building refurbishment & maintenance · terotechnology •scope of terotechnology –selection...
TRANSCRIPT
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School of the Built Environment
BUILDING REFURBISHMENT & MAINTENANCE
TEROTECHNOLOGY
(Whole life costing)
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School of the Built Environment
OVERVIEW
• THE NATURE OF TEROTECHNOLOGY
• TYPES OF COSTS
• DISCOUNTING COSTS
• WHOLE LIFE CYCLE COSTS
• LIFE CYCLE COSTING TABLES
• SPREADSHEET ANALYSES
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School of the Built Environment
LEARNING OUTCOMES
1. Understand the basic principles of
terotechnology as applied to buildings
2. Understand the key components of whole life
costs and their application to maintenance
management.
3. Know how to use life cycle costing tables.
4. Understand and apply the principles of whole
life cycle costing for maintenance purposes
using a spreadsheet.
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School of the Built Environment
ESSENTIAL READING
• BSI (2008) BS ISO 15686-5:2008 Buildings & constructed assets — Service-life planning — Part 5:Life-cycle costing, British Standards Institution, London.
• BS 3843: Guide to Terotechnology - the economicmanagement of assets
• H-WU: Handout on Life Cycle Costing
• OGC Procurement Guide 07:Whole Life Costing and cost management.Available from:http://www.ogc.gov.uk/documents/cp0067.pdf
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School of the Built Environment
TEROTECHNOLOGY• DEFINITION: a combination of management, financial, engineering, building and other practices applied to physical assets in pursuit of economic life cycle costs.
The branch of technology and engineering concerned with the installation and maintenance of equipment.
• OBJECTIVES
• PRIMARY: Best Possible Value For Money from procurement and subsequent employment of asset
• SECONDARY: To achieve the Lowest Asset Cost Over Life Cycle – based on defined level of performance and expected life cycle
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School of the Built Environment
TEROTECHNOLOGY
• SCOPE OF TEROTECHNOLOGY
–Selection & Provision of Permanent Assets Ensure selection based on best value rather than the lowest cost. Cheaper may cost more to maintain over their life.
–Caring for Those Assets Whole life cycle costs can be reduced by extending the useful life of component by effective maintenance.
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School of the Built Environment
TEROTECHNOLOGY
• SCOPE OF TEROTECHNOLOGY
–Co-ordinating Assets to Help Achieve Overall Minimum Costs Over Their Life Cycle Having a proactive & complimentary approach to maintenance.
–Feeding Back Information To Improve Assets. Ensure costs effective decisions continue to be made at the capital acquisition/ procurement stage.
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School of the Built Environment
LCC / SERVICE LIFE PLANNING
Parts 1, 2, 3, 5, 6, 7 and 8
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School of the Built Environment
DEFINITION (LCC)
Life Cycle Cost: the total cost of a building or its parts throughout its life, including the costs of planning, design, acquisition, operations, maintenance (while fulfilling the performance requirements) and disposal, less any residual value.
Residual value: the value assigned to an asset at the end of the period of analysis.
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School of the Built Environment
DEFINITION (LCC)
Planning & design
Acquisition
Operations
Maintenance
Disposal
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School of the Built Environment
DEFINITION (LCC) Life costs:
• Acquisition.
• Servicing/ MoT.
• Fuel.
• Cleaning.
• Insurance/ road tax.
• Repairs/ replacements.
• Upgrades.
Residual value:
• Trade- in.
• Scrap value.
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School of the Built Environment
LIFE CYCLE OF AN ASSET
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School of the Built Environment
WHOLE LIFE COSTS (WLC)
Whole Life Costs: all significant and relevant initial and future costs and benefitsof an asset, throughout its life cycle, whilefulfilling the performance requirements.
Life Cycle Cost: the total cost of a building or its parts throughout its life, including the costs of planning, design, acquisition, operations, maintenance (while fulfilling the performance requirements) and disposal, less any residual value.
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School of the Built Environment
WHOLE LIFE COSTS (WLC)
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School of the Built Environment
DEFINITION (WLC)
In addition to the costs include;
Benefits:
• Taxi fares (revenue).
• Fuel savings (improved performance).
• Reduced tax (modified fuel).
• Advertising revenue.
• Trade- in/ scrap value.
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School of the Built Environment
WHOLE LIFE COSTS
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School of the Built Environment
WLC v’s LCC
• LCC: shorter time frame; aspect specific; typicallyfocused on costs.
• WLC: longer time frame; costs and benefits; wholeor through life performance.
However; they are often interchanged !
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School of the Built Environment
WHY USE LCC ?
• Typically used as a comparative tool.(danger in using absolute values ! )
• Evaluation of different investment scenario.(renew, rebuild, repair, rent/ buy etc.)
• Evaluation of different designs, components orsystems.
• Estimate future costs (running, installation ormaintenance).
