The Most Expensive Assets to Replace…? by David Albrice
Have you ever wondered which parts of a building are the most expensive to replace?
Well, we did a study on 1,651 buildings over a 10 year period and the detailed research findings can be downloaded here. This blog contains a summary of what we found.
The Most Expensive Systems
Let’s start our journey by looking at the broader systems before we move down to the individual components.
Residential buildings can be organized into nine primary systems, each of which is comprised of many assets. Here is a summary list.
- Structural System – foundation, columns, beams, etc
- Enclosure System – roofs, decks, windows, etc
- Electrical System – transformers, switch gear, lighting, security, etc
- Mechanical System – plumbing, drainage, heating, ventilation, etc
- Fire Safety System – control, detection, suppression
- Conveyor System – Elevator controls, drives, hoistway, etc
- Amenities – Swimming pool, saunas, steam rooms, etc
- Sitework System – Paving, fencing, retaining walls, etc
When we add up the replacement values of all capital projects (within each of these nine systems) and then combine them all together, we arrive at the total Capital Load for a building. If we compare the capital load for each system we arrive at a system cost distribution.
Our data shows that the enclosure system represents approximately 58% of all the capital funding requirements for the average residential building over a typical 30-year planning horizon. This distribution is summarized in the following graph.
The next most expensive system includes the mechanical assets, which collectively represent approximately 17% of a building’s capital load.
But why is the enclosure system so expensive? More information can be found in our research paper.
The Most Expensive Assets
When we rank each asset, starting with the most expensive to replace, we arrive at a list that is referred to as the Capital Consumption Index (CCI). Our study identified a rank order that included the following assets near the top of the list:
- Re-glazing (windows)
- Re-cladding (wall facade)
- Domestic plumbing piping
- In-ground infrastructure
- Exterior sealant
- Elevator modernization
- Unit substation
A more complete list of projects, ranked by replacement value, can be found in theresearch paper.
An understanding of the most expensive systems and assets is important for the following reasons:
- To identify priorities for a maintenance program that preserves the expensive assets and stretches the owners’ money as long as reasonably possible
- To ensure adequate replacement reserves to mitigate financial hardship of the owners when the big ticket items arrive
This blog contains excerpts from a paper presented at the 2014 International Conference of Building Science and Technology (ICBEST) in Germany.
David Albrice is a Senior Asset Management Specialist at RDH Building Engineering Ltd. His experience in writing on multi-system cost analysis comes from his work on almost 1,000 capital plans over the last 20 years. He can be followed on Twitter.
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