To Build, Buy, Lease or Rent…that IS the question

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To be or not to be…is no longer the question. For many churches, the burning question is what to do with facilities and do we even need to own a facility. This used to be a question that only church planters were asking.  When you are first starting out, the common question is how do we “house” our church?

Do we rent a school?

Do we rent a theater?

Do we find a store front?

What about using another church on an off night?

Given a number of factors, these conversations are no longer limited to church planters but are being asked in a whole host of church setting including established churches looking to get out from under a deteriorating facility that they cannot afford to churches needing to re-invent themselves. I have been involved in the planning, development and maintaining of church facilities and until recently, this topic was almost never discussed by churches that were more than 1-2 years old.

You may be saying…”Duh, Tim…we knew that.” Or this may be foreign territory for you…so let’s take a little time to explore as well as provide a very practical tool for your own evaluation.

To get started, let’s look at some trends and realities:

  1. For most churches, the cost of owning a facility is the second or third largest expenditure in their budget…usually second to personnel but ahead of dollars actually spent on ministry.
  2. In most regions of the country, as of the writing of this post, they are seeing significant increases in construction costs.
  3. In many cities and towns, there are still a large amount of empty buildings that were vacated as part of the aftermath of the Great Recession.
  4. The life cycle cost of owning a building during a typical 40 year period of time will be about 80% of the total cost of ownership…it takes a great deal to own a building.
  5. In addition, if you own a building, then you…your church…has been tasked to be a steward of the facility entrusted to you by God.  That is no small responsibility.  In fact, in order to keep up with the natural rate of physical deterioration and be prepared for the inevitable life cycle costs, you need to set aside $1-3.00/Square Foot EVERY YEAR.  Do if you have a 50,000 SF, you need to set aside $50 – $150,000 annually.
  6. Things change…if you do not believe this, please stop reading here. Here are some examples:
    • Your church goes through a period of expansive growth or decline…how does your facility flex with those trends?
    • Culture around us changes…do our facilities also morph?
    • Demographics change…not just race and language, but also age and needs associated with those changes.
    • Ministry means and methods change.  Are any of you doing “church”exactly like you did 20 years ago? I am a firm believe that the Gospel NEVER changes…but our means and methods must change.  How many of your churches use Gregorian Chant?  That was mainstream at one time.  Winston Churchill said “We shape our buildings, thereafter they shape us.” If you have a building that is more than 20 years old (maybe even less), that space may actually be telling you how to do ministry.
  7. There is an alarming number of aging church facilities across the country that have declining congregations and deteriorating facilities. Church mergers are on an increase…which I think is really smart.  But what about the old buildings? Is an old building right for your congregation? Consider THIS first.
  8. Church building are hard to sell. As a rule, if your church is not in a commercial setting or prime for re-development, it will likely take 2-3 years to sell and you are most likely going to only net about 50 cents on the dollar of the appraised value.

How do we address these issues?  How do we set up our congregation for long term impact and engagement?

I am not going to advocate one option over another…but what I do want us to do is to consider the options.  The first and only option should not be to buy land and build a building.  The other deeply ingrained paradigm has been that once you own a building, that is it…that is where your church meets.

End of story.

Again, I am not saying that is wrong…but we need to stretch our thinking. Ask WHAT IF…?

We have developed a tool to assist churches vet out some of these options.  This is not the end-all and 100% inclusive evaluation tool, but it is a tremendous resource to do some initial side-by-side comparison of the options.

If you click HERE you can download this tool.  Now, let me walk you through how to best utilizing the tool and some of the methods to our madness:

First, we make the premise that there are 4 basic options (with a multitude of subsets):

  • Rent a school
  • Lease a commercial/retail building
  • Buy a building
  • Build a building

We then break costs down into 3 sections:

  • Operational Costs
  • Sticks and Bricks
  • FFE/AVL (Furniture, fixtures, equipment and audio, video, lighting)
  • Lease Agreement Considerations

There are some formulas built in to the spreadsheet such as:

  1. Cost of TI (Tenant Improvement) for the purchase of a building – we used $100/SF
  2. Cost of new construction – we used $200/SF
  3. Operational costs
  4. Capital reserve costs

Everything else needs to be added based on information gathered in your local context.

