 square feet to 140 square feet would save 3,100 square feet, avoiding almost $1 M in new construction. Boosting classroom utilization from 45 percent to 65 percent saves 8,900 square feet or $2.6 M.
Of course productivity gains of this level require signifi cant effort and investment. Reducing the size of faculty offi ces across the entire campus, for example, would be impractical and cost-prohibitive. But these theoretical cost avoidance estimates provide a sense of the fi nancial impact of productivity improvements.
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Research space and offi ce space are also major cost drivers. Maintaining the same ratio of expenditures to laboratory space or offi ce space to faculty is often unsustainably expensive.
The median cost for a new science building is $394 per square foot (a fi gure which undoubtedly understates the cost of new laboratory space at most universities). Holding productivity constant, the most research intensive universities (those with over $100 M in total research expenditures) would require $1.2 M in new space to support an additional $1 M in research expenditures. Less research intensive universities (with lower average research productivity) would need almost $3 M in new space to support $1 M in additional research expenditures. Each dollar in new research funding requires more than a dollar in new space.
The cost (in office space alone) to add 10 new faculty members (assuming each has 160 square foot of newly constructed offi ce space) would be nearly $500 K.
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The Drivers of Space Growth
The Barriers to Improved Utilization