Operational expenditure for built assets - Revision history

Designing Buildings at 06:54, 12 October 2020

2020-10-12T06:54:32Z

← Older revision		Revision as of 06:54, 12 October 2020
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	* 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 13:30, 26 February 2018

2018-02-26T13:30:36Z

← Older revision		Revision as of 13:30, 26 February 2018
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−
	Operational expenditure (opex, sometimes referred to as revenue expenditure) is expenditure incurred as a result of the day-to-day operations of a business. Operational expenditure might include expenditure such as; wages, utilities costs, maintenance and repairs, rent, sales, general and administrative expenses.		Operational expenditure (opex, sometimes referred to as revenue expenditure) is expenditure incurred as a result of the day-to-day operations of a business. Operational expenditure might include expenditure such as; wages, utilities costs, maintenance and repairs, rent, sales, general and administrative expenses.

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	Whilst it is generally relatively straight forward to identify expenditure to acquire or construct fixed assets, distinguishing between enhancements and operational 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 to acquire or construct fixed assets, distinguishing between enhancements and operational 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.

	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.
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	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.
−	*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).	+	* 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.
		+	* 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).)

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

−	[[Category:Cost_/_business_planning]]	+	* Budget.
−	[[Category:Procurement]]	+	* Business plan.
		+	* Capex.
		+	* Capital costs.
		+	* Construction project funding.
		+	* Cost plans.
		+	* Facilities manager.
		+	* Life cycle assessment.
		+	* Net Present Value.
		+	* New Rules of Measurement.
		+	* Value management.
		+	* Whole life costs.
		+
		+	[[Category:Cost_/_business_planning]] [[Category:Procurement]]

Editor at 12:17, 3 November 2015

2015-11-03T12:17:25Z

← Older revision		Revision as of 12:17, 3 November 2015
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	*Facilities manager.		*Facilities manager.
	*Life cycle assessment.		*Life cycle assessment.
		+	*Net Present Value.
	*New Rules of Measurement.		*New Rules of Measurement.
	*Value management.		*Value management.

Designing Buildings at 14:58, 15 October 2015

2015-10-15T14:58:25Z

← Older revision		Revision as of 14:58, 15 October 2015
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	*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.

Designing Buildings at 07:58, 17 March 2015

2015-03-17T07:58:28Z

← Older revision		Revision as of 07:58, 17 March 2015
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	= Find out more =		= Find out more =

−	=== Related ~~article~~ on Designing Buildings Wiki ===	+	=== Related articles on Designing Buildings Wiki ===
	*Budget.		*Budget.
	*Business plan.		*Business plan.

Designing Buildings: moved Operational expenditure to Operational expenditure for built assets

2015-03-17T07:58:03Z

moved Operational expenditure to Operational expenditure for built assets

← Older revision

Revision as of 07:58, 17 March 2015

Designing Buildings at 13:52, 1 December 2014

2014-12-01T13:52:42Z

← Older revision		Revision as of 13:52, 1 December 2014
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	*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:
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	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 =

Designing Buildings at 13:41, 1 December 2014

2014-12-01T13:41:07Z

← Older revision		Revision as of 13:41, 1 December 2014
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	*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. This is demonstrated ~~clearly~~ by a rough assessment of the typical costs of an office building over 30 years, ~~which are~~ in the ratio:	+	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:
	*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.
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	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:
		+	<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 =

Designing Buildings at 07:25, 7 June 2014

2014-06-07T07:25:41Z

← Older revision		Revision as of 07:25, 7 June 2014
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	*Capital costs.		*Capital costs.
	*Cost plans.		*Cost plans.
		+	*Facilities manager.
	*Life cycle assessment.		*Life cycle assessment.
	*New Rules of Measurement.		*New Rules of Measurement.

Designing Buildings at 09:11, 2 May 2014

2014-05-02T09:11:44Z

← Older revision		Revision as of 09:11, 2 May 2014
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	*Significantly increase usefulness of the asset.		*Significantly increase usefulness of the asset.

−	In construction, capex and opex can be considered to be associated 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 based on 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. 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 based on an assessment of whole-life costs