Whole life cost measures

Assessment of the ratio of capital costs to maintenance costs and business costs is a developing area of research.

Figures published by the Royal Academy of Engineering in The long term costs of owning and using buildings (November 1998) indicated very high costs in use and business costs for an office building over years. Research from Reading University suggests more modest cost ratios for office buildings.

Comparison of capital, costs in use and business costs for office buildings

Different building types with different uses may result in greater or lesser ratios between capital costs, costs in use and business costs.

The point that comes across clearly is that while capital costs seem a large cost - spent in a relatively short space of time - over the life of an asset capital costs become a small proportion of the maintenance and operating costs and a minor cost when compared with the value of the staff and turnover of business.

This does not mean you can ignore capital costs as there is a strong link between building design and its components and the future maintenance costs and staff efficiencies.

So getting the original construction right is important for minimising future maintenance costs and maximising performance from the use of the building.

The converse is also true. Where the initial construction is not right (i.e. design is poor, or short life and high maintenance materials or unreliable components are used), often in the name of lower capital costs, maintenance and operating costs increase and productivity within the asset decreases.