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Whole Life Costing

‘Applications In Use’

Constructing Excellence10th November 2015

Gloucester College

Presented by Andy Green & Colin Reed

RICS New Rules of Measurement

NRM STANDARDS IN ACTION

Focus of the presentation

What’s happening in the UK Maintenance & LCC world

• Efficiency agenda – Construction 2025 implications

• Why we need rules + simplified guidance on LCC in use

Overview of the NRM Standards + BS 8544 / 1192 (BIM)

• Background to the RICS new rules of measurement

• Overview of the new UK standards for maintenance

• Putting life cycle costing into practice, for entire life cycle

• Applications of the NRM 1& 3 and the BS 8544 guidance

Industry collaboration + client champions!

• Client’s applications are transform their ways of working

• Industry achievements – benefits of standards in action!

What is happening in the

Industry and LCC World

Efficiency Agenda - Construction 2025

What’s Happening in the UK Maintenance Market ?

Crisis maintenance - drastic cuts in spend!

Lack of ‘Standards and Rules’ to manage maintenance!

Inappropriate Maintenance Practices!

Fragmented and inconsistent approaches!

What’s Happening in the UK Maintenance Market ?

Maintenance is an expense

Innocence Developing Competence Knowledge Based Excellence

Repair as good as before

Reactive – fix it when it breaks

Struggling with management systems

Proactive, preventive maintenance

Systems are a valuable tool - information is an asset

Mai

nte

nan

ce &

Re

new

al S

pe

nd

Pe

rfo

rman

ce &

Re

liab

ility

Maintenance is an investment

Sound knowledge of cost, performance & risk relationships

Proactive predictive maintenance Outsourced contracts to

deliver value & cost savings

Integrated organization, systems & processes

Optimized planning & decision making

A “paradigm shift” in attitude from ‘cost focus’ to ‘business focus’

Learning Applying Embedding Integrating Optimizing

Business Outcomes Focused – not Construction

Business

Costs

Business

Outcomes

Design

Construction

Operate

Maintain

Delivery Cycle

Operational Life Cycle

0.1 1 >5 200

Target Efficiency and Savings

Cabinet Office – Efficiency Reform Group

Key themes:

1. Standardisation and simplification

2. Integration of the life cycle delivery model

3. Market intelligence on lean, green best practices

4. Transparency of whole life costs and performance

Need Client Role Models – to lead the way!

CanopyTrain Shed

Buildings

Platforms

Platforms

Stations – Virtual Functional Model

Common Language - Functional LCC Models

Barriers to doing LCC

and how to overcome them?

Barriers and Obstacles

Annualised Budgets – fire fighting maintenance

Fragmented responsibility/budgets for maintenance

Un-coordinated asset information management

Uncertainty over compliance & end of life obligations

Inconsistency approaches - lack of joined up thinking

Lack of information to make real informed decisions

Others – Ask the audience?

Barriers to the use ofWhole Life Costing

NAO 2005 Report on ‘Improving Public Services through Better Construction’

‘’Whilst the majority of the industry now recognise that whole life costing is the

basis for getting best value for money in public sector construction procurement

– there are 4 key barriers to making this happen in practice’’ :

1 Confusion over scoping & terminology and definitions (inconsistency)

2 Lack of a common methodology and UK standard cost data structure

3 Lack of ability to present information to enable project stakeholders to

understand the inter relationship between costs (over the whole life),

time and quality and also take account of wider environmental (notably

energy performance and CO2 emissions) and also social aspects

4 Lack of tangible evidence and the know- how (skills) to make it happen!

RICS new rules of measurement (nrm)

‘What can be measured can be evaluated,

……improved, directed – in short managed’Lord Kelvin

Background to the RICS NRM

The rules have been written to provide

a standard set of measurement rules

that are understandable by all those in

the cost management of construction

projects (during the building’s life cycle)

• Employers

• Project teams

• Cost managers

• Contractors

• Facilities managers

• Supply chain

NRM Knitting Diagram

ConstructionCost

Estimating

Works Procurement

Construction costsCapital replacement costs

Construction Cost

Planning

MaintenanceCost

Planning & Tendering

Capital costsCapital worksRefurbishment works costs

NRM 1

NRM 2

NRM 3

BCISStandard Form of

CostAnalysis

4th Edition

Works Procurement

Maintenance WorksMeasured Term Contracting

NRM 2 & 2A

MaintenanceCost

Estimating

Through life costsMaintenance costsRenewals costsInspection costs

Exclusions:Operation CostsOccupancy CostsDisposal Costs

IncomeExternalities

Non Construction Costs

Why Bother?

