Campus Utility Systems Master Planning

In a justification similar to the support granted to key financial institutions by the United States government during the economic crisis of 2009 — recall that these institutions were deemed “too big to fail” — educational institutions will likely fund all utility services because the services are “too critical to lose.” A campus utility master plan is, at its core, a formal business strategy and financial plan to address the mission-critical utility service requirements of institutional facilities.

Yet the failure of many institutions to coordinate facility development with utility service capacity has also led to gross inefficiency and unnecessary expense.  Expressed in contemporary jargon “. . . sustainable utility services don’t just happen, they must be carefully planned.”

In many cases today, buildings are planned and even budgeted for construction without considering the central plant and/or utility infrastructure required to serve the building. Because a building must have electricity, heating, cooling, water and sewerage service to be usable, this is more than a little short-sighted. Sometimes, funding for new buildings simply fails to include the utility services necessary for the buildings. In other cases, the problems occur because of a gap between the visible buildings and an understanding of constraints on the more or less invisible support infrastructure.

Even when it is determined that adequate capacity is not available, the buildings are sometimes built anyway. These circumstances may result in facilities built with low-first-cost, high-operation-cost incongruent systems that impose additional operational costs and workloads on an already overburdened operations staff.

A utility master plan is the tool for planning and construction as well as facilities management. The facilities manager uses the plan in part to define utility and energy systems needs and the associated costs for the campus. This plan guides the efforts of the facilities management department in efficiently and effectively expanding and maintaining the energy and utilities systems.

Ideally, utility planning is integrated into the fabric of comprehensive campus master planning and financial management strategies. The primary functionality of campus utility systems is dedicated to supporting campus services and programs, and as such should be structured and responsive to those needs and requirements. Sustainability goals must include provision of “adequate” utility services at minimum life-cycle costs. Indeed, without integration of planning for programmatic physical facilities and business strategies, it will be only coincidental that broad sustainability goals can be achieved — let alone realizing even a simple cost minimization objective for utility services.

Every campus has some sort of a utility plan. If this plan is informal and understood only in the minds of several key individuals, the campus is exposed to generally unacceptable risks of both a physical and financial aspect. Communicating and vetting a utility plan requires the discipline and organization of committing the plan to writing. However, even the most carefully prepared plan does not assure its benefits can be realized — it must also be integrated with institutional planning decisions.

Development, analysis, and comparative testing of alternative long-term utility systems strategies cannot be accomplished outside of a formal planning process. The lack of a well-documented, written plan makes the task of communicating the needs of the present or future virtually impossible.

Importantly, increasing emphasis on climate change, energy-efficiency, and sustainability issues have broad impacts on campus planning generally, and utility master planning specifically. Emerging best practices are planning processes that proactively address developing energy- and facilities-related technologies in the context of traditional campus utility services. It is likely in this era that “life-cycle cost minimization” must also be explicitly balanced against other noneconomic goals in utility master planning, including “transitional” technology solutions and strategies.

It is common to find that replacing a technologically obsolete energy services facility (e.g., campus steam plant) requires navigation of a host of competing technology solutions (i.e., natural gas boilers, combustion turbine combined heat and power systems, geothermal resources, solar thermal, etc.) reflecting widely divergent “maturity” characteristics for each alternative.  A well-developed utility master plan serves as a defensible foundation for choosing the “most advantageous” solution.

This chapter describes some of the elements of a utility master plan. No two situations are identical, as the needs of institutions vary, but the basic concepts will apply to all plans. A good master plan should document:

1)         the existing condition, capacity, and ability to expand campus utility systems

2)         the potential for reduced energy consumption in existing buildings to free up capacity

3)         the magnitude, cost, and timing of anticipated campus utility development requirements

4)         cost-effective ways to meet campus expansion needs

5)         the impact of expansion on the cost of facilities operations

6)         constraints on utility systems expansion to meet expected future expanded campus needs

Furthermore, the plan can provide a wide scope of facilities management capabilities and serve to develop the senior support necessary to implement the dynamic business strategies required to achieve sustainable utility service goals.

