Creating a flexible capital planning process substantially mitigates risks for public institutions. It allows administrators to develop real estate strategies that align with the capital budget and key priorities while preventing budget shortages.

1. Capital Planning: a critical process
Public Institutions

2. 1
- All levels of government are in the wake of budget compressions and spending cuts
- Administrators need to:
• Reduce real estate portfolio costs to help improve financial standing
• Address declining asset conditions and evolving agency requirements
• Make sure each capital request is fully vetted
Administrators have decisions to make under tight schedules
The Pressure Is On

3. 2
Challenges
-Making trade- offs on different projects
• Each project must be evaluated on its own as well as part of an overall strategy
-Identifying and eliminating personal or departmental biases
• Capital allocations must be made based on value of overall mission
-Mitigating vulnerabilities
-Developing realistic budgets and schedules prior to adoption of capital budget
-Developing a real estate strategy and aligning it with the capital budget
As funding decreases, administrators face various challenges

4. 3
The Solution
-Prevents budget shortages or unspent assigned monies
-Substantially mitigates planning risks
-Monitors, measures and reports on capital project implementation and performance
-Aligns the government’s capital spend and operational strategy across all agencies to best support the overall mission
-Establishes a prioritization process to provide objective recommendations across disparate competing needs
A data driven, flexible capital planning process

5. 4
Of a data driven, flexible capital planning process
-Fair and defensible
-Justifies capital requests with credible return on investment analyses
-Flexible and able to adapt to changing market and operational conditions
-Shifts the emphasis from reactive to proactive
The Benefits

6. 5
Thinking Holistically
-Capital plans should be developed in the context of a long- term strategic plan
-Developing a three to five year capital budget outlook is helpful for aligning budgets and mission requirements over the mid-term
•A formal strategic real estate master plan is ideal

7. 6
Unsure?
Ask yourself the following questions:
Does your department need an improved capital planning process?
-Are our projects usually over budget and behind schedule?
-Do we monitor, measure and report on our performance once projects are in progress?
-Is our capital spending aligned with our government’s priorities, initiatives and real estate strategy?
-Do we conduct sensitivity analyses and evaluate various scenarios prior to submitting budget requests?
-Can we justify capital requests with credible payback periods and ROI calculations?
-Do rapid increases or decreases in capital budgets impact our staffing capabilities?
-Do we have mechanisms to reinvest cost savings in our capital plan?

8. COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
For more information, please contact
Jennifer Hill
Managing Director, Public Institutions
+1 (202) 719- 5726
Jennifer.Hill@am.jll.com
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