ARCHIVE - 5. Lifecycle maintenance cost assumptions

5.1 Sources

The review of the lifecycle maintenance costs assumptions was supported by the information provided by CSC (names are those provided on the documentation received):

• Panel Review. Lifecycle Costs. Summary. This document included the capital, operating and maintenance and lifecycle costs associated with the status quo versus the new model.

5.2 Key Assumptions

CSC's typical levels of lifecycle costs are from 1% to 1.2% of the replacement of the facility, which is recognized to be an insufficient amount to maintain the facility. The key assumptions associated with the lifecycle costs are as follows:

• CSC has assumed 2% per year applied for new facilities, new construction or major redevelopments;
• CSC has assumed 1% per year is applied in a year that a major development has been initiated;
• CSC has assumed 4% per year is applied for existing institutions where the facility has gone beyond it estimated useful life and the facility is slated for closure;
• All options compared by CSC are assumed to have comparable life expectancies;
• Lifecycle is assumed to be the period of 2008 to 2040; and
• All projects are assumed to start at the same time.

Although no support from CSC was provided for these assumptions, the actual lifecycle costs were used to inform the estimate. Any further analysis should consider the quantum of lifecycle costs based on a best practice approach to asset maintenance and replacement as well as frequency of major expenditures, e.g. roof maintenance. This information can be gleaned from the experience in other jurisdictions or by engaging an independent cost consultant.

Lifecycle expenditures are highly dependent upon the type of asset and the delivery model that is employed to implement the assets. For example, P3s typically have lower aggregate lifecycle expenditures resulting from the private sector's financial interest in maintaining the asset. Thus, it would be best to compare CSC's estimates to similar projects procured in similar ways.⁴

For facilities that are well maintained, Figure 5.1 illustrates how the lifecycle costs would be distributed over the life of the facility (assuming an asset life of 30 years). This shows that a minimal amount of expense is likely be spent in the early years of the life of the facility. The annual expense slowly climbs until peaking in years 21-25.

Figure 5.1 Schedule of lifecycle costs for Hospital Assets under a P3

Thus, it may be inferred that for CSC's new build estimates, improvements to the estimated timing of the lifecycle maintenance may be possible.

⁴ This would be a natural comparison to data available from the Federal Bureau of Prisons

Date modified:

2015-12-02