Determine the Capability of Utility Systems to Serve a Growing Campus

One of the primary reasons a utility master plan is necessary is to assess the capacity of existing utility systems, and to identify additional resource requirements to meet growing campus needs. Campus expansion is not just a matter of placing another building on campus. Buildings require heating, cooling, water, electrical service, gas, and storm and sanitary sewerage, as well as access for students, staff and service vehicles, fire protection, and maintenance. These factors need to be considered when first planning the siting of a building.

Identifying and articulating how existing utility service capacity may be efficiently utilized, and prioritizing capital investment for additional capacity in a manner consistent with campus development plans defines a primary objective of utility master planning.

The capability to serve additional facilities is not simply a location issue, and must also include capacity and service reliability assessments that can have profound impacts on the costs of utility service to both existing and new facilities. Advance planning will reduce the costs of providing services. Locating the building where service capacity is available, and prioritizing the availability of service capacity in areas where growth is likely to occur allows coordination of capital needs investments in the successful execution of multiyear capital planning — consistent with master campus development plans and responsive to programmatic needs.  Many independent variables impact the siting of new buildings, and coordination of planning may assist in providing utility service capacity at substantial cost savings in both capital investments and long-term operating costs.

The capability of the utility infrastructure to accommodate expansion must address variables such as the surplus capacity of the existing central plant, capabilities to integrate decentralized (“stand-alone”) utility facilities, the location and capacity of utility services, the age and condition of the existing plant, and the cost and/or ease of adding additional capacity. To determine this, the utility master plan must first conduct a utility facilities condition assessment. Central and satellite plant capacity, distribution systems capabilities and constraints, options for capacity expansion, and the life-cycle costs of service alternatives must all be evaluated. This utilities infrastructure include electrical, heating, cooling, and domestic hot water systems; sanitary sewer; storm sewer; gas; and telephone and other communications systems. The methods of routing services (e.g., tunnel, utility corridor, duct bank, direct bury) are also key elements in planning.

The facility condition assessment data is the foundation of the utility master plan and evaluates the ability of the system to accommodate existing and future loads. This process will pinpoint areas that need improvement to support the campus in the present and in the future.

Determine the Magnitude, Cost, and Timing of Needed Campus Expansion

Another primary reason utility master planning is required is the need to anticipate the demands on the utility system so that the needed services are available when a new building comes online. Usually the central system capacity increases and utility services expansions do not occur in conjunction with the construction of a new building. Long-term strategic plans for central utility service expansions often size capacity investments to meet the needs of several buildings, and the timing of the additional capacity investment must anticipate useful life of existing equipment, reliability factors, capital constraints, and other timing issues. Anticipation of sector development over a 5- to 10-year planning horizon can save significant capital resources.

For example, a new chiller or electric substation may have the capacity to serve many buildings, but the capacity must be available when needed for the first new building, leading to an excess capacity condition until the additional buildings are constructed. Also, because many specialized pieces of equipment in the central plant require long lead times to manufacture, the central plant expansion may require longer construction periods than that required for a new building. The master plan determines the magnitude of the needed central plant and utility expansion, when the expansion must occur, and the budget required for the expansion. Indeed, this is a classic case for ongoing capital needs assessments relating to utility master plans.

Determine Cost-Effective Ways to Meet Campus Expansion Needs

A good utility master plan also evaluates the most cost-effective ways of meeting expansion needs. That said, evaluating “cost-effectiveness” is as much an economic art as engineering science when conducting long-term utility service planning. Engineers will routinely perform analyses on the costs and payback from capital equipment investments. In many cases, these are discrete analyses that compare the cost-effectiveness of individual components (e.g., cogeneration machine A to machine B). However, a central plant with many interdependent utility services forms a relatively complex economic system, with the life-cycle cost performance of the system dependent on configuration of interrelated systems and external variables (e.g., energy prices).

A utility master plan is dependent on understanding and documenting the performance of the utility systems and opportunities for energy use reduction in existing facilities. The sophistication of the utility plan turns on its ability to assess differing future operating conditions than can be observed from the existing systems. Assumptions regarding technology and service demand changes will dictate utility infrastructure sustainability strategies.

Engineering performance models may be integrated with economic performance modeling to achieve more robust cost-effectiveness evaluations for utility master planning.

