If you own a building, whether a recent build or a historic structure, it’s important to be aware that there will be long-term costs for maintaining the building. A carefully considered plan for ongoing upkeep is essential. What follows are some key considerations for crafting that plan.
Expect the Unexpected
It would be easy enough to create a long-term maintenance plan for your building using average expense information you find in a quick online search for standards in your area. Unfortunately, those averages often fail to take into account these realities: every building is different and you will encounter unexpected expenses.
Especially if you are also considering renovating or adding to the building, there are many issues that change the calculus – from abatement of hazardous materials or unusual structural attributes hidden behind walls, to having to accommodate changes in technology or upgrading to newer codes. No, you can’t account for all the unknowns in your budget—they are, after all, unknown. But you can develop your plan with plenty of “padding” to help your finances absorb the blow when issues arise.
Find the Right Balance of Initial and Long-Term Costs
Despite advances in this area, no building is truly “maintenance-free.” So, if you are envisioning a new build or renovation, you need to consider how you want to balance the cost of construction and subsequent expenses.
There are two main approaches here. The first is to pay more upfront for higher quality so that you can pay less later in maintenance costs. The second is to invest less upfront, knowing that that will mean your ongoing upkeep expenses will be higher. As you ponder that choice, keep in mind that rebates and incentives for higher-quality structures may help offset the construction costs.
Get Familiar with “Escalation” and “Contingencies”
The phrase “building cost escalation” refers to the expected increase, over time, of the cost of constructing or renovating a building. This figure can come into play if, for example, you build a structure today with the intent of adding a new wing 10 years from now. You should expect that the cost of adding on to the building will be significantly higher in the future.
A “contingency” is an unexpected need. In construction, the term is often applied to a sum of money set aside to cover unexpected costs. It is, essentially, a form of self-insurance. It’s important for owners to talk with other project stakeholders about what short-term and long-term problems might arise and how to be financially prepared for them.
Imagine a Wide Range of Scenarios
Let’s say your initial intent is simply to build a structure to house your business. What other scenarios can you envision down the road? Could your business grow enough that you have to expand the building? Could your business shrink, leaving you wanting to rent out part of the facility? Might your business focus change such that you need to renovate and repurpose certain areas?
How will the answers to all these questions and others affect your finances? The time to think about this is well before you break ground!
How We Assist You in Your Long-Term Budgeting
The key to anticipating future events as best you can is understanding where you are today. To that end, we assist our clients by putting together a detailed Conditions and Needs Assessment report. This type of report covers the multiple disciplines involved in developing a scope of work, including:
- Mechanical, electrical, plumbing, and fire protection
- Site civil and landscaping
This report relies on an up-to-date survey of the site and building. The length of the plan is important as well. Are we talking about five years? Ten years? Twenty years? The forecast window is key.
An Investment in Asset Value
Long-term planning and budgeting are necessary to ensure that facilities are maintained and updated as needed. The payoff for these activities is, of course, that the value of the asset is retained or even enhanced over time.
If you have questions about how we can help you develop your long-term upkeep budget, or about our architectural services in general, please contact us at your convenience.