Capital expenditure for construction - Revision history

Editor at 11:31, 6 May 2021

2021-05-06T11:31:18Z

← Older revision		Revision as of 11:31, 6 May 2021
Line 46:		Line 46:
	* Cost plans.		* Cost plans.
	* ECA welcomes the Value Toolkit for the construction industry.		* ECA welcomes the Value Toolkit for the construction industry.
		+	* Is hydrogen the heating fuel of the future?
	* Life cycle assessment.		* Life cycle assessment.
	* Net Present Value.		* Net Present Value.

Editor at 10:31, 5 May 2021

2021-05-05T10:31:59Z

← Older revision		Revision as of 10:31, 5 May 2021
Line 37:		Line 37:
	However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.		However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Budget.		* Budget.
Line 47:		Line 45:
	* Construction project funding.		* Construction project funding.
	* Cost plans.		* Cost plans.
		+	* ECA welcomes the Value Toolkit for the construction industry.
	* Life cycle assessment.		* Life cycle assessment.
	* Net Present Value.		* Net Present Value.

Designing Buildings at 07:48, 16 September 2020

2020-09-16T07:48:15Z

← Older revision		Revision as of 07:48, 16 September 2020
Line 55:		Line 55:
	* Whole life costs.		* Whole life costs.

−	[[Category:Cost_/_business_planning]] [[Category:Procurement]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]

Editor at 13:29, 26 February 2018

2018-02-26T13:29:25Z

← Older revision		Revision as of 13:29, 26 February 2018
Line 28:		Line 28:
	This is sometimes demonstrated by a rough assessment of the typical costs of an office building over 30 years, in the ratio:		This is sometimes demonstrated by a rough assessment of the typical costs of an office building over 30 years, in the ratio:

−	* 0.1 to 0.15 for design costs (ref OGC [http://webarchive.nationalarchives.gov.uk/20100503135839/http:/www.ogc.gov.uk/documents/CP0067AEGuide7.pdf Achieving Excellence Guide 7 - Whole-Life costing]).	+	* 0.1 to 0.15 for design costs (ref. OGC [http://webarchive.nationalarchives.gov.uk/20100503135839/http:/www.ogc.gov.uk/documents/CP0067AEGuide7.pdf Achieving Excellence Guide 7 - Whole-Life costing]).
	* 1 for construction costs.		* 1 for construction costs.
	* 5 for maintenance and building operating costs during the lifetime of the building.		* 5 for maintenance and building operating costs during the lifetime of the building.
Line 45:		Line 45:
	* Capital allowances.		* Capital allowances.
	* Capital costs.		* Capital costs.
		+	* Construction project funding.
	* Cost plans.		* Cost plans.
	* Life cycle assessment.		* Life cycle assessment.

Editor at 13:11, 26 February 2018

2018-02-26T13:11:27Z

← Older revision		Revision as of 13:11, 26 February 2018
Line 39:		Line 39:
	= Find out more =		= Find out more =

−	=== Related ~~article~~ on Designing Buildings Wiki ===	+	=== Related articles on Designing Buildings Wiki ===

	* Budget.		* Budget.

Editor at 13:11, 26 February 2018

2018-02-26T13:11:08Z

← Older revision		Revision as of 13:11, 26 February 2018
Line 7:		Line 7:
	* Significantly increase usefulness of the asset.		* Significantly increase usefulness of the asset.

−	Capital expenditure is often distinguished from operational expenditure (OPEX sometimes referred to as 'revenue expenditure'). This is expenditure incurred in day-to-day operations, such as; wages, utilities, maintenance and repairs, rent, sales, general and administrative expenses and so on.	+	Capital expenditure is often distinguished from operational expenditure (OPEX sometimes referred to as 'revenue expenditure'). This is expenditure incurred in day-to-day operations, such as; wages, utilities, maintenance and repairs, rent, sales, general and administrative expenses, and so on.

	In construction, capex and opex can be considered to be associated with separate, distinct stages, with capital expenditure during acquisition and construction, and then a ‘handover’ to operational expenditure when the client takes possession of the completed development.		In construction, capex and opex can be considered to be associated with separate, distinct stages, with capital expenditure during acquisition and construction, and then a ‘handover’ to operational expenditure when the client takes possession of the completed development.

−	Capex and ~~opex~~ can be seen as competing needs, with higher capital expenditure often resulting in lower operational expenditure, as a higher quality asset may have lower maintenance and repair costs, lower utilities costs, and so on. ~~Whilst~~ sometimes the division between capital and operational expenditure can be one of necessity, based on the resources available to the client at the time, it can be the result of an assessment of whole-life costs.	+	Capex and Opex can be seen as competing needs, with higher capital expenditure often resulting in lower operational expenditure, as a higher quality asset may have lower maintenance and repair costs, lower utilities costs, and so on. While sometimes the division between capital and operational expenditure can be one of necessity, based on the resources available to the client at the time, it can be the result of an assessment of whole-life costs.