Improving cost certainty:

1. Budgeting in construction procurement

2. Set and defend maintenance budgets in use

3. Option appraisals to inform lifecycle choices!

4. Prioritisation of spend v needs /wants & risks

5. Control the levels of expenditure (1 to X yrs)

6. Robust basis for analysis & benchmarking

RICS NRM Part 3 for Maintenance

What does it contain?

• Common methodology & cost data structures - linked

to NRM Part 1 - (Build, Maintain & Service Life Planning)

• Rules of measurement - for the LCC of maintenance

• Standard forms of cost reporting and analysis – order

of estimating, elemental cost planning and tendering

• Prioritisation and optimisation – of the total maintenance

and the cyclical asset investment programmes (1 to X yrs)

• Risks and uncertainty – typical risks & mitigation plans

• Sources of information – what information is required:

record assumptions & exclusions; reference data available

• Appendices – core definitions (GIFA/NIA), commonly used

classification (functional units) and special use definitions;

information requirements and various standard templates

NRM 3 - Standardised Methodology and Costing

Three applications:1 Order of cost estimating of maintenance

2 Elemental cost planning of maintenance

3 Tendering maintenance and capital works

Measurement Rules for Maintenance:• Purpose and scope – for 3 types of applications

• Level of costing and information required

• Constituents of maintenance + boundaries

• Method of costs – e.g. floor area; functional etc

• Estimating method and use of unit rates

• Updating unit rates to the estimate base date

• Cost estimate of contractor’s preliminaries

• On costs - plus other relevant costs (e.g. fees)

• Risk allowances, + other factors + inflation/etc

• Reporting outputs (use of standard templates)

Alignment to the BS ISO and UK LCC Standards

ISO 15686-5 & SMLCC WLC COST STRUCTURE

Clarifying scope and terminology

ISO addresses the confusion over scoping whole life costs and terminology

regarding the difference between whole life cost (WLC) and life cycle cost (LCC)

Note – Occupancy costs included in non construction costs in BS ISO 15686-5

Eliminate Confusion – Life Cycle Cost (CROME))

Source – RICS New Rules of Measurement (NRM3)

RC EO

Example – Boilers (CROME asset information model – standard LCC classification)

Common Language - Integrated CROME model

M

TASK SHEET

Common Language - Level 1 to 5 (As Built Data)

NRM 3 Appendix E

Asset

CategoryAsset system Asset Classes Asset Type (Component) NRM 3 code Asset Descriptor

Access control Access/boundary control Access control systems 5.12.2.4.2 Access control system

5.12.2.8.8.1 Hand geometry system

Door / cell entry 5.12.1.11 Door entry system

5.12.2.6.6.1 Intercom system

Security systems Security screening Screening equipment 5.12.2.2.2.4 X-ray equipment & metal detection portals

5.12.2.2.2.5 Security UV scanner

Surveillance equipment 5.12.2.1.1 Security Cameras

5.12.2.1.1 Video communication & CCTV links

5.12.2.2.1 Fibre Optic Net

Security alarm equipment 5.12.2.2.1 Intruder alarms

5.12.2.5.5 Tamper alarm

5.12.2.3.3 General alarm system

8.7.8.3 Fence alarms

5.12.2.8.8.2 Pegging system

Security detection equipment 5.12.2.1.1 Video motion

5.12.2.2.1 Fibre Optic Net

5.12.2.2.2.2 Occupancy and light sensor

5.12.2.2.2.3 Active infra-red

5.12.2.3.3.2 Passive infra red system

5.12.2.3.3.3 Microwave Intruder System

Security lighting systems 8.7.8.6 High mast lighting

8.7.9.1 Security lighting

Other security systems 5.12.2.3.3.2 Key tagging system

5.12.3.1.1 Night sanitation panel

Protection systems Personal alarms 5.12.2.3.3.1 Personal attack alarm system

Control systems Building control Building management systems 5.12.3.1.2 BMS system - Central operator station

