When considering the costs of a property, many developers increasingly focus on reducing construction costs. But does focusing solely on reducing construction costs always make sense? This question isn’t primarily about installing a food center, wok, and steamer in the kitchen, or shower-toilet units, whirlpool bathtubs, and fine marble in the bathrooms; it’s about an economic analysis of the total costs over the entire life cycle of the property. Depending on the type of building and the general terms and conditions, the subsequent operating and usage costs are considerably higher than the construction costs. Maintenance costs are often underestimated. But we’re quickly talking about costs that are five to ten times higher than those incurred during construction.
Therefore, it is essential to develop an overall strategy for the property. This includes a strategy for construction or renovation, as well as a strategy for the operation and maintenance of the property. There are several strategies for reducing construction costs without compromising the quality of a construction project. However, a balance between construction and operating costs should be sought. Higher construction costs can be offset by lower operating costs, which is more economical in the long run. Here are some tips:
1. Detailed planning
Thorough and detailed planning can help avoid unexpected costs. This includes allowing sufficient time for architectural planning and building permits. A cost-benefit analysis of the various materials and construction methods should also be conducted, taking into account manufacturing and labor costs, as well as the durability of the materials.
2. Choice of material
To reduce transport costs, it makes sense to use local materials, i.e., materials available in Switzerland. The choice should be high-quality, durable materials that meet your requirements both aesthetically and functionally. Depending on the application and where technical requirements are met (circular economy), recycled or renewable building materials can also be used. The costs of recycled building materials can vary, but they are often competitive or even cheaper than new materials. The use of recycled materials reduces the need for primary raw materials and protects the environment. This can lead to long-term cost savings.
3. Energy efficiency
The energy efficiency of a building plays a crucial role in downstream operating costs. While good insulation, such as a thermal insulation composite system for the facade and roof, and triple-glazed windows, may result in higher construction costs, they drastically reduce heating costs. The use of energy-efficient technology should not be underestimated. Investments in modern heating systems, such as heat pumps or solar panels, entail higher initial costs but can reduce energy costs in the long term.
4. Operating costs
When operating the property, regular expenses arise for energy and water costs, common costs such as elevators, cleaning, gardening, maintenance, garbage collection, etc., insurance, taxes, administrative costs and repairs or replacement of parts.
The basic principle here is: Plan for the costs of regular maintenance to avoid major repairs. Keeping a detailed list of all ongoing costs helps you get an overview of the major items and identify potential savings.
5. Life cycle cost analysis
A life cycle cost analysis helps consider the total costs of a property over its entire useful life. This analysis considers both construction and operating costs and highlights where higher initial investments can lead to long-term savings. Investments in sustainable construction methods and energy-efficient technologies can not only reduce operating costs but also increase the value of the property and provide benefits for future sales or rentals.
Life cycle cost analysis also includes planning for future operating and maintenance costs. Materials with a longer lifespan and lower maintenance requirements may result in higher construction costs, but they reduce ongoing operating costs over their lifetime.
Curiously, it’s been observed in various projects that the initial generous investment in planning and execution is contradicted by the meagerness of future operating expenses for maintenance. This ultimately only results in short-term cost savings. In the long run, poor maintenance consumes many times the cost of repairs or replacements.
The entire life cycle should be considered. For example, a green façade has a variety of effects. It reduces the building’s heating, the plants filter dust, and bind harmful carbon dioxide. At the same time, they release valuable oxygen. But for insects and birds, they provide a haven and a place of refuge. In addition, the green façade requires relatively complex management, including watering, pruning, and the removal of dead plant matter. The maintenance effort varies depending on the type of greenery and the choice of plants. Good accessibility to all green areas is also important to ensure effective maintenance. This always requires the use of mobile work platforms. When making a decision, the cost and return should be analyzed, as well as the importance of each for the property at the location.
Conclusion
As a developer, you should strive for a balance between construction and operating costs. Higher construction costs can be offset by lower operating costs, which is more cost-effective in the long run. Detailed and holistic planning, close collaboration between all stakeholders, and a constant focus on the impact of every decision are the pillars of success.
In our age of relentless and rapid development, it is essential to seek innovative solutions across the entire life cycle. A well-developed life cycle cost analysis is crucial for planning, making informed decisions, and thus optimizing costs in the long term.
We can help you find the balance between optimized construction and operating costs in your planning. Contact us. We’re happy to assist you and look forward to integrating our extensive expertise and competence into your planning.
