Peter Lockett- Acting Director Building & Property- Flinders University

Donald Macdonald- Head of Consultancy- Programmed Facility Management

Tertiary Education Management Conference

Supporting Education Through

Effective Life Cycle Management

19th September 2012

The Challenge

New to role

Lack of condition data

Constrained budgets

Competing Demands

Time poor

The Challenge (cont)

Complex portfolio

Access challenges

Core business

Time constraints

Necessity to ‘hit the ground running’

The solution

The Challenges of Life cycle Modeling

Life cycle cost definition

Sum of all recurring and one-time (non-recurring) costs over the full life span or a

specified period of a good, service, structure, or system. In includes purchase

price, installation cost, operating costs, maintenance and upgrade costs, and

remaining (residual or salvage) value at the end of ownership or its useful

lifehttp://www.businessdictionary.com/definition/life-cycle-

cost.html#ixzz25k5Nq200

Life cycle cost is the total cost of ownership of machinery and equipment,

including its cost of acquisition, operation, maintenance, conversion, and/or

decommission (SAE 1999).

Life cycle cost definition (cont)

Life Cycle Costing in a construction context is an economic evaluation method

that accounts for all relevant costs over a defined period of time (period of

analysis) adjusting for the time value of money. The relevant costs include the

capital cost of construction, maintenance and operation costs during the period of

analysis, and end of life costs. LCC is focused on the costs only of an asset

during the period of analysis. (RICS Draft Guidance Note- Life Cycle Costing)

Whole of Life Costing is a more inclusive service, which in addition to the relevant

costs of LCC, can include non-construction development costs, facility related

occupancy costs, facility related income, and any other costs associated with the

provision of the construction works, which are not included in the transaction cost

paid by the client. WLC is the systematic economic consideration of all whole life

costs and benefits during the period of analysis. (RICS Draft Guidance Note- Life

Cycle Costing)

Life- cycle costing challenges

Bill of Quantities

Works site is unoccupied

Design team are available

Adequate supplementary information is likely to be available

Life- cycle estimating new building

Works site is occupied

Design team are available

Adequate supplementary information is likely to be available

Life- cycle estimating existing building

Works site is occupied

Design team are unavailable

Inadequate supplementary information is likely to be available

Funding Challenges

The GFC

GFC2

The rising profile of whole of life costs e.g. PPPs

Statutory obligations

The triple bottom line

The rising cost and scarcity of money

Funding Challenges (cont)

Consequences of failure not always immediately apparent

If it don’t appear broke, why fix it?

Assets often deteriorate gradually

Competing demands of core business

The natural world

Alternative approaches to estimating

Fixed % of value per annum

Squeaky wheel

What did we spend last year?

Advantages

Predictable budgets

Transparent calculation methodology

Fully auditable

Consistent approach

Disadvantages of ‘traditional estimating methods (cont)

No causal link

Hermetically sealed

Challenging to nuance

…the world is changing…6th March 2010

…the world is changing…

…the world is changing…

…the world is changing…

…the world is changing…

… the world is changing…

…the world is changing…

…the world is changing…

An Alternative Approach to Lifecycle Modeling

Kew Cottages

DSD

ABH

PPP’s

DoJ

Adelaide CC

Flinders

University

FMA

Excellence

Award

2003 2005 2007 2009 2011

Elemental Methodology

VENT001 - Asset-Trak LCM Rev C (TJ 2012.09.12).xlsx

VENT001 - Asset Maintenance Plan Rev A - Draft - (2012.09.03).xlsx

Example Report.docx

An Alternative Approach to Lifecycle Cost Budgeting

Establish Brief

Review Available Data

Interview Key Stakeholders

Undertake Building Condition Audit •No. of assets

•Condition of assets •Site specific issues

Populate Asset- Trak •Forecast replacement timing of assets •Estimate replacement cost of assets

Repeat survey for highest risk/ most dilapidated assets

Generate ‘vanilla’ Asset Trak Summary and Detail Report

Report is tailored to clients requirements e.g. risk ranking, smoothing , NPV

Pilot Survey

Elemental methodology

New and existing properties

Scalable library of assets

Costs reflect all issues e.g. demolition, professional fees, disposal etc.

Risk profiling

Elemental Methodology (cont)

Flexible Tool

Smoothing to match expenditure to affordability

Statistical treatments model typical replacement of large volume items e.g. FF&E

Premature or deferred dilapidation can be modelled

NPV and sinking fund calculation

Advantages & Benefits

Long term asset replacement liability is established

Manage executives expectations

Robust strategic approach

Based on practical review of on site assets

Facilitates informed cost benefit analysis decisions

Transparent process from a probity and audit perspective

Supports robust business cases

Can be nuanced to reflect ‘externalities’

Flinders University Benefits

Understand stock

Altered Divisions to meet demand

Strategic Planning

Asset Management

Manage Executives Expectations

Prioritise Spend

Support Business Cases

Villa Savoye completed 1929

Le Corbusier

British Library completed 1997

Colin St John Wilson

St Pancras Station built 1868- 73 Sir Giles Gilbert Scott

City of London School for Girls

built 1965- 76

The London Ark built 1989- 92

Ralph Erskine

Churchill Gardens built 1946- 62

Powell & Moya

Churchill Gardens built 1946- 62

Powell & Moya

Churchill Gardens built 1946- 62

Powell & Moya

Churchill Gardens built 1946- 62

Powell & Moya

Royal Darwin Hospital completed 1980

QUESTIONS