Again, this is not the only evaluation tool you should use.  The old adage in real estate is “Location, Location, Location.” That also needs to be factored into your comparison matrix.  Is the location in the right part of the community?  Will there be visibility and signage opportunities?  Is it properly zoned? Is there ample parking, etc.

To round out this, you also need to give serious attention to any leased (not rented…there is difference…renting is usually short term and leasing is long term) facilities or purchased facilities. you need to consider:

  1. If purchasing, is there deferred maintenance you are also inheriting? Learn more HERE.
  2. If you plan on more than 300 seats in worship, does the facility have a fire sprinkler system?
  3. Is the power adequate to support your AVL systems?
  4. How old is the HVAC system and is it adequate to cool an assembly occupancy?
  5. What is the condition of the roof?
  6. Are there enough restrooms?

OK…that probably has your head spinning….which is good.  You MUST consider all of the above before you make a serious financial decision.  Do not take this lightly.  Do your due diligence. Consider all the options.  Seek wise counsel.  Pray continuously.

ONWARD!


Cool Solutions Group helps churches with the planning, development, and management of their facilities!

Retirement Planning…for your Facility

 

Unless the Lord decides to call you home premature, we all will be faced with some variation of “retirement.” That means plans need to be considered for that period in our lives when we are not producing income based on a full time 40-hour +/- work week.  For most, that takes the form of:

  • 401K or 403b
  • IRA’s
  • Annuities
  • Life Insurance
  • Investments
  • Pensions

For others, it may simply be hoping that Social Security, Medicare and Medicaid will be adequate.  I think we would all agree that is not very wise.

We will project what we believe our costs will be in retirement…then plan a strategy to utilize one or more of the above to ensure we have the basis from which to generate the level of income to sustain the desired lifestyle.

This all sounds prudent as we plan for the INEVITABLE stage of life.  Would you agree?

So what are we doing to prepare for the “retirement”of our ministry facilities? I guess the first question is…do you think it is necessary?  If you don’t, then why would you plan for your personal retirement?

Sorry for being snarky…could not help myself.

Even at the very worst of personal financial planning, their is a partial safety net (although tenuous) is Social Security and other entitlements (did you realize that Entitled and Entitlements are not mentioned in the Bible…just saying). Considering our facility retirement concerns, we do not even have a social security safety net.

You may be saying – “We do not plan to retire our facility.” Oh Grasshopper…that is flawed thinking.

You may not “retire” the entire facility…but you WILL retire nearly every component of the facility.

  • You will retire all roofs…and replace them…and retire them again.
  • You will retire all HVAC equipment…and replace them…and retire them again.
  • You will retire all paving…and replace them…and retire them again.
  • You will retire all floor coverings…and replace them…and retire them again.
  • You will retire all lighting, plumbing, windows, doors, etc, etc, etc.

Need I go on?

These facility retires…just like our personal retirement…are INEVITABLE. There is no getting around it.  There no magic bullet.  There is no “Facility Fairy” to wave a wand.

Given the above…what are your plans?  Do you have a plan?  If not, how do you start? What is your baseline? How much is enough?

These are great questions that can and must all be answered…and starting with your current reality is the best place to get going.  In light of that, we strongly recommend a Facility Condition Assessment. Such an assessment will provide you:

  • Fresh Eyes Assessment
  • Life Cycle Assessment
  • Benchmark of Budgets/Staff
  • Deferred Maintenance
  • Facility Management Best Practices
  • Preventive Maintenance
  • Energy/Operational Evaluation
  • Capital Reserve Planning

Make your facilities “retirement” a positive experience by being intentional Facility Stewards.

-Tim


New eBook – Four Buckets of Church Facility Budgeting

A few months back, we released a blog on the topic of the 4 specific buckets that churches should plan for when developing their facility operational budgets and facility stewardship initiatives.  As a refresher, they include:

Operations – The day-to-day items like utilities, janitorial, general maintenance, etc.

