Weighted Square Footage Cost
In our last post we discussed the Simple Square Footage (SSF) method for calculating Current Replacement Value (CRV). In this post we are going to explore the last approach, which is a modification on the SSF, which we call Weighted Square Footage (WSF) Cost.
The SSF methodology applies a single cost/sq.ft. to each building to get the CRV. While this works for single purpose building, not all buildings or portfolios are that simple.
In cases where you have multipurpose buildings that have different uses in different areas of a building, it is difficult to develop a single cost/sq.ft. that is relevant for the entire building, without having to model each and every building individually, which is very labour intensive.
For example, within the higher education sector, there are very few single-use buildings. Most on-campus buildings have a combination of classrooms, offices, laboratories and other special purpose spaces. The square footage of each space type varies greatly from building to building.
Another example might be a recreation centre where there is a pool, an arena, a gym as well as a police or fire station. Each of these spaces has a very different cost/sq.ft. profile.
To address these varied program spaces, we recommend that you develop unit costs for each space type that are then applied based on the total size of each space use. Table 1 below provides an example of a simple WSF calculation. Please note the costs provided are done so purely for demonstration purposes
Similar to the SSF methodology, getting accurate square footage costing for each space type is vital. Once again, cost guides such as Marshall & Swift and R.S. Mean can be used as a baseline for these values. However, cost guides provide average values for a given market. As such, we recommend that you validate the costs based on actual construction costs for your organization or within your sector.
The second critical data point is a clear understanding of the square footage for each space type. If you have accurate space data, such as with the Higher Education institution across Canada, then this methodology can be straight forward to implement. However, if you do not have accurate data, the CRVs may be impacted by poor square footage information for each space type. As such, we highly recommend that clients that are going to use this methodology conduct regular measurements of the space usage within their facilities to ensure accuracy over time for their WSF CRVs.
The only time that a major change to a building’s CRV would occur with this method is if there is a major preprogramming of the space usage of the facility, such as if a number of classrooms are converted to laboratories. In this case the CRV would go up, based on the higher cost/sq.ft. for laboratory space compared to classrooms. This increase makes perfect sense and is easy to explain to Board’s, Senior Leadership and other non-facility professionals.
Our next blog post in this series will focus on some of the typical factors (multipliers) that can be included in your CRV calculations to make them as reflective of reality as possible.