Life Cycle Costing (LCC) model in use André Bode senior staffmember R&D department Netherlands Board for Healthcare Institutions (NBHI)
The needs Financing of capital costs: Past (until now): real costing of capital cost (standards for interest and depreciation) -> investment maximalisation Present: Introduction of DRG s for certain elective operations excluding capital cost. Future: DRG s with capital cost component? ->investment optimalisation ->risk on investments ->impuls for efficiency
Financing investments capital costs through the life cycle capital cost 120000 100000 80000 60000 interest depreciation capital costs 40000 20000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 years
Housing costs in the DRG s 400 350 300 250 200 150 100 50 "Oude kapitaalslasten" versus Integrale Huisvestingscomponent Rente Aflossing Huisvestingscomponent - 0 5 10 15 20 25 30 35
Benefits of LCC Relation between investments and running costs Insight in the total housing-costs Major decision-support-tool in several stages: initiative (strategic scenario studies) design stages technical work-out Finding the optimum
Questionaire / choices Refurbishing or new building? How large? Functions? Optimal proces / logistics? Design (structure, building mass)? Flexible / adaptable / changeable? Future proof? Lifespan? Saleable / Real estate policies? Reduction of running costs (energy, maintenance)? etc.
Health care specialties Changing environment more market, competition, needs for efficiency/cost reduction Changing demands aging, privacy, more space, quality Developments medical-technologies new players Lots of installations and equipment with a short technical lifespan (in parts of the hospital) Needs for the future? Innovations demands dynamic real estate
Hospitals
Finding the optimum, the model
The development of the LCC-model Dutch research in 2003 No literature Seldom attention for running costs Cooperation between Multiconsult and Bouwcollege (NBHI) LCC-model adaptabilty module
Data bank Investments: Building note Bouwcollege More detailed cost analyses (Sfb elements) from our own references / studies Other public (external) data Running costs: Benchmark75 hospitals Weight per functiongroup
MOM costs Hospitals 2004 250 200 Costs per m² 150 100 50 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 Management civil functions Maintenance Ziekenhuizen Costs of protection and surveillance Energy costs and w ater Planned maintenance and replacements
MOM costs hospitals 2004 Ene r gy 50 45 40 35 kosten per m² 30 25 20 15 10 5 0 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 Ziekenhuizen
Testcase Scenariostudy merged hospital on two sites Scen. 1.: Complete New building on one location (gross area = ± 80.000 m²) Scen. 2. t/m 4.: Two-location models with various parts of refurbishing / new building (gross area = ± 82.000 100.000 m²) Scen. 5.: Continuing existing situation, including necessary refurbishment (gross area = ± 110.000 m²)
5 Different scenarios compared Annual costs Annual costs per m² 15.000.000 14.000.000 13.000.000 12.000.000 11.000.000 10.000.000 9.000.000 8.000.000 7.000.000 6.000.000 1 2 3 4 5 scenario's INVEST MOM-kosten 160 150 140 130 120 110 100 90 80 70 60 1 2 3 4 5 scenario's INVEST MOM-kosten Total sum annual costs Initial investments and MOM (NPV) 24.000.000 220.000.000 22.000.000 20.000.000 18.000.000 16.000.000 14.000.000 12.000.000 10.000.000 8.000.000 6.000.000 1 2 3 4 5 scenario's MOM-kosten INVEST 200.000.000 180.000.000 160.000.000 140.000.000 120.000.000 100.000.000 1 2 3 4 5 scenario's INVEST MOM-Kosten
LCC is not stand-alone! Lcc Logistics/ workprocess Adaptablity/ designstrategies/ CREM
Core Hospital Differentiation of Buildings
Strategic asset approach Level 1- hot floor: theatres, diagnostics, intensive care etc. Level 2 - hotel accommodation: low care nursing Level 3 office accommodation: out-patients, administrative Level 4 factory accommodation: laboratories, kitchen
Examples from NBHI competition Core Hospital
6 College bouw Step Relations hybrid model (B) 1 2 3 4 5
Office Specificity Investment cost Capacity fluctuation Asset marketability
6 College bouw Step Division functions 1 2 3 4 industry 9% office 24% hot floor 46% 47% Hybrid model (B) hotel 21% industry 13% office 36% hot floor 24% hot floor 24% Extreme model (C) hotel 27% 5
Step Hybrid model (B) 1 2 3 4 5 6 hotel hot floor office industry Extreme model (C) hotel hot floor office industry Sections
Financial benefits Figuur 17: Vergelijking rendement van de monoliet en het extreme model (C) Monoliet * Extreem Hotel Hot floor Kantoor Fabriek bruto vloeropp. (m²) 46.075 46.075 12.923 11.372 16.270 5.510 bouwkosten excl. BTW (mln.) 68,0 63,4 17,5 19,0 17,7 9,3 investeringskosten incl. BTW (mln.) 99,1 92,4 25,4 27,7 25,7 13,6 levensduur (jaren) 40 50 20 50 20 Internal Rate of Return (IRR) 6,00% 7,49% 6,92% 7,47% 7,33% toename rendement 25% 15% 25% 22% * = voor de vergelijking zijn de bruto vloeroppervlakten gelijk en zijn de bouwkosten van de monoliet 7% hoger t.o.v. het extreme model lifecycle
Dordrecht Albert Schweitzer
Mapping Functionality Adaptability Technical quality Cbz Monitoring
% buildings Functionality 100% 90% above average 80% 70% 60% below average 50% 40% 30% below minimum 20% 10% 0% Algemene verpleging Special care Polikliniek Beeldvormende technieken Spoedeisende hulp Verlosafdeling
Technical quality % buildings 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% gemiddeld totaal bouwkundig bouwkundig extern intern installaties condition uitstekend goed redelijk matig (zeer) slecht
Adaptability: matches Algemene verpleging Special care Polikliniek Beeldvorm. Techniek Spoedeisende hulp Operatieafdeling bouwdeel A laag 0 4 4 4 3 4 2 laag 1 4 4 4 3 4 2 laag 2 4 4 4 3 4 2 laag 3 4 4 4 3 4 2 bouwdeel B laag 0 4 3 4 1 1 laag 1 4 3 4 1 1 1 laag -1 4 3 4 1 1 1 laag 2 4 3 4 1 1 bouwdeel C laag 0 4 3 4 2 2 1 laag 1 4 3 4 2 2 1 laag -1 4 3 4 2 2 1 0 matches 3 3 matches 1 1 match 4 4 matches 2 2 matches
Flextool Totalscore 0,9 Level Flextoolscore of flexibility -> 0,8 0,7 0,6 0,5 0,4 0,3 Low functionality & low flexibility High functionality & medium flexibility Low functionality & one flexible scenario scenario 1 scenario 2 sceanrio 3 scenario 4 0,2 0,1 1 2 3 4 5 6 7 8 9 Level of functionality -> Mappingscore
Future? Open market New incentives Be prepared!
Thank you very much! Netherlands Board for Healthcare Institutions College bouw - Bouwcollege Churchilllaan 11, 7e etage 3527 GV UTRECHT The Netherlands +3130-2983100 cbz@bouwcollege.nl www.bouwcollege.nl