Deferred Maintenance – The things you have been putting off (See blogs on this topic HERE and HERE).

Capital Reserves – The money needed to address the inevitable costs of capital replacement.

Projects – For the items that fall outside the normal operations like major renovations and new construction.

Well…we have expanded on these topics and have released a FREE eBook entitled The Four Buckets of Church Facility Budgeting.  This will be a great resource for your team, your administrator and the finance team that needs assistance in addressing the reality of each bucket.

Get your free copy HERE and then share it with your church leaders.  You will be glad you did!

Facing the Inevitable: Capital Reserve Planning – WEBINAR

There are 3 irrefutable facts that every church must face if you own a facility:

  1. All buildings deteriorate at a rate of 1-4% per year
  2. As such, nearly every physical component of your facility will be replaced or have a major overhaul
  3. All of the above will require dollars

So the big question is…how much money will be needed?

Join us for an informative and fun session to explore:

  • What are Capital Reserves?
  • How does “Life Cycle” factor into Capital Reserve Planning?
  • How much money needs to be allocated?
  • What are some practical ways to get started?

Register today HERE.

We Focus On Your Facility…

…so you can focus on your mission.

That is more than just a tagline for our team.  This WHO we are.  It is WHY we do what we do. That is HOW we do what we do.

I am yet to find a pastor that went to seminary with the primary reason of focusing their energies, time and ministry on a building. I know a few Business Administrators and Executive Pastor’s that have previous experience in the world of the built environment…but that is not WHY they got into vocational ministry.

And yet…how many churches in America could continue to function without a facility? I dare say that every church…the body of believers…in North America relies on a facility in some form or fashion.  This reliance may be on a physical structure that they assemble in to worship, educate, disciple and/or meet the needs of others.  If you are a “home-based” church, you are reliant on a house or similar.  If you are 100% internet based, your church is still reliant on a facility to host your servers…to produce video and audio content.

I get it…the “church” is NOT a building.  I preach that at every speaking engagement and project we serve on.  The building will never save a soul.  It will never disciple a Christ-follower.  And yet, we have a reliance on it. I also get that this is a “First-World” issue. All of us have pointed to how the body of Christ can function in very austere settings in other countries.  And yet, here we are…reliant on a built environment.

So what are you to do?

First, be thankful we have such facilities to assist us in spreading the gospel.  Don’t despise it.

Second, don’t take it for granted or take a posture that we are entitled to these physical blessings.  Money does not grow on trees, as we all know, and it requires money to own a facility.  Did you notice I did not say BUILD…I said OWN.  When you evaluate the cost to own a facility, 71-80% of the total cost of ownership is in the OPERATIONAL costs…and usually, only 20% (over a 40 year period) is the cost to build.

Thirdly, do not try to go it alone.  As a ministry leader, you need to focus on the ministry, mission, and vision of what God has called you to.  That means you need to rely on others to plan, build, and care for your building. There are several ways to accomplish this:

  1. Hire the needed people on your staff to steward what has been entrusted to you
  2. Adequately fund your General Maintenance budget to avoid deferred maintenance
  3. Outsource duties and tasks to specialists (i.e. HVAC companies for Preventive Maintenance)
  4. Set aside appropriate Capital Reserves for the inevitable future costs
  5. Obtain a firm grasp on your current facility needs related to space allocation and Facility Condition
  6. Implement systems and processes to increase operational efficiencies (and energy efficiencies) such as software applications, system integrations, policies and procedures, workflows, etc.

Need some help to get started?  Let us know how we can help.

Cheap Shower Curtains (and church facilities)

If you have read my blogs for just about any time at all, you know that I am a big Seth Godin fan.

Recently he posted a blog entitled “Cheap Shower Curtains” that really caught my attention. Here is an excerpt:

The unskilled cost accountant might suggest you outfit your new hotel with cheap shower curtains. After all, if you save $50 a room and have 200 rooms, pretty soon, we’re talking real money.

