REPORT TO THE BOARD OF GOVERNORS
SUBJECT QUANTUM MATTER INSTITUTE (QMI) / ADVANCED MATERIALS AND PROCESS ENGINEERING LABORATORY (AMPEL) - BOARD 3
MEETING DATE DECEMBER 2, 2014
APPROVED FOR SUBMISSION
Forwarded to the Board of Governors on the Recommendation of the President
Arvind Gupta, President and Vice-Chancellor Presented By David Farrar, Provost and Vice-President Academic
John Hepburn, Vice-President Research & International Lisa Castle, Vice-President Human Resources
(Acting Vice-President Resources & Operations) Simon Peacock, Dean, Faculty of Science
Marc Parlange, Dean, Faculty of Applied Science
John Metras, Managing Director, Infrastructure Development Peter Smailes, Treasurer
Al Poettcker, President & CEO, UBC Properties Trust Report Date November 12, 2014
DECISION REQUESTED IT IS HEREBY REQUESTED that the UBC Board of Governors grant:
a. BOARD 3 approval to commence construction on the new Quantum
Matter Institute (QMI) / Advanced Materials and Process Engineering Laboratory (AMPEL). The project has been tendered and costs are $2 million above previous Board approved budget of $25,200,000. Additional funding has been committed. Approval is requested for the increased budget and a funding release of $24,201,000 to undertake and complete construction.
Revised Capital Budget $27,201,000
Operating Budget $444,336
Revised Schedule
Award construction contracts
Funding Release $24,201,000
Information
Expenses to date $1,757,916
Funding released to date $3,000,000
b. Approval for an internal loan of $11 million at an annual interest rate
of 5.75% amortized over up to 30 years with debt service sourced from the Central operating budget.
c. Approval for internal financing of up to $6.2 million if required to address fundraising shortfall or timing issues. Individual loans would be allocated as follows: Faculty of Science – up to $1.6M, Faculty of Applied Science – up to $3.0M, UBC Central – up to $1.6M. Loans would be provided at an annual interest rate of 5.75% and amortized over up to 30 years. Debt service would be sourced from the operating budgets of the respective parties.
EXECUTIVE SUMMARY
This project proposes a $27.2 million development of new state-of-the-art research space for the UBC Quantum Matter Institute (QMI) as an addition to the Brimacombe building, which houses the related Advanced Materials and Process Engineering Laboratory (AMPEL). This proposal, to expand the globally significant quantum materials research currently underway at UBC, supports the successful Quantum Matter Institute (QMI) partnership with the Max Planck Society and the recently awarded Canada Excellence Research Chair (CERC) in Quantum Materials and Devices.
Board 2 approval for the project was received in April 2014. The design team has completed working drawings and tender documents and has tendered 80% of the project. The construction tenders came in $2 million higher than the original $25.2 million Board approved budget. Board 3 approval is requested at this time to proceed with construction with a revised capital budget for the project of $27.2 million.
Canada Excellence Research Chairs are selected through a highly competitive two-stage selection process involving a multilevel peer review assessment. The Chair positions are targeted at the world's top researchers to develop ambitious research programs. Canadian universities administer the funds, receiving up to $10 million over seven years for each Canada Excellence Research Chair at their institution. The successful CERC award, in combination with this proposed expanded high quality research space, will support recruitment of world class quantum materials researchers, expansion of research activities, and co-location of quantum materials researchers from the Faculty of Science and the Faculty of Applied Science. This will make UBC one of - if not the - world leaders in quantum materials research and will enhance Canada’s ability to be a leader in this potential breakthrough technology.
UBC has successfully recruited Prof. Jenny Hoffmann, an outstanding materials scientist from Harvard University, to hold our Canada Excellence Research Chair in Quantum Material; this appointment and the CERC funding was approved by the federal government in June 2014. The unique research requirements of the CERC required a significant change in the functional program for the facility including the construction of 4 ultra-low vibration chambers in the basement of the building. At Board 2, these changes were estimated at an additional $2.2 million subject to confirmation by tender. Design changes were made to accommodate this work within the original project budget. The most significant cost saving was to leave the second floor as shelled space for future development when funds can be raised. No change was made to the total gross building area to be constructed or the exterior design as a result of these program changes.
Prior to tender, the cost to accommodate the ultra-low vibration chambers was estimated at $2.8 million above the board approved budget and so value engineering was undertaken. The October 2014 tender was $2 million over budget. To accommodate the increased costs, the Faculty of Science fundraising has increased from $4.2 million to $6.2 million. The Faculty of Science fundraising will be supported by Faculty of Applied Science and UBC Central. In the event fundraising is not successful the $6.2M will be covered as follows: $1.6M by Science, $1.6M by Central and $3.0M by Applied Science. Other funding includes a committed donation of $8 million. UBC Central's contribution remains at $11 million and a CERC Indirect Costs Allocation will contribute $2 million.