• Comparison or evaluation of the effectiveness ofprevious decisions.
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School of the Built Environment
COMPONENTS OR STAGES OF THE LCC
• Decision to use – other tools available.(Value Engineering; investment appraisal; specialist contractor (procurement))
• Appropriate timing/ need – when/ where to use.
• Select ‘service’ life – based on what ?(manufacturers data; experience; test data)
• Select appropriate costs and timing.(acquisition, running, repair, maintenance etc.)
• Identify and quantify revenue/ savings or residual value.
• Select appropriate discount rate(s).
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School of the Built Environment
WHERE TO USE LCC
-Confidence +
in data
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School of the Built Environment
SCOPE TO INFLUENCE LCC ASSESSMENT
Maintenance
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School of the Built Environment
‘Bath tub’ failureThe bath tub represents the typical service life model for manycomponents or systems (buildings). In the early stages of lifethere is potentially a high risk of failure which level off,increasing again towards the end of the service life. Thefigure below shows the ‘bath tub’ failure.
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BATHTUB FAILURE CURVE
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School of the Built Environment
Rates of deterioration
Different types of ageing
All materials, products and components age,figure below is a graphical representation ofdifferent types of ageing.
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1. Ideal performance profile- there isno drop off in performance overthe life of the product. Howeverdue to natural deterioration,ageing and use this isunobtainable.
2. Abrupt- sudden failurefollowing a period of slow lineardeterioration in performanceover time. Associated withbuilding services materials andsystems.
3. Linear- typical failure of buildingmaterials which performeffectively and deteriorate over afixed period of time.
4. Exponential- this is typified bya slowing up of the rate ofdeterioration over the servicelife of the product.
5. Minimum acceptable standard-a level of life expectancy whichmust be obtained either due toeconomic, social,environmental or practicalreasons.
DIFFERENT TYPES OF AGEING
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School of the Built Environment
LIFE ! - BS Definitions
Service life: the period of time after installation during which a building or its parts meets or exceeds the performance requirements.
Reference service life: service life that a building or parts of a building would expect (or is predicted to have) in a certain set (reference set) of in-use conditions.
Estimated service life: service life that a building or parts of a building would be expected to have in a set of specific in-use conditions, calculated by adjusting the reference in-use conditions in terms of materials, design, environment, use and maintenance.
Design life: intended service life; expected service life; service life intended by the designer.
Predicted service life: service life predicted from recorded performance over time.
Forecast service life: service life based on either predicted service life or estimated service life.
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School of the Built Environment
LIFE AND MAINTENCE CYCLES (STANDARDS)• Types of services lives (organisational standard):
– Aesthetic
– Design
– Physical
– Economic
• Cyclic and routine maintenance:– Repairing
– Servicing
– Cleaning
– Restoring
– Replacing
• Sources of data:– Experience
– Manufacturer
– Testing/ modelling
– Measure and monitor
Acceptable performance level
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School of the Built Environment
MAINTENANCE LIFE CYCLES
KEY INFLUENCES
• Exposure (level of protection).
• Where in building.
• Use/ abuse.
• Material (expected service life).
• Finance !
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School of the Built Environment
DETERIORATION MECHANISMS
• Chemical
– Acids
– Alkalis
• Electromagnetic
– Solar radiation
• Mechanical
• Biological
• Hygrothermal
• Stress
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School of the Built Environment
DETERIORATION MECHANISMS
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School of the Built Environment
COSTS AND TIMINGS
• Sometimes known as forecasting/ service life planning.
• Sources for costs:- Experience.- RICS.- Contractors/ sub-contractors.- Cost books/ standard references.
• Timing of regular events:- Typically based on experience/knowledge.- May be determined by organisational standards (policy).
- Manufacturers literature.
