Life-cycle Costs and Consequences

This article appears in the January 2015 issue of CAM Magazine


Life-cycle Costs and Consequences

Building facilities that succeed today and tomorrow
By Kevin Ryan
Senior Vice President, Powerlink

Making design and construction decisions based on the lifetime cost of a facility has become an increasingly important prerequisite for companies who want buildings that not only make sense today, but years (or even decades) from now. Consequently, more our industry is beginning to realize that a detailed, lifecycle perspective and a more thoughtful approach to design, development and construction can pay significant dividends.

Understanding how that process works, however, is critically important. The best strategies for facility development rely on close collaboration between design, construction and management specialists who have a keen understanding of building usage and requirements and other variables. Deploying those strategies begins early, long before the first brick has been laid.

Understanding and engagement

The first step for any organization is to begin by gathering/exchanging information and fully understanding a facility’s uses, projected timeline and key stakeholders. One of the key variables here is the customer itself. Every customer has a different level of understanding of the process. More sophisticated customers can outline their business model with great detail well into the future. They know the space planning and programming requirements, as well as block plans and the basic layout of professional spaces.

At initial high-level meetings, design and construction specialists who specialize in facilities management considerations will meet with key stakeholders of the business, as well as a space planner and/or an architect who can facilitate the information needed for a successful plan. Those specialists not only offer their facilities management experience, by becoming part of the design team they are able to make key recommendations to stakeholders at critical points throughout the design and development process.

Less sophisticated/experienced clients typically require more handholding, and the process may require more front-end time investment in order to elicit the right information. Instead of a few high level representatives, a specialist may need to meet with more members of the client’s team to get the answers they need to deliver impactful advice. For example, these are the type of clients that might not have thought through their growth plans in great specificity—or considered how those plans might impact their facilities needs. While they may need to be walked through the process a bit, these are exactly the clients who may stand to benefit more from the services of a team who understands how to design and develop with lifetime costs in mind.

After those initial meetings, the specialist will bring back an initial draft of a development plan to ensure that all parties are on the same page with respect to the bigger picture. That plan drives the next steps, where it is time to dig into the details and begin reviewing specifics about materials, energy efficiency recommendations and other priorities based on information received in those preliminary meetings.

Bringing facilities management to the table.

After those initial meetings have borne fruit, and some initial plans are in place, bringing the facilities management team to the table is a critical next step. Understanding the subtleties and nuance of how facilities management considerations will impact materials selection as well as design and development decisions differs slightly, depending on whether the circumstances involve a leasing situation or a ground-up development. With the former, establishing a positive and productive relationship with the property ownership and the property management team is essential. The facilities management experts will work with those parties to determine whether they need to maintain key designations (LEED certification, for example) and to communicate and coordinate client goals. Specifics such as energy efficiency and lighting, fire alarms and emergency infrastructure functionality and other details will likely need to be considered.

While the process is similar with a ground-up project, there tends to be less need for coordination and compromise. The communication is more straightforward: identifying the owner’s goals and objectives, understanding the space planning and programming requirements, and coming up with a preliminary plan. No matter what the specific priority may be—eliminating paper usage, achieving a certain environmental certification, implementing a specific water reclamation feature—there will be design and development implications. Whether dealing with a leasing situation or a ground-up build, understanding the client’s business model and function is critically important in order to give them the most value for the duration of their time in the location. Success means identifying the property function and working with ownership and management teams to mold their best interests and the user’s best interests with regard to both form and function.
Another key point to understand here is that the timeframe matters. It might sound self-evident that the lifetime costs and considerations are impacted by how long a particular lifecycle might be, but it is surprising how often that critical detail is left out of the equation. Cost calculations and decisions made for a five-year lease timeframe will be very different from those made with a two- or three-decade ownership time horizon.

Materials difference

Carefully examining and considering the usage/life-span necessary for specific materials is one of the most important steps in an efficient and cost-effective lifecycle-conscious design and development process. Consider the example of a manufacturing facility with a projected 20-year lifecycle. The best design and development experts who specialize in facilities management considerations will meet with client accountants to gain a sophisticated understanding of anticipated depreciation costs for key equipment. Factoring in the costs of depreciation and replacement can be an essential part of making smart decisions for the usable lifetime of the property.

Remember that context matters, and materials considerations can differ wildly from one industry to the next, and from one facility to the next. Specific usage parameters—mandated both by regulatory compulsion and practical utility—drive decision-making here. Everything from flooring to furniture to fixtures should be reviewed. In a heavier-use facility like a busy hospital, for example, sturdier fixtures and more resilient materials may more than pay for themselves over the lifetime of the building. It may cost a bit more on the front end to install more rugged doorknobs or solid cabinets instead of plywood or laminate, but the long-term savings realized by not having to repair or replace those items makes that initial investment more than worth it.

To add another wrinkle, even within the same facility, there can and should be different graduations of material based on usage. For example, an administrative or office wing of the same hospital will most likely have very different usage needs for doors, flooring and many other materials. It is in this area where smart planning can zero in on the items where strategically spending more at the outset will significantly reduce upkeep expenses down the road.

Cost calculations

The basic formula for calculating the long-term cost for specific features or items considers the initial cost for each item and the cost for replacement. The reality is somewhat messier, however. Energy efficiency/inefficiency considerations often loom large, and the need to include the cost of the manpower and equipment required to replace broken or outdated equipment makes that calculation more complex than it might seem at first. The key is identifying opportunities for payback and ROI over a specified length of time (again, coordination with client-side accounting can be valuable here). The savings from even a minor change can be dramatic: in one recent project, replacing traditional stairwell lighting with specialized fixtures equipped with motion sensors that only illuminate above emergency level lighting when needed yielded 85% energy savings, and paid back the higher front-end cost in less than one year!

Think critically about not only the expected lifetime of materials, but the expected lifetime of technologies. If the client knows that they want to be there in 20 years, understand that new technologies will likely make infrastructure and equipment decisions look very different. Whatever the specific features desired by the client, costs can generally be calculated on a macro basis and then plugged it into a more detailed cost model. That model tends to be more a la carte, so clients understand the finite costs of each piece in the plan, how (and whether) it fits into their budget, and what the return on that cost is likely to be in the long run. From facilities management and construction standpoint, one of the biggest challenges is convincing clients to look at their costs through that long-range viewfinder. Companies have an understandable tendency to want to make decisions based on the costs in front of them today, even when established best practices may suggest a more cost-effective long-term plan.

Ensure success

Ensuring that the success of a construction project is not just measured during the grand opening, but over the lifespan of the facility, requires maintaining a close working professional relationship between the client and the consultant throughout the design, development and construction process when possible. At every step, both the client and the lifecycle facilities management and development expert should be asking themselves: What does a successful building look like on day one? What does it look like in a year, in five years, in ten? Clear, consistent, open and honest communication throughout the design and development process is critical. Ultimately, realizing lifetime-scale efficiencies for a facility demands close collaboration, the vast majority of it before a building emerges in brick-and-mortar reality.

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