Project completion is now targeted for July 2016. This is 2 months behind the initial target proposed at Board 1. The delay has been caused by iterations of design and value engineering work required to deliver the revised program within a tight capital budget.
QMI/AMPEL is a priority on the current UBC Capital Plan and therefore sufficient liquidity is available to immediately support the full internal financing needs of the project. Board 3 approval is now required to award tenders and proceed with construction.
Place and Promise COMMITMENT(s)
Research Excellence: The University creates and advances knowledge and
understanding, and improves the quality of life through the discovery, dissemination, and application of research within and across disciplines.
Place and Promise ACTION(s)
Foster UBC’s globally influential areas of research excellence.
Description & Rationale
Classical physics describes the “normal” behavior of matter and energy at the macroscopic scale experienced by humans. In contrast, quantum mechanics is required to explain unusual phenomena that take place at atomic length scales. Its effects become obvious under extreme conditions such as low temperature, but can also be enhanced and engineered by shrinking device sizes, by restricting electrons to 2-dimensional sheets or 1-2-dimensional wires, and by exploiting what happens at interfaces between different materials grown together layer-by-layer with atomic precision. UBC researchers are actively discovering, experimenting with, and fabricating such quantum materials – materials that display unique physical properties such as superconductivity, unusual forms of magnetism, and other phase transitions to new states of matter. Control over such quantum materials has the potential to lead a technological revolution, just as atomically precise control of silicon was the basis of the microelectronics revolution, and could realistically lead to new industries in fields such as electronics, solar energy, medicine, and next-generation computing.
UBC has a recognized world-class theoretical and experimental quantum materials research group that has been built over the past two decades. This group is in the midst of a push to even greater prominence on the international stage. Last fall, UBC competed for and was awarded a $10 million Canada Excellence Research Chair (CERC) in Quantum Materials and Devices Based on Oxide Heterostructures that seeks to advance our understanding and manipulation of the astonishing electronic properties appearing at the physical interface between different quantum materials (quantum heterostructures). CERC funding enabled UBC to recruit a world-class quantum materials scholar who, together with our commitment to four additional faculty hires and their teams, will make UBC one of - if not the - world leaders in quantum materials research, and will enhance Canada’s ability to be a leader in this potential breakthrough technology.
Crucial to the strategy behind this push forward is greater overlap with the branches of engineering that can help the movement of new discoveries towards future applications. In parallel with the current activity in Science, there are a number of important materials initiatives under way in Applied Science, particularly in Materials Engineering and Electrical and Computer Engineering. Themes in Applied Science that connect with quantum materials include nanoelectronics; nanomaterials for electrochemical energy harvesting, storage and sensing; and biomaterials.
UBC’s materials science and engineering groups come together in the Advanced Materials and Process Engineering Laboratory (AMPEL), located in the Brimacombe Building on East Mall. This multi-disciplinary materials research facility houses groups from the Faculties of Science and Applied Science, and has strong collaborations with researchers in Medicine, Dentistry, and Forestry. In order to successfully recruit and
support the Quantum Matter CERC research group and the four associated faculty positions and their teams, UBC must provide high-quality research space, since this field relies critically on the availability of state-of-the-art laboratory space for a variety of highly-sensitive and cutting-edge experiments. Similarly, the recent and upcoming hires in Applied Science need high quality research space in proximity to the shared facilities essential to all of these related fields. An example of a shared facility would be the merging and upgrading of UBC’s electron microscopy capabilities, jointly funded through a future Applied Science CFI grant and the CERC commitment, in a high-quality, stable ground level space.
The Brimacombe Building is already filled to capacity. By adding an extension to the existing Brimacombe Building, the full Quantum Matter CERC research groups can be co-located with the existing AMPEL groups and provide much needed space for related materials science and engineering researchers in the Faculties of Applied Science and Science who are currently dispersed across campus. The new space is essential and brings with it the added benefits of enhancing synergy in these areas and giving quantum materials the additional advantage of closer ties with applications.
Functional Program
Resource Planning Group Inc. (RPG) was retained to develop a functional program for the project as follows:
• Laboratories and offices for QMI experimental faculty and their research teams • Office/dry lab for theoretical QMI faculty and their research teams
• Laboratories and offices for Faculty of Applied Science advanced materials faculty and their research teams
• Meeting and informal research space
• Partially unfinished basement for future electron microscopy facility or other research requiring a low vibration environment. It is anticipated that fit-out of this space would be funded through future grants
The majority of the basement area will now accommodate the super low vibration laboratory required for the new lead CERC researcher. The gross area of the building will not change, only the amount of finished space as cost savings were required to accommodate the special structural infrastructure for the super low vibration needs. The second floor will remain unfinished due to budget restrictions.