5.12.3.1.2.2 BMS outstation panel

5.12.3.1.5 Control cabling and containment

5.12.3.1.6 Compressed air and vacuum operating controls

Controlling terminal units and switches 5.8.2.1.13.1 Emergency stop button

Communication 5.12.1.3.3 Disabled alarm

systems Communication systems Paging and emergency 5.12.1.3.3 Hospital Call Point

5.12.1.3.3 Cell call systems

Public address 5.12.4.1 Public address system

Television system 5.11.3.1.5 Cable and satellite systems

Clock 5.12.1.10 Clock

Radios 5.12.1.12 Radios

Co

ntr

ol,

co

mm

un

icat

ion

an

d s

ecu

rity

sys

tem

s

Detection

Common Language – Prison Asset Data Structure

B&ES Products – NRM Maintainable Assets Linked to

SFG20

Master NRM Menu (Version 1st January 2015)

SELECT APPLICABLE MAINTAINABLE ASSET TYPES -

YES / NO

NRM

Code /

Elements

or

Systems

NRM 3 - Maintain Descriptor

SFG20 Maintenance Code and SFG20 Task Schedule

Description

NRM UoM for Construct & Renewals

MAINTAIN

Unit of

Measure

SFG20 Task Frequencies and Activities

1 HrlyDly Wkly 2 Wkly Mnth 2 Mnth 3 Mnth 4 Mnth 6 Mnth 11 Mnth 12 Mnth 13 Mnth 18 Mnth 2 Yrly 3 Yrly 4 Yrly 5 Yrly 10 Yrly

12

Yrly

Elements Maintain Descriptors

SFG20

codeSFG20 Task Schedule

5.5 Heat

Source

5.5Boilers - General

05-01 Introductory Procedures

Nr

Nr

5.5Boilers - General

05-02 Pre-Maintenance Procedures

Nr

Nr

Boiler - Biomass

5.5.1Boiler - biomass

05-38 Biomass Boiler

Nr

Nr

1

23-18

15-17

18-19

20

Boiler - Gas/Oil

5.5.1Boilers - gas/oil

05-03 Atmospheric Gas Burner - Free Standing Boiler

Nr

Nr

1-14


05-04 Atmospheric Gas Burner - Condensing Boiler

Nr

Nr

1-26


05-10 Blown Gas Burner Condensing Boiler

Nr

Nr

15

1-13, 16-

18

14


05-11 Blown Gas Burner Modular Boiler

Nr

Nr

1-13, 15-

17

14


05-12 Forced Draught Gas Condensing Boiler

Nr

Nr

5-161-4, 17-19


05-13 Forced Draught (Pressure Jet) Oil Condensing Boiler

Nr

Nr

4-9, 11-

24

1-3, 10


05-14 Boilers MTHW up to 120ºc

Nr

Nr

1-15


05-23 Boilers LTHW Up to 95ºc

Nr

Nr

2-19


05-28Atmospheric Gas Burner Boiler - Small and/or Wall Hung

for Domestic/Light Commercial Installation

Nr

Nr

1-19


05-29 Combination Atmospheric Burner Gas Boiler

Nr

Nr

1-18


05-30 Atmospheric Gas Burner/Condensing Combination Boiler

Nr

Nr

1-20


07-01 Atmospheric Gas Burners

Nr

Nr

1-13


07-02 Blown Gas Burner

Nr

Nr

1-14


07-03 Forced Draught Gas Burner

Nr

Nr

1-16


07-04Fuel Oil Distribution and Pipework using Medium

(220/960 Sec) Oil

Nr

Nr

1-7


07-05 Forced Draught (Pressure Jet) Oil Burner

Nr

Nr

1-13,

15-16

14


07-06 Light Oil Vaporising Pot Burner

Nr

Nr

1-8,

10

9


07-07 Gas/Oil Burners - Dual Fuel (Gas Safe Tasks)

