Pay Now or Pay Later Controlling Cost of Ownership from Design Throughout the Service Life of Public Buildings (1991) / Chapter Skim
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4 Government Facilities and Life-Cycle Costs
4 Government Facilities and Life-Cycle Costs
Pages 23-30
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From page 23... ...
GOVERNMENT POLICIES RECOGNIZING LIFE-CYCLE COSTS AND ANALYSIS The economic principles of discounted cash flow analysis that underlie life-cycle cost analysis have been used in certain areas of government decision making for many years, most notably in the development of large dams and other major capital investment projects.20 Office of Management and Budget (OMB) Circular A-94, issued in 1972, specified the discount rate to be used 20The Bureau of Reclamation and the U.S.
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From page 24... ...
The DOE guidelines are oriented primarily toward actions intended to conserve energy or to enhance use of renewable sources of energy, but the methods described include all nonfuel O&M costs as well as investment costs and salvage values. Higher discount rates are currently applied to nonfuel future costs (in effect giving extra weight to future fuel savings as compared to future operating costs)
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GOVERNMENT POLICIES CONFLICTING WITH LIFE-CYCLE COST CONTROL Some policies and procedures followed by federal agencies actually work against the goals of achieving low life-cycle costs and controlling the costs of ownership throughout a facility's service life. For example, design fees for federal facilities are limited by law26 to no more than 6 percent of the estimated cost of construction.
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their own current expenses, without regard for the concerns of future or prior decision makers.28 The resulting failure to coordinate action to control life-cycle costs is made more severe by a widespread lack of understanding among designers and maintenance personnel of the concerns the others face. The VA, for example, has found that as much as 20 to 30 percent of the operating efficiencies of their technically sophisticated new hospital and research buildings located on older campuses are lost because current maintenance personnel are untrained and unprepared to deal with the new systems.29 Training and documentation of design decisions that influence maintenance practice, of some help in overcoming these problems, are hindered by personnel rotation and designers' lack of sensitivity to the demands for maintenance that new systems may present.
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From page 27... ...
At the same time, work by development economists at the World Bank and elsewhere began to demonstrate convincingly the direct contribution that pavement conditions have on vehicle operating costs and, in turn, on economic efficiency of a region's transportation system. These forces combined to motivate research and development efforts leading to establishment of practical pavement management systems that, after two decades, are now used routinely by many state transportation agencies to monitor highway facilities, assure maintenance effectiveness, and schedule rehabilitation and replacement of pavements (Hudson, Haas, and Pedigo, 1979~.
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From page 28... ...
Two results of research and development activities have been key to the successful development of pavement management systems: · characterization of pavement performance in measurable terms that can be related to economic benefits (e.g., longer pavement life and reduced vehicle operating costs) and · development of reliable analysis tools that relate performance to characteristics of pavement design, maintenance and repair activities, environmental conditions, and service loads (e.g., vehicle types, weights, and numbers)
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From page 29... ...
December. Carlsson, B., 1989, Solar Materials Research and Development: Survey of Service Life Prediction Methods for Materials in Solar Heating and Cooling, Swedish Council for Building Research, Stockholm.
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