Higher education institutions across the country have reached a critical tipping point. With increasing competition for students, faculty and research, and a mounting backlog of facility maintenance, campuses are finding it increasingly difficult to modernize and expand to meet the demands of future students and staff. Higher education leaders have hit a crossroad, where balancing growth ambitions with maintaining reliable and resilient infrastructure is becoming an insurmountable task. The new reality of higher education will be a shift of non-core operations to third parties and allowing a renewed focus on core educational priorities.
Backlogs and competing priorities present significant modernization challenges
According to the recently published State of Facilities in Higher Education report (Gordian), aging infrastructure, such as equipment nearing end-of-lifecycle, outdated systems and deferred maintenance, has become a significant barrier to modernization. These backlogs indicate that available funds from tuition, grants and research are being utilized for competing priorities and not for the projects necessary to modernize and expand campus facilities. In fact, in a recent University Business and Schneider Electric survey, nearly 80% of respondents listed competing priorities as their top challenge to their modernization ambitions. There is simply not enough funding to go around, especially as attention shifts to attracting students and research with campus amenities and facility capabilities. In the coming years, this budgetary split will prove to be unsustainable without upgrades to critical infrastructure.
Adding to the budgetary dilemma is the prediction that student enrollment will continue to slump over the next several years, leading to a sharp decline as soon as 2026 (Gordian). This trend may even be accelerated due to recent global events. As the pool of applicants decreases, competition for these students will skyrocket. Students will seek modern, sustainable, and reliable campuses for their educations.
As such, reliability is also quickly becoming a focal point for many campuses. Aside from the comfort of adequate temperature and moisture control, air and water quality, and always-on technology, students and researchers alike will also seek campuses that can sustain all activities without interruption. Mission-critical operations must be maintained year-round, especially to attract advanced research projects, talent and funding. The cost of inaction on developing solid energy infrastructure will be higher than lost efficiency.
As of 2016, outdated electrical infrastructure has been responsible for a $27 billion loss annually in the United States; buildings alone experiencing annual outage-related costs of nearly $7.5 billion (E Source).
Shifting the path forward to diversified project delivery models
Even with the split focus in budgetary priorities, three in four respondents to the University Business survey are engaging in construction and/or renovation now or in the next three years. In the same survey, respondents who reported active modernization initiatives also cited reducing energy costs and securing reliable energy supplies as two top challenges to address.
The global race to carbon neutrality is also heating up, especially for higher education institutions. In fact, for 64% of students surveyed, sustainability has become a key decision criterion for enrollment decisions (Princeton Review). Although nearly 90% of higher ed leaders say their institution has implemented energy savings measures in the past three years (University Business), there is still much work to be done. According to 2019 reports, 80% of total CO2 emissions come from energy and more than half is energy waste (ACEEE).
For campuses to meet the demands of both facility operations and students, addressing the resilience and cost of energy infrastructure will be key in delivering on more core campus priorities.
In order to evolve under increasing funding constraints and aging infrastructure, institutions must look for innovative ways to implement projects that leverage existing assets into a more comprehensive strategy. One-off projects to replace equipment, construct new facilities, or install renewables simply won’t add to the bottom line or address deep transformational needs. In order to free up resources, administrators will be looking for third-party experts to shift the ownership, operation and management of infrastructure to alleviate both capital and operational risk.
Click here to learn more about how universities are using innovative methods to address deferred maintenance and other energy and infrastructure projects.