Strategic Asset Management: Life Cycle Costing Model for Church/Chapel

This report provides a detailed life cycle costing analysis for a 1000 sqm Church/Chapel, outlining the various cost elements involved in the project, including initial construction costs, maintenance, insurance, energy, pest control, security, rates, and management. It includes an elemental capital cost estimate, a 30-year life cycle costing report, and a sinking fund calculation to ensure sufficient funds are available for future replacement. The methodology used for life cycle costing is described, along with key assumptions, replacement strategies, maintenance strategies, administrative costs, and a detailed estimate of energy use. A statistical analysis of the model, including total nominal costs, NPV, cost per square meter, and proportional cost split by building element, is also presented. This document helps in understanding the financial implications and long-term sustainability of the property.

Running head: STRATEGIC ASSET MANAGEMENT
Strategic Asset Management
Name of the Student:
Name of the University:
Authors Note:

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STRATEGIC ASSET MANAGEMENT
Contents
Introduction:....................................................................................................................................2
Description of the building:.............................................................................................................2
Report containing life cycle cost of the property:...........................................................................5
Sinking fund calculation document:................................................................................................6
Methodology used to calculate life cycle costing:.....................................................................11
Assumptions in the model:........................................................................................................12
Strategies applied:......................................................................................................................13
Administrative costs:.................................................................................................................14
Detailed estimate of energy use:................................................................................................14
Spreadsheet model:....................................................................................................................14
Statistical analysis of the model:...................................................................................................15
Conclusion:....................................................................................................................................17
References:....................................................................................................................................18

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STRATEGIC ASSET MANAGEMENT
Introduction:
A detailed report on the life cycle costing of 1000 sqm building for Church /Chapel is provided
to help the readers to identify the different elements of cost in the project. Often while
calculating the cost of a building only the initial cost to complete the building is calculated.
Initial cost of completion is the cost of direct materials, labour, other materials, indirect costs and
other costs. However, a large portion of costs such as maintenance cost of the building over the
life time of the building, insurance cost, energy costs, pest control cost, security cost, rates and
other charges and management costs are equally important to the maintenance of the building
over its life. A detailed calculation of these costs in relation to the above mentioned building
shall be provided at the end of this document as an attachment along with a discussion on
different elements of these costs.
Description of the building:
The building is expected to be 1000 sqm in size and costing $2,375 per sqm to build. Thus, the
estimated total cost to complete the building is $2,375,000. The building is expected to have a 30
year life span provided necessary maintenance and services are provided to the building. The
building will have a relatively large space and will be able to accommodate large number of
people (Berchicci, Dowell and King, 2017).
Elemental capital cost estimate:
As per the standard rates for 1000 sqm church / chapel provided in 12.2.2 in Rawlinsons
document the estimated capital cost in detailed is provided below.
3. REPLACEMENT (MAJOR PERIODIC) COST

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STRATEGIC ASSET MANAGEMENT
Elemental Cost of Building Est Capital Cost
%
Preliminaries 9.6% $228,000
Substructure 5.3% $125,875
Superstructure
Columns 3.1% $73,625
Upper Floors 2.9% $68,875
Staircases 1.6% $38,000
Roof 13.4% $318,250
External
Walls
24.7% $586,625
Windows $0
External
Doors
1.5% $35,625
Internal Walls 1.4% $33,250
Internal
Screens
$0
Internal 0.9% $21,375

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STRATEGIC ASSET MANAGEMENT
Doors
Finishes
Wall 1.8% $42,750
Floor 5.3% $125,875
Ceiling 5.6% $133,000
Fittings
Fitments 9.1% $216,125
Special $0
Services
Plumbing 3.4% $80,750
Mechanical 0.6% $14,250
Fire 0.2% $4,750
Electrical 6.8% $161,500
Transportatio
n
$0
Special $0
External Services 0.3% $7,125
Contingency 2.5% $59,375

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STRATEGIC ASSET MANAGEMENT
TOTAL REPLACEMENT COST 100.0
%
$2,375,000
The above calculation has been made on the basis of the following estimates and percentages as
provided in Rawlinsons. As per the standard costing chart the total cost of building which is in
this case is $2,375,000 is comprised of preliminaries (9.6%), substructure (5.3%), columns
(3.1%), Upper floors (2.9%), staircase (1.6%), roof (13.4%), external walls (24.7%), external
doors (1.5%), internal walls (1.4%), internal doors (0.9%), wall (1.8%), floor (5.3%), ceiling
(5.6%), fitments (9.1%), plumbing services (3.4%), mechanical services (0.6%), fire (0.2%),
electrical (6.8%), external services (0.3%) and contingency (2.5%).
The calculation in the table above has been made on the basis of the above given percentages by
considering the total cost of $2,375,000 for building. The importance of dissecting the different
elements in the overall cost of the building is very crucial as it helps to understand different
elements of cost that required to construct a building of this size and nature (Berchicci, Dowell
and King, 2017).
Report containing life cycle cost of the property:
As already mentioned that often calculation of cost of a building only considers calculation of
initial cost of construction of a building. However, to properly assess the cost of a building it is
important to calculate the life cycle cost of the building to understand actual expected costs of
the building over its useful life. Life cycle cost of a property includes cost of energy, insurance
cost, cleaning charges, pest and infection control costs, security cost, rates and surcharges,