On the other hand, experience will demonstrate that cheap shower curtains let the water out, causing a minor flood, every day, room after room. And they wear out faster. Cheap shower curtains aren’t actually cheap.

This is so in line with one of our recent blogs – “Cheap Is No Bargain”

Let’s take the analogy above a little further:

PERCEIVED SAVINGS: – $50 x 200 rooms = $10,000

AFTERMATH COSTS:

  • Damage to the floor and substrate of 200 rooms
  • Ceiling damage from water leaking from rooms above – about 75% of the 200 rooms requiring patch and repaint
  • Potential unseen issues such as mold, wet insulation, water migration to electrical fixtures, etc.
  • Increased humidity issues due to moisture causing HVAC to work “harder” to obtain comfortable levels
  • Replacement of floor covering to all 200 rooms
  • Loss of revenue due to repairs being made
  • Truncated life cycle of 200 shower curtains (this will be at least the cost of the original savings but at inflated dollars)

I am not going to venture a cost for the above…but I would say it is fair that it will be at least 10 times (and I actually believe it is 25-50 times) the perceived savings. So, unless your intent was to sell the hotel within the first few months of completion, you have just made an incredibly unwise decision. BY THE WAY: If you did plan to sell, you just sold a money pit to your buyer, damaging the one thing that really counts…your integrity and reputation. Another unwise decision.

“But Tim…we are not building hotels…we are a church.”

Right…all the more reason to not make such unwise decisions as you are utilizing Kingdom dollars entrusted to you and your church. You have been asked to steward them…not just on the “spending” of the initial costs/purchases, but of the long term value. The principle is the same whether you are building hotels, shopping centers or investing monies into the construction, renovation or sustaining your ministry facilities.

Sounds a lot like Facility Stewardship.

Church Revitalization: Boat Anchor OR Fresh Wind in the Sails?

Church Revitalization is alive and well.  This is not the “Church Growth” movement of the 1980’s or “Seeker Sensitive” or some other fad. Frankly, “CHURCH” revitalization has less to do (in my opinion) with the age or condition of a congregation as much as a revitalization of the purpose (the WHY) of the church universal.

We have seen some incredible initiatives the past 10+ years related to revitalization and church multiplication. The most obvious and most publicized are Church Planting and Multisite Church. Both are alive and well and growing in impact.

“We need to be cognizant to not burden the next generation of church leaders with facilities that will become the boat anchor around their ministry and missional impact.”

But there has been an upswell of 2 additional initiatives that need to be mentioned.  These may be subsets of the above; however, they bring an additional set of impactful elements and I believe they have significant nuances that need attention:

  1. Mergers – Our team has served several churches the past few years that have merged to not just “rescue” a declining church, but rather to form a stronger, more vibrant and impactful church. As Jim Tomberlin and Warren Bird have so well stated – BETTER TOGETHER!
  2. Revitalization/Redeveloped/Adoptive Re-Use – So many terms we could use here…but we see a trend (for the good) of revitalization and adaptive use of facilities that have either aged out or are underutilized and/or a “highest and best use” that may not be exclusive of a 1-day-a-week church facility.

A deeper dive into the above is merited, but that is for another day. Instead, I want to share a concern I am seeing with both of the above when we are not intentional. Both of the above are exciting…and they are a great way to not only grow the Kingdom/Church (capital “C”) but to breathe new life into aging church facilities.

HOWEVER…there are 4 critical considerations that both the “giver” and the receiver of such facility gifts need to consider:

1. Functional Obsolescenceis a reduction in the usefulness or desirability of an object because of an outdated design feature, usually one that cannot be easily changed. Here are some prime examples:

  • Not handicap accessible
  • Inadequate HVAC system
  • Flow feels more like a maze than an intentionally community space
  • Lots of stairs
  • “Wrong-sized” spaces
  • Limited parking

2. Incongruent/Non-contextual – In many cases, the “gift” does not communicate the story of the receiver. It may be in the wrong part of town…may feel like a monastery and not a thriving community-centric facility…or it may just be old looking, feeling, and smelling.

