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
5.5.1Boilers - gas/oil
05-04 Atmospheric Gas Burner - Condensing Boiler
Nr
Nr
1-26
5.5.1Boilers - gas/oil
05-10 Blown Gas Burner Condensing Boiler
Nr
Nr
15
1-13, 16-
18
14
5.5.1Boilers - gas/oil
05-11 Blown Gas Burner Modular Boiler
Nr
Nr
1-13, 15-
17
14
5.5.1Boilers - gas/oil
05-12 Forced Draught Gas Condensing Boiler
Nr
Nr
5-161-4, 17-19
5.5.1Boilers - gas/oil
05-13 Forced Draught (Pressure Jet) Oil Condensing Boiler
Nr
Nr
4-9, 11-
24
1-3, 10
5.5.1Boilers - gas/oil
05-14 Boilers MTHW up to 120ºc
Nr
Nr
1-15
5.5.1Boilers - gas/oil
05-23 Boilers LTHW Up to 95ºc
Nr
Nr
2-19
5.5.1Boilers - gas/oil
05-28Atmospheric Gas Burner Boiler - Small and/or Wall Hung
for Domestic/Light Commercial Installation
Nr
Nr
1-19
5.5.1Boilers - gas/oil
05-29 Combination Atmospheric Burner Gas Boiler
Nr
Nr
1-18
5.5.1Boilers - gas/oil
05-30 Atmospheric Gas Burner/Condensing Combination Boiler
Nr
Nr
1-20
5.5.1Boilers - gas/oil
07-01 Atmospheric Gas Burners
Nr
Nr
1-13
5.5.1Boilers - gas/oil
07-02 Blown Gas Burner
Nr
Nr
1-14
5.5.1Boilers - gas/oil
07-03 Forced Draught Gas Burner
Nr
Nr
1-16
5.5.1Boilers - gas/oil
07-04Fuel Oil Distribution and Pipework using Medium
(220/960 Sec) Oil
Nr
Nr
1-7
5.5.1Boilers - gas/oil
07-05 Forced Draught (Pressure Jet) Oil Burner
Nr
Nr
1-13,
15-16
14
5.5.1Boilers - gas/oil
07-06 Light Oil Vaporising Pot Burner
Nr
Nr
1-8,
10
9
5.5.1Boilers - gas/oil
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
Asset Management Plans
Capital Planning
Asset Management Plans
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
Thank You – Q&A