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STRATEGIC ASSET MANAGEMENT
management and other costs necessary to maintain the property (Cho, Kirkewoog and Daim,
2018).
Life cycle costs calculated in the attached spread sheet shows the importance of maintenance and
other annual costs to the building and its functioning. Overlooking these costs will not help in
analysing the actual costs necessary to manage and maintain the building over its useful life.
Thus, life cycle costing is the true costing in every sense as it brings out the cost to be incurred
over the useful life of a property to keep the property in workable condition. The whole purpose
of construction of a property will not be achieved if the property does not provide intended
benefits over its useful life. Hence, calculation of life cycle costing for such properties is very
important for the overall cost and benefit analysis of such properties (Gille, 2010).
Sinking fund calculation document:
Sinking fund is formed to periodically set aside money for repayment of debt gradually or to
replace a wasting asset at the end of its useful life. Thus, the concept of sinking fund is to
provide for the future requirement by making periodical provision each year. In this case the
sinking fund is to make periodical provision to ensure that at the end of the useful life of the
building, i.e. 30 years to be precise, there is enough money in the sinking fund to replace the
building at the end of its useful life with similar building.
Based on the life cycle cost of the property and the initial cost incurred to construct it the sinking
fund calculation is provided below.
7. SINKING FUND (FOR 3.
REPLACEMENT MAJOR
1 2 3 4 5

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STRATEGIC ASSET MANAGEMENT
PERIODIC COST)
Sinking Fund Payment $226,691 $226,691 $226,691 $226,691 $226,691
Interest $0 $9,068 $18,498 $28,306 $38,505
Annual Deposit $226,691 $235,758 $245,189 $254,996 $265,196
Reserve $226,691 $462,449 $707,638 $962,634 $1,227,8
30
Drawdown (from Inflated
Replacement Cost)
$0 $0 $0 $0 $0
Balance $226,691 $462,449 $707,638 $962,634 $1,227,8
30
PV $215,896 $205,615 $195,824 $186,499 $177,618
7. SINKING
FUND (FOR 3.
REPLACEMENT
MAJOR
PERIODIC COST)
6 7 8 9 10
Sinking Fund
Payment
$226,691 $226,691 $226,691 $226,691 $226,691

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STRATEGIC ASSET MANAGEMENT
Interest $49,113 $60,145 $71,619 $80,391 $92,675
Annual Deposit $275,804 $286,836 $298,310 $307,082 $319,365
Reserve $1,503,634 $1,790,471 $2,088,780 $2,316,864 $2,636,229
Drawdown (from
Inflated
Replacement Cost)
$0 $0 $78,998 $0 $224,975
Balance $1,503,634 $1,790,471 $2,009,782 $2,316,864 $2,411,254
PV $169,160 $161,105 $153,433 $146,127 $139,168
7. SINKING
FUND (FOR 3.
REPLACEMENT
MAJOR
PERIODIC
COST)
11 12 13 14 15
Sinking Fund
Payment
$226,691 $226,691 $226,691 $226,691 $226,691
Interest $96,450 $109,376 $116,047 $129,756 $144,014

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STRATEGIC ASSET MANAGEMENT
Annual
Deposit
$323,141 $336,067 $342,738 $356,447 $370,705
Reserve $2,734,39
5
$3,070,462 $3,243,91
2
$3,600,359 $3,971,064
Drawdown (from
Inflated
Replacement
Cost)
$0 $169,288 $0 $0 $0
Balance $2,734,39
5
$2,901,174 $3,243,91
2
$3,600,359 $3,971,064
PV $132,541 $126,230 $120,219 $114,494 $109,042
7. SINKING
FUND (FOR 3.
REPLACEMENT
MAJOR
PERIODIC
COST)
16 17 18 19 20
Sinking Fund
Payment
$226,691 $226,691 $226,691 $226,691 $226,691

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STRATEGIC ASSET MANAGEMENT
Interest $158,843 $170,414 $186,298 $202,818 $219,998
Annual
Deposit
$385,533 $397,105 $412,989 $429,508 $446,689
Reserve $4,356,59
8
$4,657,451 $5,070,43
9
$5,499,948 $5,946,636
Drawdown (from
Inflated
Replacement
Cost)
$96,252 $0 $0 $0 $719,967
Balance $4,260,34
6
$4,657,451 $5,070,43
9
$5,499,948 $5,226,669
PV $103,850 $98,904 $94,195 $89,709 $85,437
7. SINKING
FUND (FOR 3.
REPLACEMENT
MAJOR
PERIODIC
COST)
21 22 23 24 25
Sinking Fund $226,691 $226,691 $226,691 $226,691 $226,691

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STRATEGIC ASSET MANAGEMENT
Payment
Interest $209,067 $226,497 $232,506 $250,873 $256,178
Annual
Deposit
$435,758 $453,188 $459,196 $477,564 $482,869
Reserve $5,662,42
7
$6,115,615 $6,271,83
6
$6,749,400 $6,887,323
Drawdown (from
Inflated
Replacement
Cost)
$0 $302,975 $0 $344,947 $19,154
Balance $5,662,42
7
$5,812,640 $6,271,83
6
$6,404,454 $6,868,169
PV $81,369 $77,494 $73,804 $70,290 $66,942
7. SINKING
FUND (FOR 3.
REPLACEMENT
MAJOR
PERIODIC
COST)
26 27 28 29 30
Sinking Fund $226,691 $226,691 $226,691 $226,691 $226,691