Nr

Nr

1,

2-3,

10-11,

16-21

18-20

5-8, 22-23

12-15

26

Prisons

Stations

Airports Retail &

Banking

Universities

Offices

Stadium

RICS NRM 3

New Rules of

Measurement

for Building

Maintenance

BS 8544 – 2013

Guide to LCC of

maintenance

during the in

use phases

SFG20 – B&ES

(formerly HVCA)

• Compliance

• Customise

Service Level

• Modeller

CIBSE – Guide M

Align asset

Lifing

with NRM 3 and

B&ES SFG20

task

Schedules (PPM)

Cross Industry Collaboration – Integrated Standards

BS 8544 – Objectives & Context of the Guide

Client/Business Outcomes Focused

1. Integrated process - for planning, budgeting and delivering maintenance & investment programmes

2. Understanding the impacts on key business outcomes of doing, or not doing maintenance

3. Planning and prioritisation of maintenance spend on constructed assets and wider estate strategies

4. Setting and defending sustainable budgets

5. Implementing approved works and tracking spend against budgets and specific business outcomes

6. Total cost of maintenance & investment indexation

7. Standardise & simplify the use of asset information

Client Applications/ Standards in Use

‘Option Appraisals – Affordability Modelling’ Schools Example

‘How LCC can help to set, defend budgets and

optimise and maintain the assets sustainably!’Ministry of Justice

UK New Standards for for LCC of Maintenance

When to use them?

Budget Option appraisals

Budget - £17,5m Capex

Option Appraisals – LCC Modelling

Standards in Actions - MOJ’s Prisons

• Original remit – know the condition of the assets

• NAO actions – ‘need to plan maintenance better’

– Service focused maintenance – roll out RYG regimes

– Sustainable asset investment planning and budgeting

• Integrated process to give MOJ the capability to:

– Drive the investment planning (top down/bottom up)

– Prioritise the maintenance spend (revenue & capital)

– Keep up to date - sustainable asset review model !

• Outputs driven - to enable MOJ to make better inform decision making

Capital Planning

Asset Management Plans

Repairs & Maintenance

Facilities ConditionAssessment

Assets Status and Life Cycle Data Resources Service Models

Funding Life CycleCostingStrategies Prioritisation

Capital Planning


Capital Planning


Repairs & Maintenance

Facilities ConditionAssessment

Assets Status and Life Cycle Data Resources Service Models

Funding Life CycleCostingStrategies Prioritisation

Simplify and Integrated LCC of Maintenance

InformingBudgeting

&Optimising

Life Cycle Spend

Standardise Asset Reviews

(Forms & use of IT)

MaintenanceManagementProgramming

Data Repository,Fund Modelling &

Optimise CAI SpendProgramming

Construct

Renewal

Operate

Maintain

End of life

(energy)

Environment

CORE

ASSET

DATA

Renewals

Operate

Energy

Capital

Asset

Investment

Planning

(CAFM

CORE

ASSET

DATA

Maintain

NRM CROME – Integrated Asset Data & Life Cycle Costing

ASSET CLASSIFICATION

Asset Group Asset TypeAsset System

Selection of Asset Groups, Systems and Asset Types

Common Language – for Construction & In Use

Common Language – Portfolio Asset Structure/Rules

Business / Service Focussed Maintenance

Do Not Go To Jail!

Plan and optimise the cost and the

performance of all maintainable assets

and the life cycle asset replacements:

1. Set minimum standards; Must do tasks

to ensure statutory & legal compliance

and avoid the risk of going to jail …..

2. Determine the optimum level: Critical

maintenance expenditure to support

the core business activity or function

(commercial use of built environment)

3 Define the Non Critical capital works &

maintenance tasks – i.e. the low risk

discretionary tasks, or not do tasks!

SPACE UTILIZATION ENVIRONMENTAL

PERFORMANCE

FUNCTIONAL

SUITABILITY

PHYSICAL CONDITION

& REMAINING LIFE

FINANCIAL

SAFETY,

SECURITY &

COMPLIANCE

OTHER FACETS ?

How Well Are Your Assets Performing?

