Private finance initiative service suppliers bidding to deliver services to facilities over 15, 20 or 25 years have realised that crude estimates of occupancy costs could seriously affect their profits. Occupancy costs over this type of timescale are likely to be five to 10 times greater than the capital cost.
In addition, there is increasing awareness that good facilities management advice in the early stages of the design process can significantly affect the whole-life costs of a development. Seemingly harmless design decisions, such as plant accessibility or simply the number of entrances and receptions, can have a considerable impact on costs when facilities management implications are taken into account.
The combination of early advice from an occupant's perspective and reliable cost data can significantly influence the affordability of many PFI schemes. The new breed of service providers are having to learn this lesson, and enlightened commercial developers are taking the concept on board in order to maximise their investment by providing best-value options that closely meet their customers' requirements.
The development of value engineering and the Latham and Egan reports' call for greater efficiency and better value for money have also had an impact.
In the following cost models, whole-life costs are given for three typical office buildings of varying sizes, and one case study in London. Capital costs are considered alongside occupancy costs ranging from security and cleaning to running a post room. A detailed breakdown of services provided is also given.
Model buildings
The whole-life costs of three model buildings are analysed below.
The 40 000 ft2 building is a typical two-storey building; the 100 000 ft2 has three storeys. Both are medium quality, out-of-town, business-park office developments, with car parking and landscaping.
The 200 000 ft2 building is a blue-chip, owner-occupier headquarters. Similar buildings would reflect variations in cost for labour and material rates, geographic location, security risks and threats, and site accessibility.
Specification in brief
40 000 ft2 and 100 000 ft2 buildings: steel-frame, cavity wall construction, double- glazing, pitched roof, lifts, four pipe fan-coil air-conditioning system to office areas, fire alarm.
200 000 ft2 building: multistorey, steel frame, glass and metal cladding, double-glazing, flat roofs, lifts, four-pipe fan-coil air-conditioning system to office areas, fire alarm, glass atrium and superior finishes to reception areas. For more detailed specifications, see pages 70-71.
Capital costs
These include internal finishes, mechanical and electrical installations, site works and fees (planning and building control only). They exclude land costs, legal charges, abnormal ground and level conditions, VAT and other taxes, furniture and loose fittings.
Occupancy costs
These have been estimated over 25 years at today's prices with finance charges at a real rate of 4%. They include planned and reactive maintenance to the M&E installation and building fabric, maintenance of hard and soft landscaping, cleaning of all areas, monthly window cleaning, 24-hour security guarding and reception services, post-room services, porterage, a full-time facilities manager and assistant during normal office hours, a 60% occupants per annum churn rate with a proportion of moves needing significant reconfiguration, and operational hours of 8am-6pm. They exclude insurance, rates, major refurbishments (for normal wear and tear only), IT provision (PC servers and printers), consumables used in the normal course of business (stationery, postage, telephone and so on). The table gives more details. Cost per ft2 has been used as it is consistent with the compilation of service charges.
Rent has been excluded. However, finance charges are included, reflecting the funding of the building's construction.
An occupier under a full repairing lease will need to make an adjustment to reflect the higher rent payable.
Model buildings
Cost commentary
Many of the components that make up occupancy costs have been subject to modest increases for a number of years, with increasing market competition and productivity gains offsetting rising wage rates. However, what has been seen is the spiralling impact of change within organisations, particularly in the more dynamic business sectors such as financial services and telecoms. In the context of whole-life costs, this has manifested itself in the reconfiguration of the workspace. The cost per person per move of churn (internal moves) can range from £50 to £3000 depending on the nature of the move and the flexibility of the workplace.
Other developments include unmanned security. The availability of more electronic and unmanned security features, such as remote control cameras and alarms, has enabled the whole-life costs of this element to be reduced in recent years, despite heightened security risks.
Window cleaning on the model buildings is within a reasonable band allowing for cleaning with cables and a cradle. This element is often held hostage to a "good design" that results in inaccessible windows that can only be cleaned by dangerous – and therefore expensive – methods. The model allows mean occupancy costs to be viewed in the context of other costs together with the initial capital investment.
Case study: Friars Bridge Court, London The table below compares the whole-life costs of the 100 000 ft2 model building with those of an actual building, Friars Bridge Court in Blackfriars Road, Waterloo, London SE1. Friars Bridge Court is a modern, multi-tenanted, metal- and glass-clad building broadly in line with the 100 000 ft2 model building, based in London.
Built in 1991, it has eight floors of office accommodation, a basement, a ground-floor reception and plant room. The building is served by two service cores, two main fire escapes and five passenger lifts.
The head lease belongs to British Rail Board and has been managed by FBA for four years. Since 1991, the building has been occupied by the same six tenants. Initially, these all came under the British Rail banner, but, since privatisation in 1996, they have operated as separate companies and have taken up three-year leases. They occupy the following space:
- Racal Telecom, a railway communications company: half of the first floor.
- Thameslink Rail, a train operating company: half of the first floor.
- Thameslink 2000, a Railtrack major project: floor two and half of the eighth floor.
- Connex South Eastern, a train operating company: floors three, four and five.
- South West Trains, a train operating company: floors six and seven.
- Railtrack Southern, a control centre for the track: part of floor five.