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School of the Built Environment
Maintenance cycles – fabric
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School of the Built Environment
PLANNED MAINTENANCE BUDGET
DODGY SPIRES Ltd Planned Maintenance Budget for Year ending Dec. 20022012
January February March April May June July August September October November December TOTAL
Income
Monthly Alloc. £16,000.00 £15,000.00 £14,000.00 £13,000.00 £12,000.00 £11,000.00 £14,000.00 £14,000.00 £14,000.00 £14,000.00 £14,000.00 £14,000.00 £165,000.00
Expenditure
Cleaning £219.48 £285.05 £342.82 £521.83 £483.93 £514.04 £585.93 £408.62 £392.20 £274.38 £183.72 £143.57 £4,355.57
Building Repairs £134.08 £189.48 £175.83 £262.93 £234.84 £2,786.96 £3,164.93 £2,067.69 £1,262.22 £863.04 £673.82 £308.84 £12,124.66
Services Rep. £462.00 £427.00 £538.00 £657.42 £604.37 £687.52 £853.69 £634.62 £555.55 £375.58 £274.83 £186.95 £6,257.53
Heating £600.00 £600.00 £500.00 £400.00 £300.00 £200.00 £50.00 £50.00 £100.00 £569.35 £600.89 £602.34 £4,572.58
Lighting £326.97 £268.60 £578.85 £1,296.83 £1,073.93 £857.93 £1,146.95 £987.65 £1,276.42 £849.37 £654.32 £521.93 £9,839.75
Gas £230.45 £240.00 £186.58 £140.54 £100.98 £78.58 £50.67 £45.67 £78.78 £170.87 £203.67 £239.84 £1,766.63
Rates £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £120.00 £1,440.00
Electricity £189.34 £178.63 £160.65 £150.34 £135.47 £125.45 £120.23 £166.48 £170.54 £180.45 £190.54 £210.21 £1,978.33
Wages / NI £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £52,027.80 £624,333.60
Insurance £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £257.00 £3,084.00
Administration £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £376.86 £4,522.32
Water £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £200.00 £2,400.00
Emergencies £200.00 £250.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £650.00 £0.00 £1,100.00
Ave. Exp. £4,257.23 £4,263.11 £4,266.49 £4,339.35 £4,301.17 £4,479.40 £4,534.93 £4,410.95 £4,370.57 £4,328.05 £4,339.50 £4,245.80
Total Exp. £55,343.98 £55,420.42 £55,464.39 £56,411.55 £55,915.18 £58,232.14 £58,954.06 £57,342.39 £56,817.37 £56,264.70 £56,413.45 £55,195.34 £677,774.97
Balance (£39,343.98) (£40,420.42) (£41,464.39) (£43,411.55) (£43,915.18) (£47,232.14) (£44,954.06) (£43,342.39) (£42,817.37) (£42,264.70) (£42,413.45) (£41,195.34) (£512,774.97)
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School of the Built Environment
DISCOUNTING COSTS OVER TIME
• Select appropriate discount (interest) rate.(typically between 1 and 5%)
Present value = Future value X 1/(1+r)n
Where: r = discount rate.
n = time in years.
• Apply discounted rates to all costs and aggregate.(Net present value, NPV)
• Select most appropriate (lowest LCC) option.
• Understand data !
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School of the Built Environment
DISCOUNTING COSTS OVER TIME
Present Value (PV)
Example: You can get 10% interest on your money.
So $1,000 now can earn $1,000 x 10% = $100 in a year.
Your $1,000 now can become $1,100 in a year's time.
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School of the Built Environment
Present Value
Present Value (PV)
Example: You can get 10% interest on your money.
So $1,000 now can earn $1,000 x 10% = $100 in a year.
Your $1,000 now can become $1,100 in a year's time.
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School of the Built Environment
Calculate Future Payment
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School of the Built Environment
Future Back to Present
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School of the Built Environment
Present Value
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School of the Built Environment
DISCOUNTING COSTS OVER TIME
Discount rates used to calculate NPV
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School of the Built Environment
LCC example of rainwater goods – 60yr
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School of the Built Environment
LCC example of rainwater goods
• Cheapest option may not have lowest LCC.
• May prove less expensive to replace at regularintervals rather than maintain.
• Care need with discounting and costs, minorchanges could influence results.
• There may be residual (scrap, recycling) value.(Aluminium (not included) could have high value)
• Financial costs may not include ‘environmental’ cost/ impact.
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School of the Built Environment
LCC graphical example
Windows Option Whole Life Cost
(Net Present Value discounted @ 6%)
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Time (years)
NP
V (
£)
Hardwood
Softwood
uPVC
Aluminium
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School of the Built Environment
LCC graphical example
0
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Example of the future annual maintenance costs (NPV) associated with a school over 25 years.
£
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School of the Built Environment
DEALING WITH REVENUE
• Not normally included in LCC.
• Identify revenue stream, discount as costs and aggregate.
• Subtract from costs to generate modified NPV.
Example: £ (NPV)
Initial cost plus five yearly maintenance 65,000.00 costs for new external insulation system and double glazing package.
Energy savings (over 30 year predicted 13,000.00 life)
Modified LCC (WLC/ NPV) 52,000.00
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School of the Built Environment
OTHER INDICATORS/ MEASURES
• Payback period - the time it takes time for cumulative savings to offset the initial investment.(initial cost: £ 30,000; annual savings: £ 4,500; payback period = 30,000/4,500 = 6.7 say 7 years)
- Simple payback: no discount.- Discounted payback: uses NPV.
• Savings to investment ratio - (SIR) expresses the ratio of savings to costs. The SIR is calculated by dividing the present value of operating-related savings by the present value of the investment costs attributable to that option.
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School of the Built Environment
OTHER INDICATORS/ MEASURES
• Internal rate of return (IRR) - the compound rate ofinterest that, when used to discount the costs and benefits over the period of analysis, makes costs equal to benefits when cash flows are reinvested at a specified interest rate.When IRR is positive (+) investment is viable.