The project will build approximately 2,695 net square metres (nsm) of finished new space in a 4,800 gross square metres addition with 735 nsm of shell space, and renovate approximately 430 nsm of specific lab areas in the existing Brimacombe Building.
COSTS Capital & Lifecycle Operating CAPITAL BUDGET BOARD 1+2 BOARD 3 COMPONENT COST $ $/GSF (incl shelled base't) COST $ $/GSF (incl shelled 2nd floor Construction 67% 79% Construction 12,466,434 $240 17,251,434 $334 GC's 934,983 934,983 CM fee 373,993 373,993 Construction Contingency 900,000 900,000
Addt'l site works 450,000 450,000
Subtotal Construction 15,125,410 $292 19,910,410 $385 Cash Allowances 17% 8% FF+E Allowance 2,000,000 1,600,000 UBC IT/AV/Security 1,400,000 350,000 Owner/Design/Esc Contingency 500,000 0 Total Ancillary 3,900,000 1,950,000 Soft Costs 16% 14% Consultant budget/Printing 2,268,811 2,270,000 Project Management 530,000 530,000 Moving/Keying 90,000 90,000 Permits 250,000 150,000 DCC/DP/IIC 200,000 200,000 Commissioning + Inspection 140,000 140,000
Insurance and legal 110,000 110,000
Total Soft Costs 3,588,811 3,490,000
Project subtotal 22,614,221 25,350,410
GST 361,825 375,590
New Building Total 1 22,976,046 $433 25,726,000 $498
Financing 500,000 50,000
Existing building upgrades 1,500,000 1,000,000
Retained Risk 225,000 225,000
PROJECT TOTAL 2 25,201,046 $446 27,201,000 $483
1-$/GSF calculated using new bldg gross area incl unfinished space 2-$/GSF calculated using new bldg gross area incl + AMPEL renovation area
OPERATING BUDGET
Operating Costs Annual $ $/GSF
Ops & Maintenance $329,119 $6.37
Utilities $115,217 $2.23
Total O + M Cost $444,336 $8.60
Lifecycle Capital Costs Annual $ $/GSF Cyclical Maintenance $181,351 $3.51 Modernization / Upgrade $48,050 $0.93
Total Capital Renewal Cost $229,401 $4.44
As per current space chargeback protocol, the Faculties of Science and Applied Science will pay annual O&M costs for their respective space. Central Operating budget will fund Capital Renewal requirements to the extent possible.
FINANCIAL
Funding Sources, Impact on Debt Ratios
Funding sources for the project are as follows:
Funding sources in $000s Board 1 Board 2 Board 3
UBC Central (internally financed) $ 11,000 $ 11,000 $ 11,000 CERC Indirect Costs Allocation $ 2,000 $ 2,000 $ 2,000 Faculty of Science Fundraising $ 8,100 $ 4,200 (1) $ 6,200 (2) Faculty of Science Fundraising Committed $ 8,000 $ 8,000 Faculty of Applied Science Fundraising $ 4,100
Total $ 25,200 $ 25,200 $ 27,200
(1) BOARD 2: Faculty of Science fundraising will be supported by Faculty of Applied Science and UBC Central. In the event fundraising is not successful the $4.2M will be covered as follows: $1.6M by Science, $1.6M by Central and $1.0M by Applied Science.
(2) BOARD 3 REVISION: Faculty of Science fundraising will be supported by Faculty of Applied Science and UBC Central. In the event fundraising is not successful the $6.2M will be funded as follows: $1.6M by Science, $1.6M by Central and $3.0M by Applied Science. Internal financing (5.75% annual interest, up to 30 year amortization) will be provided as required to address these liabilities with repayment from the operating budgets of the respective parties.
A signed gift agreement is in place that includes $8m which the Dean of Science has directed to support the new QMI building. The pledge schedule is anticipated to be paid over 5 years, with payments expected to begin in 2015 associated with the Federal CERC commitment.
Since Board 2 approval, UBC’s $10M Phase 2 CERC application was approved by the Federal government in June 2014 and the associated $2 million capital contribution to the building from the CERC indirect costs is therefore confirmed.
The $11M UBC Central contribution will be internally financed (5.75%, up to 30 years) with debt repayment from the Central operating budget. This contribution is meant to be positioned as a UBC match for prospective donors. The Development Office has commented on remaining fundraising as follows:
• The QMI project is one of the University’s highest fundraising priorities • Central Development is committed to assisting the Faculties of Science and
Applied Science in raising the required funds
• Development expects that the remaining funding will be secured through individual & industry contacts and is working closely to identify key prospects.