3. Deferred Maintenance – “Here is your FREE Building.” – Oh Goodie…but what about the $3-4M in deferred maintenance. Don’t miss this. I have seen too many well intended churches and church planting organizations hand over an older facility to a church plant or even a multisite campus that appears to be “free” only to find they had been give the MONEY PIT. Free is rarely ever free.

4. Uninsurable – Directly related to the above, make sure the facility being gifted is actually insurable. Put yourself in this scenario…you are the pastor of a church plant…you are gifted a facility only to learn that the facility in not insurable or the insurance cost, due to its condition, has massive deductibles and/or unsustainable premiums. OUCH!

We need to be cognizant to not burden the next generation of church leaders with facilities that will become the boat anchor around their ministry and missional impact.


4 Steps to Conquering Deferred Maintenance

Deferred maintenance is a term that gets thrown around a lot and yet I find many people have no real idea what it means. Let’s start with a definition:

Deferred maintenance is the practice of postponing maintenance activities such as repairs on both real property and personal property (i.e. machinery) in order to save costs, meet budget funding levels, or realign available budget monies. The failure to perform needed repairs could lead to asset deterioration and ultimately asset impairment. Generally, a policy of continued deferred maintenance may result in higher costs, asset failure, and in some cases, health and safety implications. (Wikipedia.com)

In a previous blog entitled “The “4 X” Reality of Deferred Maintenance” we provided some very sobering realities from national research projects…here they are again:

“Every $1 in deferred maintenance costs $4 of capital renewal needs in the future.”

“If a necessary repair is deferred and allowed to remain in service until the next level of failure, the resultant expense will be 30-times the early intervention cost.”

If those 2 statements do not shake you up a little, then you may need to see a doctor or psychiatrist. If you believe EVERYTHING belongs to God…and that HE has ENTRUSTED His ministry facilities to us to STEWARD…then you cannot take this lightly.

Let’s explore what the keys are to conquering deferred maintenance.

1. Identify YOUR deferred maintenance – The first step in nearly any issue in life is to first recognize there is an issue. If we do not acknowledge there is an issue, how can we resolve it? In most churches, there is a lack of understanding of what their deferred maintenance issue are. We get so busy with budgets, “doing church”, break/fix items, etc that we do not stop to take time to see the trees for the forest. In many cases, even if you took the time, you may not know what you are looking for. This is where a set of “FRESH EYES” can be beneficial.

2. Provide adequate general maintenance budgets – Over the past couple years, we have done facility assessments for several million square feet of church facilities. The aggregate amount of deferred maintenance has been in the tens of millions of dollars. That is sad!  The “church” claims to be an organization focused on being “good stewards” and yet we allow our buildings to deteriorate right under our feet. In every single case, the General Maintenance budget was under-funded. There was not enough money in the budget to keep up with the natural rate of physical deterioration. Check out this quote from Kevin Folsom, former Facilities Director at Dallas Theological Seminary:

“There are numerous levels that can be used to go about this, but to start we have to remember our early Physics lessons in high school about the 2nd Law of Thermal Dynamics. Everything we build will decay, but it may last longer if properly maintained. So, here’s a puzzling question…If we build facilities that the natural law causes them to decay at fairly predictable rates throughout its birth to burial, why do we not plan for it?”

The best way to conquer deferred maintenance is to have a budget that addresses the natural decay and deterioration of your facility.

3. Properly “staff” your facility team – In every instance referenced above, not only was the budget under-funded, but they were under-staffed…and not by just a little! If you only have enough staff to address the break/fix emergencies of the urgent, then how do you expect to stay on top of the natural decay and deterioration? Quick answer…YOU CAN’T! Based on national surveys by our firm and IFMA, we believe the number of facility staff for a well-run organization is one Full Time Facility Staff Employee for every 25,000 – 35,000 SF. This is not for cleaning…that is another story…this is for general maintenance.

