Q&A: The Total Cost of Ownership

Andrew Arnold, Director of DPR Consulting, uses his 25 years of industry and software development experience to help DPR customers establish virtual design and construction strategies.
Andrew Arnold, Director of DPR Consulting, uses his 25 years of industry and software development experience to help DPR customers establish virtual design and construction strategies.

DPR’s Andrew Arnold has more than 25 years of experience with product design and management, product and process modeling for AEC software and implementing lean construction, BIM and integrated project delivery strategies and practices. Arnold sees the big picture when it comes to the cost of building and managing a facility. He shares his insights on the total cost of ownership, and how owners can begin to tap into vast cost savings.

How do you define the “total cost of ownership”?
Total cost of ownership is the cost of designing and constructing a building combined with the cost of operating the building. A building’s design and construction cost is only 10 percent of the cost over the life of a building. The operation cost, which includes regular service and preventive maintenance for building systems, ongoing repairs, consumables and energy consumption, is 90 percent.

Another often overlooked cost of any building is the kind of work environment it provides. A high-quality work environment makes it easier to recruit and retain talented people. Conversely, a poor environment will result in unhappy employees who don’t stay long and aren’t productive. For example, an outdated, badly laid out hospital won’t attract top surgeons who could have the latest technology somewhere else, and won’t retain nurses who must walk three miles a day just to do their jobs. A building like that creates a major cost to the business that is hard to quantify; however, businesses are beginning to recognize that occupant satisfaction is a strategic competitive factor.

How does BIM help with reducing operations and maintenance costs?
BIM provides an intuitive way to access accurate information quickly. A facilities manager can click on a valve in a model, get a clear picture of its accessibility and instant information about it without having to search through maintenance manuals. Dr. Paul Teicholz, professor emeritus at Stanford University and founding director of the Center for Integrated Facility Engineering (CIFE), estimates that the value of integrated information flow from BIM to operations for a 400,000-sq.-ft. office building is 10 cents per square foot annually, with less than a two-year return on investment. That may be even higher for a facility like a hospital.

What data yields the biggest benefits for reducing operations and maintenance costs?
The minimum database should include location, identification, classification, and manufacturer, make and serial number:

  • Location: The lowest hanging fruit is where a piece of equipment is located by the area or room it serves.
  • Identification: There may be more than one product in a room, so when a facilities engineer gets a work order to fix a light fixture, it’s important that the engineer can quickly and easily identify which one.
  • Classification: The type of product, whether it’s a light fixture or an outlet, needs to be classified. Standard classification codes have not been adopted consistently.
  • Specification: The manufacturer, make, and serial number of equipment and systems allow you to link elements in the model to actual product and commissioning information. This means that a facility manager could actually order needed parts by referencing the model.

Why isn’t this data being captured?
Typically, information that a project team develops to build a building is transferred to the owner in documents, such as product cut sheets. But the data we use for construction isn’t necessarily useful for operations. If the owner’s operations and management teams are involved early in design, we can ensure that the data they need to run the building more effectively is baked into the model from the very beginning.

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