Asset Performance RatingsAsset performance indicators have been tested to measure asset

condition at an Establishment and Building level and inform investment planning

0% 5% 10% 15% 20% 50% 100%

Excellent Good Fair Poor

Refurbishment Trigger

0% 5% 10% 15% 20% 50% 100%

Excellent Good Fair Poor

Refurbishment Trigger

Facility Condition Index

• The current condition of the facility can be quantified using

the total estimated cost for all identified maintenance

actions and the current replacement value (CRV) of the

facility.

• The facility condition index, or FCI, is defined as follows;

Value of identified maintenance actions

Current replacement value

Building Performance Ratings

A

[No loss of

places]

B

[Loss of

regime]

C

[Loss of prisoner

places]

Business Impact

B

[Minor actions

to comply]

C

[Identified

contraventions]

Safety & Security

A

[Complies

with

regulations]

D

[Seriously

at risk]

Capacity

B

[Approaching

capacity]

C

[At capacity]

A

[Capacity

Available]

D

[Beyond

capacity]

FCI’s and other Building Performance Ratings

How Well Are Your Assets Performing?

Impact of Funding P1’s – Statutory/ legal Works!

Impact of Funding P2’s - Business Critical Works

Impact of Funding all the P1,P2 and P3 Works

Example - FCI Investment Profiling, by Function Types

Prioritised Programme of Capital Spend (P1, P2, P3)

RISK BANDING

P1 – Statutory /Legal

P2 – Service Critical

P3 – Other Criteria

Transparency of work over years 1 to 5 by element

Indexation of LCCM to Capital Costs (1:5:200 Ratio)

1.0 to 1.5 % per annum on maintenance

1 to 2 % per annum on asset investment

1 to 1.5 % per annum on business moves

2 to 3 % per annum v business outcomes

(Depending on type of functional use etc)

Asset depreciation / finance provision

(dependent on value of capitalised assets)

Ratio e.g. 0.1; 1; 5 +

Fees to Capital Building

Works to the Total Cost

Maintaining the Asset (s)

Key

O&M = Operations

& Maintenance Cost

0.1 1.0 5.0+ TOC RATIO to CAPITAL REBUILD COSTS

(Based on a 60 year life office facility)

Design Fees

Build

CostMaintain

Renewals

Churn

Operating

Costs

Write

Down

Procurement for Life Cycle

Strategic

Definition/Initiate

Project

OptionsAppraisal

Design &

DetailingSolution

Construct,

Refurbish/ Adaptation

Operate,

Maintain &Renewals

Recycling

Salvage/ SaleDecommission

In Use -Service Plan

Po

ten

tia

l fo

r V

alu

e Im

pro

ve

me

nt

an

dL

ife

Cyc

le C

os

t R

ed

uc

tio

ns

A

B

C

D E

F

Integration

LCC approach

to projects

Optimise the

LCC in use

Performance Benefits

& WLC Cost Savings

Unlock Business

Intelligence

Fit 4 Function

Modelling and

Benchmarking

Proje

Digital Applications of Life Cycle Costing

APPLICATION – AT KEY LCC STAGES

LEVELS & METHODS OF LCC USED

• Selecting the lowest whole life cost scheme• Informing the design detailing – option study• Handover to operate and maintain (post build)• Control and managing life cycle cost in use

• Floor Area (GIFA/ NIA) and Functional Unit Costs• Level 2 BIM costs for project planning / delivery• Level 3 and 4 AIM for maintain and renewal costs

PROJECT LIFE CYCLE COSTING£ LIFE CYCLE COST IN USE £

£

£

Standards for Life Cycle Costing(BS 8544 and 1192 alignment

CAPEX OPEX

Standardized Method of Life Cycle Costing- for Construction Procurement

A supplement to ISO 15686-5 Buildings & constructed assets - Service life planning – Part 5: Life cycle costing

Simplifying and

Digitising dLCC

CAPEX OPEXBS 1192 (BIM) Standard

CAPEX OPEXEfficiency Agenda – Lower WLC

By 33% and reduction in carbon

Whole Life Costing

NRM Standards in Action

For more information contact

[email protected]

Thank You – Q&A

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