	Whole life costs consider all costs associated with the life of a building including:		Whole life costs consider all costs associated with the life of a building including:
Line 33:		Line 33:
	* 200 for the cost of operating the business during the lifetime of the building.		* 200 for the cost of operating the business during the lifetime of the building.

−	Ref. Report of the Royal Academy of Engineering on The long term costs of owning and using buildings (1998).	+	(Ref. Report of the Royal Academy of Engineering on The long term costs of owning and using buildings (1998).)

	However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.		However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.
Line 49:		Line 49:
	* Net Present Value.		* Net Present Value.
	* New Rules of Measurement.		* New Rules of Measurement.
−	* Opex ~~(repeats some of the text in this article)~~.	+	* Opex.
	* Value management.		* Value management.
−	* Value.	+	* [[Value\|Value.]]
	* Whole life costs.		* Whole life costs.

	[[Category:Cost_/_business_planning]] [[Category:Procurement]]		[[Category:Cost_/_business_planning]] [[Category:Procurement]]

5.36.110.84 at 04:16, 20 December 2016

2016-12-20T04:16:37Z

← Older revision		Revision as of 04:16, 20 December 2016
Line 1:		Line 1:
−
	Capital expenditure (sometimes abbreviated as Capex, CAPEX or CapEx) is one-off expenditure that results in the acquisition, construction or enhancement of significant fixed assets including land, buildings and equipment that will be of use or benefit for more than one financial year.		Capital expenditure (sometimes abbreviated as Capex, CAPEX or CapEx) is one-off expenditure that results in the acquisition, construction or enhancement of significant fixed assets including land, buildings and equipment that will be of use or benefit for more than one financial year.

	Whilst it is generally relatively straight forward to identify expenditure necessary to acquire or construct fixed assets, distinguishing between enhancements and expenditure such as repairs, maintenance, or replacement can be difficult. Very broadly, enhancements should either:		Whilst it is generally relatively straight forward to identify expenditure necessary to acquire or construct fixed assets, distinguishing between enhancements and expenditure such as repairs, maintenance, or replacement can be difficult. Very broadly, enhancements should either:
−	*Significantly lengthen the life of the asset.	+
−	*Significantly increase the value of the asset.	+	* Significantly lengthen the life of the asset.
−	*Significantly increase usefulness of the asset.	+	* Significantly increase the value of the asset.
		+	* Significantly increase usefulness of the asset.

	Capital expenditure is often distinguished from operational expenditure (OPEX sometimes referred to as 'revenue expenditure'). This is expenditure incurred in day-to-day operations, such as; wages, utilities, maintenance and repairs, rent, sales, general and administrative expenses and so on.		Capital expenditure is often distinguished from operational expenditure (OPEX sometimes referred to as 'revenue expenditure'). This is expenditure incurred in day-to-day operations, such as; wages, utilities, maintenance and repairs, rent, sales, general and administrative expenses and so on.
Line 14:		Line 14:

	Whole life costs consider all costs associated with the life of a building including:		Whole life costs consider all costs associated with the life of a building including:
−	*Acquisition.
−	*Fees
−	*Construction.
−	*Insurance, inflation and financing.
−	*Fixtures, fittings and equipment.
−	*Relocation.
−	*Operation.
−	*Disposal.

−	Whilst it is often tempting to seek savings in the early stages of a project, the relative benefit of this tends to be outweighed by the long-term impact.~~<br/>~~	+	* Acquisition.
		+	* Fees
		+	* Construction.
		+	* Insurance, inflation and financing.
		+	* Fixtures, fittings and equipment.
		+	* Relocation.
		+	* Operation.
		+	* Disposal.
		+
		+	Whilst it is often tempting to seek savings in the early stages of a project, the relative benefit of this tends to be outweighed by the long-term impact.

	This is sometimes demonstrated by a rough assessment of the typical costs of an office building over 30 years, in the ratio:		This is sometimes demonstrated by a rough assessment of the typical costs of an office building over 30 years, in the ratio:
−	*0.1 to 0.15 for design costs (ref OGC [http://webarchive.nationalarchives.gov.uk/20100503135839/http:/www.ogc.gov.uk/documents/CP0067AEGuide7.pdf Achieving Excellence Guide 7 - Whole-Life costing]).	+
−	*1 for construction costs.	+	* 0.1 to 0.15 for design costs (ref OGC [http://webarchive.nationalarchives.gov.uk/20100503135839/http:/www.ogc.gov.uk/documents/CP0067AEGuide7.pdf Achieving Excellence Guide 7 - Whole-Life costing]).
−	*5 for maintenance and building operating costs during the lifetime of the building.	+	* 1 for construction costs.
−	*200 for the cost of operating the business during the lifetime of the building.	+	* 5 for maintenance and building operating costs during the lifetime of the building.
		+	* 200 for the cost of operating the business during the lifetime of the building.