The FBA facilities management team consists of one facilities manager and one assistant, and the following contract staff: two handymen, one electrician, two security officers, two janitors, 24 cleaning staff and 10 catering staff.
Detailed specification for 40 000 and 100 000 ft2 buildings
Foundations
Reinforced concrete foundations
Ground-floor slabs
Reinforced concrete floor slabs. Power floated finish
First, second and plant room floor slabs
Precast concrete planks with structural topping or insitu concrete on permanent formwork. First, second and plant room floor slabs give one-hour fire resistance
Structure
Internal steel frame, generally on a 6 and 7.5 × 6 m grid, supporting upper floors, roof framing and plant room floor slabs
External walls
Cavity wall construction up to sill level. Outer skin of facing brickwork, inner skin of blockwork with rigid extruded polystyrene cavity insulation. Reconstructed stone to window sills and heads
Windows and doors
Sealed unit double glazing with clear glass in polyester powder-coated aluminium frames
Roof
Resin-bonded reconstituted slates on timber battens, insulation and timber trussed rafters. Polyester powder-coated aluminium gutters and external downpipes
Stairs
Reception stairs precast concrete with screeded landings. Balustrades in coated tubular steel, hardwood handrails
Internal partitions
All partitions in concrete block
Ceiling
Suspended ceiling system comprising 600 × 600 mm mineral fibre ceiling tiles
Internal joinery
Hardwood veneer, flush-lipped solid core doors. Polished aluminium ironmongery. Hardwood skirtings, sill boards, door linings and architraves
Lifts
Electrically operated eight-person hydraulic lifts with stainless steel doors, surround and control panels
Sanitary fittings
White vitreous WCs and wash basins
Floor finishes
Medium-grade metal-faced full access flooring (250 mm overall floor zone) to office and corridor areas. Carpet finish high quality
Wall finishes
Plaster finishes or plasterboard drylining with joints taped and filled to general areas. One mist and two full coats of emulsion
Power
Wiring to and installing of three compartment floor boxes at a rate of 1 box/10 m2 net floor area and busbar power distribution system Lighting Based on 1994 CIBSE Guide for Offices at 450 lux at 0.75 m using 600 × 600 mm recessed modular fluorescent luminaries. The lighting scheme is based on open -plan offices
Heating
Gas-fired boiler in each plant room provides low pressure hot water for heating
Above-ground drainage
PVC soil vent waste pipework
Ventilation
Air-conditioning of office area using a VAV system with fresh air supplied via ducted system.
WCs A roof void mounted, packaged twin-fan extract unit
Hot and cold water services Hot water to basins provided by central storage heaters, other hot and cold water services as suitable
Below-ground drainage
Flexible, jointed, vitrified clay or concrete pipework
External works
Includes access road, plot road and parking aisles. Concrete block paviours to all roads. Bitumen macadam to individual car bays. Footpath finished in concrete block paviours. Full landscaping. External irrigation system. External car park lighting
Detailed specification for 200 000 ft2 building
Foundations
Piled foundations and reinforced concrete ground beams, basement car park
Ground-floor slabs
Reinforced concrete floor slabs. Power floated finish
First, second and plant room floor slabs
Precast concrete planks with structural topping or insitu concrete on permanent formwork. First, second and plant room floor slabs give one-hour fire resistance
Structure
Internal steel frame, generally on a 6 and 7.5 × 6 m grid, supporting upper floors, roof framing and plant room floor slabs
External walls
Reconstructed stonework panels with aluminium-framed curtain-walling system
Windows and doors
Sealed unit double glazing with clear glass in polyester powder-coated aluminium frames
Roof
Flat roof construction comprising single-ply membrane on insulation
Stairs
Stairs precast concrete with screeded landings. Balustrades generally tubular stainless steel with hardwood handrails
Internal partitions
All partitions in concrete blockwork to core areas
Ceiling
Suspended ceiling system comprising 600 × 600 mm metal ceiling tiles
Internal joinery
Hardwood veneer, flush-lipped, solid core doors. Polished aluminium ironmongery. Hardwood skirtings, sill boards, door linings and architraves
Lifts
Glazed feature lifts to main entrance area. Electrically operated eight-person hydraulic lifts with stainless steel doors
Sanitary fittings
White vitreous WCs and hand basins
Floor finishes
Medium-grade metal-faced full access flooring (250 mm overall floor zone) to office and corridor areas. Carpet finish high-quality. Reception areas to comprise high-quality ceramic tile finish
Wall finishes
Plaster finishes or plasterboard drylining with joints taped and filled to general areas. One mist and two full coats of emulsion
Power
Wiring to and installing of three compartment floor boxes at a rate of 1 box/10 m2 net floor area and busbar power distribution system
Lighting
Based on the 1994 CIBSE Guide for Offices at 450 lux at 0.75 m using 600 × 600 mm recessed modular fluorescent luminaries
Heating
Gas-fired boiler in each plant room provides low-pressure hot water for the heating
Above-ground drainage
PVC soil vent waste pipework
Ventilation
Air-conditioning of office area using a VAV system with fresh air supplied via ducted system
WCs
A roof void mounted, packaged twin-fan extract unit Remaining specifications as for 40 000 ft2 and 100 000 ft2 buildings