4. Have a Properly funded Capital Reserve PlanGentlemen…this is a football! Church leader…capital replacement is not an “IF” consideration but rather a “WHEN” and “HOW MUCH”.  You WILL replace every HVAC unit.  You WILL replace all your carpet.  You WILL replace your roof. You WILL have to re-surface your parking lot. To turn a blind eye to the need of a capital reserve fund is kin to telling God that the laws of science and natural resources…that HE created…don’t apply to your church. You are above the laws of God. REALLY?!?! Do you have a 401K or similar account for the future or do you assume retirement or old age is not part of your future…that it does not apply to you?

If we were proactive with our operational budgets and capital reserves, there would not be any deferred maintenance. In a perfect world, we would properly fund our general maintenance budget to keep the building in the best physical condition as possible…AND…we would have adequate capital reserves when we approach “end of life” of our facility component.

That is how you conquer Deferred Maintenance. To quote Sean Connery in The Untouchables“What are you prepared to do?”


CAPITAL RESERVE PLANNINGAlmost every component of your facilities will have to be replaced at some point. Do you have an action plan? INTENTIONAL organizations plan today for tomorrow’s costs. That’s why it’s critical you establish a capital reserve account now.

Download our FREE guide to learn more. 

 

Facility Stewardship – What Is It?

For over 10 years, you have seen me refer to facility stewardship. For some of you this may be still be a new concept. You know what a facility is and you are familiar with stewardship…but how do the 2 go together? I am glad you asked…

Let’s first look at the definition of each:

FACILITY (ies) – something designed, built, installed, etc., to serve a specific function affording a convenience or service.

STEWARDSHIP – (act of being a STEWARD) – a person who manages another’s property or financial affairs; one who administers anything as the agent of another or others.

If you have grown up in the church or been involved in church for any period of time, you have heard the term “stewardship”…and I am sure that in almost every case, it revolved around money or raising money. In these cases, we are generally talking about financial stewardship which is critical to our spiritual life as well as the life of our ministries.

The word “money” is used over 140 times and if you add terms such as “gold” and “silver” the number is huge. For example, financial matters are mentioned more often in the Bible than prayer, healing, and mercy.

But stewardship is not just about money and finances…but refers to (as its definition above indicates) the caring for or oversight of something of someone else’s. The EPA has a section on their website that explains “Environmental Stewardship”. They define it as:

Environmental stewardship is the responsibility for environmental quality shared by all those whose actions affect the environment.

So, how do we apply this to our ministry facilities? Do we really believe that God has entrusted these to us, thus making us stewards of their care and oversight? As I have shared before, I have witnessed churches and ministries spending millions of dollars in the construction and renovation of their facilities…but then fail to maintain them (i.e. steward them). They wave the banner of “stewardship” when raising money to build them…but then neglect their care, management and maintenance. So, the following is a list of attributes that I believe are part of “Facility Stewardship”:

  • Proper cleaning
  • Systematic and proactive Preventive Maintenance
  • Proactive Capital Reserve Account planning
  • Life Cycle analysis and planning
  • Development of a systematic painting plan
  • Proper facility scheduling – this is a key element of stewarding the facility…they were meant to be used
  • Sustainability implementation
  • Vigilant monitoring of operational costs
  • Implementation of energy saving processes (i.e. HVAC interface with a Building Automation System or WiFi thermostats of better yet)
  • Proactive cataloging of facility components and tracking of work orders and service requests

With the above as a backdrop, how are you doing with your Facility Stewardship? What can you implement immediately that would make you a better steward?


The “Real” Cost of Facility Ownership: What They Didn’t Teach You in Seminary

As many of you know, I come from a background of planning and building ministry facilities. I have been blessed to invest over 30 years of my life in serving churches to develop new and renovated ministry facilities. That phase of my life brought me great joy and fulfillment. But now I am very burdened by the millions…and billions of dollars that are spent each year on religious construction without a clear understanding of the “real” cost of ownership. I also think that most ministry leaders do not understand that the ongoing costs eclipse the initial costs and do so in a much bigger way than you would imagine.