QMI is a priority on the current UBC Capital Plan therefore sufficient liquidity is available to support the immediate development of the project.
SCHEDULE
Implementation Timeline
Project Milestone Board 1 Board 2 Board 3
Executive 1 Dec-12 Dec-12 Dec-12
Executive 2 Feb-13 Feb-13 Feb-13
PPAC Feb-13 Feb-13 Feb-13
Executive 3 Apr-13 Apr-13 Apr-13
Board Information Report on QMI Apr-13 Apr-13 Apr-13
Board 1 Jun-13 Jun-13 Jun-13
Board 2 Dec-13 Apr-14 Apr-14
Board 3 Jun-14 Sep-14 Dec-14
Construction Start Jun-14 Oct-14 Dec-14
Substantial Completion May-16 Aug-16 Jul-16
Final Occupancy May-16 Sep-16 Aug-16
Board 4 Jun-18 Jun-18 Sep-18
RISKS
Financial, Operational & Reputational
The remaining risk is in securing the further $6.2 million in fundraising required to fully fund the project. The Development Office is working with the Faculties of Science and Applied Science to identify donor prospects. Fund-raising efforts are on-going. A plan is place to address any fundraising shortfall through shared operating budget contributions from the Central Administration, Faculty of Science and Faculty of Applied Science. BENEFITS Learning, Research, Financial, Sustainability & Reputational
The Brimacombe Addition will meet LEED Gold certification standard as per UBC and Provincial government policy. Sustainability objectives will include an improved Energy Use Intensity over the existing building through heat recovery, connection to the District Energy System, and a high performance envelope. The design team will be encouraged to look for servicing efficiencies by tying into existing building facilities and upgrading as required.
CONSULTATION
Relevant Units, Internal & External Constituencies
This is a priority in the current UBC Capital Plan and is a priority for the Faculties of Science and Applied Science. Facilities Planning (Infrastructure development) worked with the user group to develop the functional program. UBCPT provided preliminary budget costing based on program and schematic design documents. Campus & Community Planning provided input on off-site utilities and siting and UBC Utilities provided an assessment of utilities requiring relocation. UBC Properties Trust is the project manager.
Architect selected: Public Architecture + Communication Inc. / Maples Argo Architects.
Following Board 1 approval the development review process for DP 14001 has included reviews by the Advisory Urban Design Panel, where the design was supported, and by the Development Review Committee. A public open house was held on January 20, 2014 in the atrium of the Fred Kaiser Building. While 32 people signed the attendance sheet this is only a fraction of the people who had a chance to see the project and discuss the design with the project architect. Generally, the response to the project was positive.
UBCPT COMMENTS
Complete for all reports that include a property component
Date of Review: Signed Off by:
ATTACHMENTS Attachment 1: Location Map for QMI Addition
Attachment 2: Capital Project Accountability Scope & Planning Attachment 3: Capital Project Accountability Budget & Funding
Previous Report Date April 14, 2014 Decision Board 2 Approval
Approval:
Capital Budget: $25,200,000
Operating Budget: $446,200
Revised Schedule Revised Program
Authorization to issue development permit Proceed to working drawings and tender
Funding Release: $2,500,000
Information:
Expenses to Date: $563,302
Funding Releases to Date: $500,000
Action / Follow Up Commence working drawings and tender documents.
Previous Report Date June 4, 2013 Decision Board 1 Approval
Preliminary Capital Budget: $25,200,000 Preliminary Operating Budget: $446,200 Schedule
Project in Principle Location
Program
Proceed to Schematic Design
Funding Release: $500,000
Information:
Expenses to Date: $0
Action / Follow Up Select design consultant. Commence schematic design.
Previous Report Date April 3, 2013 Decision For Information
This report provides an overview of the globally significant quantum materials research currently underway at UBC and the plans to expand that research based on the recent award to UBC of a $10M Canada Excellence Research Chair (CERC) in Quantum Materials and Devices. This overview is meant to provide background and context in anticipation of a planned Board 1 submission in June 2013 for the development of new state-of-the-art research space for the UBC Quantum Matter Institute (QMI) as an addition to Brimacombe building, which houses the related Advanced Material and Process Engineering Laboratory (AMPEL). The CERC award in combination with this expanded high quality research space will support recruitment of world class quantum materials researchers, expansion of research activities and co-location of quantum materials researchers from the Faculty of Science and Faculty of Applied Science. This will make UBC one of, if not the, world leader in quantum materials research and will enhance Canada’s ability to be a leader in this potential breakthrough technology. Action / Follow Up Proceed to architect selection.
Attachment 2: Capital Project Accountability Scope & Planning