To: Deans, Directors, and Department Heads
From: John G. Dempsey, Executive Director, Facilities & Services (F&S)
Date: December 17, 2004
Effective January 1, 2005, the labor markup rate will be raised from 29% to 35% for all construction and maintenance services provided on a recharge basis by F&S. On January 1, 2006, this rate will increase to 40%. This change is occurring in an attempt to fully recover indirect costs of providing these services. We have determined that the indirect costs have been under-recovered for some time, which has caused a diversion of maintenance funds. With increased pressure on these scarce funds, it is imperative that units using such services pay for all related costs of providing them. Increasing this rate was discussed with the Dean's Budget Committee, which after careful review supported the change. The methodology used to calculate the markup rate was reviewed by a subcommittee of Facilities & Services Advisory Committee (FSAC), which determined that was reasonable based upon a review of information presented to them.
Several steps are being taken to monitor, assess and minimize the long-term impact that these rate increases might have on unit budgets:
1. The FSAC will conduct
an annual review of the rate and recommend approval of or adjustments to
the rate.
2. To promote productivity and to minimize indirect costs, key performance
measures will be identified and established under the guidance of the FSAC.
The impact
of these measures will be monitored and re-evaluated annually.
3. Building standards are currently being reviewed by the FSAC in order to
identify instances where they can be relaxed without compromising the integrity
and
longevity of crucial building systems. Where appropriate, less robust construction
requirements should reduce maintenance costs.
4. A Campus committee will be formed to assist us in implementing a review
of Division of Responsibility issues to determine, where appropriate, F&S
rather than Campus Units should assume funding responsibility and to increase
uniformity in the documents themselves.
5. We will continue to make available Job Order Contracting and Standing
Purchase Orders with local contractors to ensure that departments have alternative
service delivery options where feasible.
For more information, please visit http://www.fs.uiuc.edu/ori/overview.htm
If you have any questions or concerns, please contact Jeff Oberg, Director, Shared Administrative Services Division 333-8380.
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