Creating and monitoring building life-cycle costs is a key component of physical asset total cost of ownership management
- Initial Costs—Purchase, Acquisition, Construction Costs
- Operation, Maintenance, and Repair Costs
- Replacement, Renovation, Adaptation Costs
- Disposal / Recycling Costs
- Cost of Capital
Initial design, procurement, and construction costs of a facility account for only 10%-20% of total capital expenditures throughout its useful life. The efficient management of both initial and ongoing repair, renovation, maintenance, replacement, and operational costs requires the integration of people, processes, information, and technology across multiple “business domains”, skills, and activities.
Life-Cycle Cost Calculation
Calculating the life-cycle costs for a facility involves identifying all relevant costs, such as initial/investment costs, operational, maintenance, and repair costs, replacement, renovation, adaptation costs, and disposal costs, in there appropriate years and running an associated net present value (NPV) calculation.
Life-cycle Cost = I + PV RECURRING COSTS (operations, maintenance, energy, repair, renovation, etc.) + PV DISPOSAL COST – PV Residual Value
In most cases it helpful to separate the building/structure into major systems and run life-cycle costs individually bases upon materials and equipment used. Uniformat category and or major assembly information is likely available if a detailed condition assessment has recently been done for an existing building, otherwise information is created for new structures.
Uniformat II Classification for Building Elements / Systems:
Substructure – Foundations / Basements
Shell – Superstructure / Exterior Enclosure / Roofing
Services – Conveying / Plumbing / HVAC / FIre Protection / Electrical
Demolition
Value
Life-cycle cost is critical to sound financial planning and associated physical asset decision-making. For example, how can a building a real property portfolio owner make capital reinvestment decisions for a particular facility, such as extending its useful life or replacing it with a new facility, without knowing is current liabilities and estimated life-cycle costs?
Tables of Average Service Life / Years
Air Conditioners
Window Unit 10
Split Package 15
Commercial 10
Water-Cooled Package 20
Computer Room Unit 15
Air Handling Units
Built-Up Heavy Duty 30
Packaged Medium-Duty 25
Severe Duty or 100% Outside Air 20 3
Heat Pumps
Residential Air-to-Air 12 b
Commercial Air-to-Air 15 c
Commercial Water-to-Air 18
Roof-Top Air Conditioners a
Single Zone 18 b
Multizone 18
VAV 20
Boilers, Hot Water
Steel Water-Tube 30
Steel Fire-Tube 30
Cast Iron 30
Electric 25
Condensing 15 6
Boilers, Steam
Steel Water-Tube 28
Steel Fire-Tube 25
Cast Iron 30
Furnaces
Gas Fired 18
Oil Fired 18
Condensing 15
Unit Heaters
Gas 13
Electric 15
Hot Water 20
Steam 20
Heaters
Electric Radiant or Convector 10
Radiant Hot Water 25
Radiant Gas 18
Steam or Hot Water Convector, Cast Iron 50
Steam or Hot Water Fin Tube 15
via Four BT, LLC – Four BT, LLC (4BT) is the AEC industry’s innovative integrated project delivery, construction cost data, and SAAS technology provider. We help guide organizations to achieve accelerated improvement of their facilities repair, renovation, and construction outcomes through the development of a culture centered upon delivering customer value, supported by proven LEAN processes, actionable data, enabling cloud technology, and ongoing training.