Indeed, important capital investment decision capabilities are provided by a systems performance model that can evaluate the net present value of systems operations, including debt costs, major maintenance costs, capital replacement costs, and operating costs for alternative facility (investment) configurations, and under alternative growth and external factors (i.e., input prices, revenue sources, etc.).

For example, the University of New Mexico undertook utility master planning to evaluate major extensions of its district energy system to a large tract of contiguous undeveloped real estate. Infrastructure planning preceded investment and was based on a comprehensive utility business plan model, incorporating both engineering and economic performance parameters to evaluate lowest net present value cost of serving existing facilities and an anticipated five million square feet of additional facilities over a 20-year period (nearly doubling total service requirements). Numerous alternative investment, growth, and input factor costs scenarios were evaluated. The planning produced a staggered schedule of service extensions, but surprisingly demonstrated that a second central plant could not be economically justified until at least the tenth year of the 20-year evaluation period.

At Arizona State University, the staff thought a major expansion of the campus, combined with inadequate chilled water to the existing campus, would require major additional new chilled water mains. The master plan found that by increasing the chilled water temperature range (i.e., Δt), the capacity served by the existing mains could be doubled, and variable flow modifications could eliminate many of the circulation problems. Thus, the master plan process identified a cost-effective way of meeting capacity expansion needs.

Determine That Utility Systems Expansions Are Efficient in Meeting Expected Campus Needs

Without good utility master planning, utility expansion may not be sized properly for the added buildings; utilities may be added and/or installed without proper isolation valves and tees, manholes, or junction boxes located where future connections will be required. The mains may even be routed through a future building site, which will necessitate relocation when the future building is constructed. This is extremely wasteful of campus resources. It not only costs more to duplicate pipe runs or relocate mains, but it also disrupts campus operation and sometimes takes buildings out of service for an extended period of time.  Although good utility master planning cannot entirely eliminate this problem, it can reduce it.

A utility master plan performed in the context of capital asset management planning activities requires an inventory of physical assets and analyses of the condition of those assets. Such inventory should take explicit consideration of the risks associated with the failure of those capital assets, and a fiscal strategy to maintain or improve the condition of those assets.  Risks may include (for example) environmental, safety and changes to development priorities for new facilities identified in the Master Plan for Campus development.

Where technology changes rapidly (e.g., lighting efficiency), addressing risks and uncertainties as a formal sensitivity component of utility master planning may assist in identifying an efficient solution for meeting future utility service needs. A quantitative performance-model-based utility plan allows formal testing of assumptions regarding technology change, risks, and uncertainties. The performance model will not define the specific technology changes that will impact utility system decisions, but an ability to test the future impact on systems operations, capacity requirements, and costs can provide significant assurances.

Develop Institutional Support for Needed Expansion and Operations

Decisions on budgets for facilities operations and expansion are usually political or bureaucratic rather than rational, or even based on good economics. Utility master planning processes that are sponsored by senior financial officers from inception have a significant leg-up in obtaining the required funding. Importantly, a master utility business plan that comprehensively assesses cash flow requirements to meet life-cycle operational, debt, and major maintenance costs can be indispensable to obtaining financial officers’ and broader institutional support.

Budgets and operations are often based on historic precedents, with adjustments based on economic trends and factors such as inflation. Budgets are sometimes based on square footage served or student full-time equivalents.

All too often in higher education, short-term costs can drive financial decisions. Thus, lowest first cost, one-year operational costs, or similar considerations will often govern decisions, rather than life-cycle costs or long-range operational and maintenance costs. Similarly, the need to reduce current operating costs can lead to deferral of investments needed for renewal, modernization, and expansion to meet future capacity considerations. Given the long-term nature of most campus utility system investments, these systems can be particularly vulnerable to the adverse effects of short-term financial decisions. Effective capital asset management is a facilities’ “best practice” and foundation for sustainability planning for utility services. Long-term capital needs assessments, based on comprehensive utility master plans, may assist in avoiding these pitfalls.

A good utility master plan that lays out the long-term utility investment needs and a sound financial case for making these investments presented in a clear and convincing manner can do much to overcome this tendency.