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Geekiyanage, D, Ramachandra, T and Thurairajah, N (2018) A Model for Early Stage Estimation of Operational Expenses (OPEX) in Commercial Buildings. In: Gorse, C and Neilson, C J (Eds.), Proceedings 34th Annual ARCOM Conference, 3-5 September 2018, Queen’s University, Belfast, UK. Association of Researchers in Construction Management, 617–626.
- Type: Conference Proceedings
- Keywords: commercial buildings, cost modelling, hedonic regression, indices, OPEX.
- ISBN/ISSN: 978-0-9955463-2-5
- URL: http://www.arcom.ac.uk/-docs/proceedings/6254275799660dfa3cde95c534d2a103.pdf
- Abstract:
Usually, OPEX consumes a substantial share (70-80%) of its Life Cycle Cost (LCC) in commercial buildings. Despite its contribution to the LCC structure, often OPEX is given less focus in investment decision making and investors tend to mostly rely on initial costs alone. This is due to lack of reliable historical cost data related to building operations and maintenance (O&M). In addition, a varying range of models are available and application of those are limited to the later stage of building life cycle as these models require an extensive set of operational data. Therefore, this study introduces a model, which can facilitate the early stage estimation of OPEX in office buildings. The data related to O&M costs and project characteristics were collected from 35 office buildings in Sri Lanka. Initially, a Pareto analysis performed on the collected data indicates that 85% of the total OPEX are consumed by 24% of running cost components which include building services (42%), administrative work (25%), utilities (11%) and replacement of major systems and components (6%). Then, the next stage of the research involves developing an early stage supportive model for the estimation of OPEX in office buildings using the hedonic regression modelling. The hedonic approach is used to develop cost models where there is no adequate cost data and it presents running costs of the property as a function of its structural and location characteristics. The model provides significant O&M cost components under the early stage estimation, which enables designers and construction professionals to make informed decisions on implications of the costs incurred during the operational phase of buildings. Further, the hedonic approach offers indices for monthly OPEX, which supports practitioners in measuring relative changes in the cost variables over a period of time.