School-building is booming, thanks to the PFI – and firms now have to build with best value rather than lowest price in mind. Peter Mayer of Building Performance demonstrates how to cost a school's whole life

Much of the current wave of school-building and refurbishment is being funded by PFI and PPP contracts. Nearly 100 such contracts have been signed by the DfES across all education sectors, with a capital value of nearly £2bn. As these procurement models typically last 25 to 30 years, contractors are motivated to consider whole-life costs. For example, PFI and PPP contracts require a lifecycle maintenance reserve fund.
Whole-life costing provides a means of prioritising new work and maintenance strategies in many schools that have historically suffered from a chronic lack of maintenance. Victorian buildings tend to have hard internal surface finishes, which are noisy, and schools built in the 50s and 60s often have single-glazed facades, resulting in excessive energy costs and external noise. Another problem is that classroom, ancillary and access spaces do not always meet the needs of the disabled pupils and the wider community or the requirements of modern teaching methods. A choice needs to be made to improve existing buildings or demolish and build new blocks. The whole-life costing process helps to clarify the decision.
PFI and PPP contracts include non-availability clauses that may impose severe financial penalties on consortiums running the schools if, say, a maintenance problem leads to a classroom being unavailable for use. So choices about a roof finish should not just be considered in terms of installation and maintenance costs – the whole-life costs would take into account the risk of a roof leak, the cost of repairs and the associated cost penalty. Components and materials for schools should be selected with limited maintenance and replacement periods in mind.
Works to schools are generally scheduled in holidays. This may be further complicated where school buildings also have a community or commercial use whereby the school earns a letting income during non-education periods. Whole-life performance assessments enable management of component choice and space management in this context – so, for example, a specifier may need to choose components that can be maintained without disruption to building users.

<B>Two approaches to whole-life costing</b>
Initial costs are no longer the overriding factor in specifying buildings or components for schools. Costs and incomes throughout the life of the building are taken into consideration to define best value for a given time period.
A useful starting point for whole-life costs is the BRE (Digest 452) definition, which says that whole-life costs are "the systematic consideration of all relevant costs and revenues associated with the acquisition, use and maintenance and disposal of an asset."
Whole-life costing may be carried out as a "top-down" approach, taking a strategic view of the whole building and then later breaking the single cost down into smaller components. The alternative "bottom-up" approach looks at the costs of all the detailed components and then adds them up for the final whole-life cost. Schools offer fertile ground for using these two approaches in comparing component and building options.

<B>Using strategic whole-life costing</b>
On a strategic level, information from a whole-life cost assessment should provide a cost profile for a given period. It is important to be clear about which costs are involved. Typically they include planned maintenance, responsive maintenance, and possibly improvements and utility costs. It is useful to consider these costs in relation to capital costs for new build projects or in the case of existing buildings in relation to refurbishment costs. The whole-life costs give a measure of benefit or liabilities associated with a given building solution.
Life cycle costs at this level are often expressed as £/m2/year or cost per pupil per year for a complete school. The information is often based on historic data on the likely maintenance costs for different types of school and is useful when taking a "top-down" approach.
The benefits of this approach is that a whole-life cost value can be arrived at quickly. A single cost for a given school is readily understandable and financial models can easily be constructed to take into account future costs. However, a major disadvantage is that these strategic measures can vary enormously; often by more than 100% when published cost data is consulted. Whole-life costs vary with many factors including the type of school, the age of the school, the area, the buildings comprising the school and the components that make up the buildings.
Another shortcoming of "top-down" whole-life costing is that there is lack of detailed data to answer specific questions such as "will floor finish A offer a better whole-life cost outcome than floor finish B?"
Component choices and design option appraisals rely on detailed whole-life cost assessments, which are based on components, quantities, service lives, energy usage and maintenance regimes as a minimum.

<B>Detailed cost appraisals</b>
Detailed whole-life cost appraisals take time, relying on processing a considerable set of data and presenting it in an unambiguous format to enable realistic comparisons. The advancement of spreadsheets and databases allows number-crunching and reporting to be carried out efficiently.
To achieve best value outcomes, whole-life performance needs to be an integral part of the complete design and decision-making process. This includes strategic option appraisal, informing the detailed specification of materials and components. Finally, a comprehensive whole-life cost plan, based on the bill of quantities for new-build, or a detailed survey of existing buildings should be produced.
The whole-life cost plan should identify components, quantity and location. The plan can be generated by working out component replacement frequency, maintenance costs and energy bills as appropriate.

<B>Charting the whole-life cost options </b>
Any whole-life cost appraisal comparing two or more options must chart the financial outcomes of each set of options based on the initial and final costs for a given time period (see graph, previous page).
So for example, cost option A may involve a greater capital outlay than option B but, after 30 years of repairs, maintenance and energy bills, would end up being cheaper than B, which is expensive to maintain. Or there might be an option C that needs fairly low capital outlay, but careful specification means that the rate of cost increase is less than B, so it ends up being as cheap as A over the life of the PFI contract. This may be the preferred option for those companies that require best value but don't have the initial capital to go for option A.

<B>Detailed whole-life cost examples</b>
A school comprises hundreds if not thousands of components and assemblies, all open to whole-life cost appraisals. In practice detailed whole-life cost information serves several purposes:

  • A whole life appraisal for the complete building provides the single figure whole-life cost as in a "top-down" approach with the benefit of applying specifically to the building and components as planned or existing. An example of a cost profile for a new-build school is illustrated in the bar chart below. Peak whole-life costs are spread over 15-20 years as this is the typical component replacement period. Detailed analysis of the spread of these costs would could allow the use of alternative components to reduce the whole-life costs, or at least to more evenly spread the costs throughout the lifetime of the building.
  • The complete whole-life cost plan also provides the basis of the maintenance plan for the school. Underlying each of the columns in the graph above are the combined costs of component replacements and maintenance activities. Using a database this information can be extracted to produce maintenance plans by room, element, building, component or trade as fits the budget or maintenance procurement policy.
  • The whole-life cost model provides the financial framework within which to make provision for future expenditure.
  • The same framework provides a benchmark to measure actual performance of components. If some components are performing better than anticipated maintenance and replacement may be deferred.
<B>Levels of option appraisals</b>
Option appraisals can be made at a variety of levels, by:
  • individual components (for example, lamps or floor coverings)
  • assemblies (for example, windows or boilers), elements (for example, roof types)
  • functional spaces (for example, gymnasium, science laboratories or lecture theatre)
  • buildings (for example, prefabricated classroom block or cavity brick wall and trussed rafter option).
Considerable cost benefits can be realised when calculated over a 25- or 30-year time frame – particularly with services components where energy costs are included in the cost appraisal.

Further information

Building Performance Group has developed and uses an expert software tool to calculate whole-life costs, payback appraisals, compare component options and maintenance strategies and carry out value engineering.

For further information on whole life performance contact Peter Mayer, email: p.mayer@bpg–