Let’s look at the REAL cost of ownership of our ministry facility:

  1. INITIAL COST: For this exercise, let’s assume that our new ministry facility is 30,000 SF for $4,777,550
  2. COST OF “MONEY”: Let’s assume that we borrowed $3,000,000 to pay for the project and we did so based on a 15 year loan at 6%…but paid it off in 7 years. In this scenario, you will have paid approximately $1.1M in interest.
  3. COST OF OPERATION: Based on our research and bench-marking provided by IFMA (International Facility Managers Association), the average church in America will spend $4.50 to $7.00 per square foot annually for janitorial services, utilities and general maintenance. In addition, a church will spend an additional amount in capital improvements that will be in the $1.00 to $2.00/SF range (if the capital reserve account is started at the time construction is complete…this number grows significantly higher if you neglect the capital reserve account during the early years of the building’s life cycle). For the sake of this exercise, let’s assume that we will spend $6.00/SF for operational and capital reserve items. This may be low…but I want the calculations to be realistic.

Assume a 40 year life cycle (which is not that long)…at 1.5% per year of inflation. Remember that operational costs are perpetual and paid for with inflated dollars…so this is going to increase, and 1.5% is probably TOO LOW. $210,000/ yr x 40 years at 1.5% per year inflation for 40 years…without compounding = $13,440,000.00

So let’s look at what this means:

  1. Initial costs including design – $4,777,550
  2. Cost of Money – $1,100,000
  3. Cost of life cycle operations and capital reserve – $13,440,000 (that is $448/SF…OUCH)
    TOTAL COST OF OWNERSHIP = $19,317,550

WOW…that is a BIG number…now…here is the shocking part:

  1. The combined cost of the construction partner and the design professionals is only 3% of the total cost of ownership.
  2. The construction cost…including the design…is only about 22% of the total cost of ownership.
  3. The interest paid is only about 6% of the total cost of ownership.
  4. Leaving…71% of the total cost of ownership in operation costs and capital expenditures.

As I indicated prior, State Farm Insurance found that they spend about 80% of the total cost of ownership of commercial buildings on operational costs over 40 year. Further, a book was published in 1969 by THE AMERICAN INSTITUTE OF ARCHITECTS entitled – LIFE CYCLE COST ANALYSIS 2: USING IT IN PRACTICE by David S. Haviland. In this book, Mr. Haviland states:

“The INITIAL DESIGN and CONSTRUCTION of a facility comprises about 15% of the total cost of a building over its 40 year lifespan. The remaining 85% is made up of the building’s OPERATIONS and MAINTENANCE COSTS.”

So…what costs more…the initial cost…or the cost after you occupy? I think the numbers speak for themselves. So…do we invest the same amount of time and energy in planning our operational costs as we did when we developed our master plans and floor plans? Why do we get all in a tiff about an architect charging 7% instead of 5%…or the construction partner charging 6% instead of 3%? The fees that encompass only 3% of the total cost of ownership feel so important at the time we hire them…but the decisions, direction, means and methods that this team suggests and implements will be with you for the life of your buildings. Do we have our eyes on the REAL cost of facility ownership?

If Facility Stewardship is really about being wise stewards of all God has entrusted, then I think it is fair to say that most of us have our priorities upside down. Facility Stewardship must include:

  1. Purposeful Facility Planning – Taking the time to really evaluate the “genetic code” of the church, reviewing the vision, determining IF facilities are needed to accomplish the vision and mission of the church in addition to evaluating the potential financial implications.
  2. Proper Facility Development – This is not just about construction…but also encompasses the financial stewarding of the resources God has entrusted to us by planning facilities that meet the ministry objectives…AND…that do not bankrupt the church in the future with operational costs. As seen above…most of your long term cost of facility ownership WILL BE established based on the planning during this phase of any project.
  3. Proactive Facility Management and Long Term Care – This is where we too often fall grossly short in our Facility Stewardship Initiative.
    Think about it…then do something about it.

Do you need some help getting started? Don’t forget to order your copy of our manual –   Facility Stewardship: Managing What God Has Entrusted To You. It is a must have for every church that has a facility!