What Does Your Building Really Cost?

If you construct a building that your company or organization will occupy, the total cost of ownership over the life of the building will far outweigh your initial costs for design.

Items to consider when computing the total cost of ownership include:

• Design fees and project soft costs – what you pay architects, engineers along with permits, inspections, testing, etc.
• Construction cost 
• Cost of financing
• Annual operating expenses -- energy costs, annual maintenance, insurance and custodial cost
• Maintenance reserves – money set aside for planned and preventive tasks whose cycle exceeds one year
• Systems upgrades – the cost of replacing/ renovating major building systems at least once over the life of a building

An Example

Working from our experience and information available at www.ifma.org  and www.asumag.com  (to name just two of many sources) we’ll look at the design and construction a 50,000 square foot classroom building that is planned to have a 30-year life span. We’ll assume a construction cost of $160/ square foot and design fees of 6%. 60% of the cost for construction will be financed at a rate of 6% and annual operations will cost $5/ square foot. Lastly, money set aside and used for maintenance reserves and systems replacement will each cost almost half of the initial cost of the building. The result looks something like this: 

There are established methodologies for determining total cost of ownership. These methodologies consider numerous additional details and variables, but the primary lesson is that the real value of your investment in the design and planning of your facility is not the cost in design fees, but what the team can save you over the life of the building. In our example, if the architects and engineers lower your cost of ownership by 1%, they will have paid for half their fee. Blue Ridge Architects can walk you through the total cost of ownership for your next project.