	Ref. Report of the Royal Academy of Engineering on The long term costs of owning and using buildings (1998).		Ref. Report of the Royal Academy of Engineering on The long term costs of owning and using buildings (1998).
Line 38:		Line 40:

	=== Related article on Designing Buildings Wiki ===		=== Related article on Designing Buildings Wiki ===
−	*Budget.
−	*Business plan.
−	*Capital allowances.
−	*Capital costs.
−	*Cost plans.
−	*Life cycle assessment.
−	*Net Present Value.
−	*New Rules of Measurement.
−	*Opex (repeats some of the text in this article).
−	*Value management.
−	*Value.
−	*Whole life costs.

−	[[Category:Cost_/_business_planning]]	+	* Budget.
−	[[Category:Procurement]]	+	* Business plan.
		+	* Capital allowances.
		+	* Capital costs.
		+	* Cost plans.
		+	* Life cycle assessment.
		+	* Net Present Value.
		+	* New Rules of Measurement.
		+	* Opex (repeats some of the text in this article).
		+	* Value management.
		+	* Value.
		+	* Whole life costs.
		+
		+	[[Category:Cost_/_business_planning]] [[Category:Procurement]]

Editor at 12:13, 3 November 2015

2015-11-03T12:13:47Z

← Older revision		Revision as of 12:13, 3 November 2015
Line 44:		Line 44:
	*Cost plans.		*Cost plans.
	*Life cycle assessment.		*Life cycle assessment.
		+	*Net Present Value.
	*New Rules of Measurement.		*New Rules of Measurement.
	*Opex (repeats some of the text in this article).		*Opex (repeats some of the text in this article).

Designing Buildings at 10:07, 27 May 2015

2015-05-27T10:07:37Z

← Older revision		Revision as of 10:07, 27 May 2015
Line 31:		Line 31:
	*200 for the cost of operating the business during the lifetime of the building.		*200 for the cost of operating the business during the lifetime of the building.

−	Ref. ~~[http://www.raeng.org.uk/news/publications/list/reports/The_Long-Term_Costs_of_Buildings.pdf~~ Report of the Royal Academy of Engineering on The long term costs of owning and using buildings] (1998).	+	Ref. Report of the Royal Academy of Engineering on The long term costs of owning and using buildings (1998).

−	However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.	+	However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.

	= Find out more =		= Find out more =

Designing Buildings at 13:55, 1 December 2014

2014-12-01T13:55:58Z

← Older revision		Revision as of 13:55, 1 December 2014
Line 23:		Line 23:
	*Disposal.		*Disposal.

−	Whilst it is often tempting to seek savings in the early stages of a project, the relative benefit of this tends to be outweighed by the long-term impact. <br/>	+	Whilst it is often tempting to seek savings in the early stages of a project, the relative benefit of this tends to be outweighed by the long-term impact.<br/>

	This is sometimes demonstrated by a rough assessment of the typical costs of an office building over 30 years, in the ratio:		This is sometimes demonstrated by a rough assessment of the typical costs of an office building over 30 years, in the ratio:
Line 33:		Line 33:
	Ref. [http://www.raeng.org.uk/news/publications/list/reports/The_Long-Term_Costs_of_Buildings.pdf Report of the Royal Academy of Engineering on The long term costs of owning and using buildings] (1998).		Ref. [http://www.raeng.org.uk/news/publications/list/reports/The_Long-Term_Costs_of_Buildings.pdf Report of the Royal Academy of Engineering on The long term costs of owning and using buildings] (1998).

−	However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs ~~include:~~	+	However, this has been criticised as misleading, not least because the construction industry accounts for around 7% of GDP, implying a much more significant proportion of business costs than the ratio suggests. Other ratios of construction costs to operational costs to business costs have suggested figures as low as 1:0.6:6 for some types of buildings. However, the usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.
−	~~<ul >~~	+
−	~~<li>~~1:1.5:15 for ~~London offices</li>~~	+
−	~~<li>1:0~~.~~8:4.5 for English secondary schools</li>~~	+
−	~~</ul>~~	+
−	~~The~~ usefulness of these ratios is questionable, other than if they are calculated based on actual figures for specific businesses.	+

	= Find out more =		= Find out more =