Better Roofs Are Less Expensive
Article by Richard A. Boon, P.E., CCI
The ultimate question for roofing is: “What is the best
roof?” The accountants will tell you that the answer is
simple: It is the roof that costs the least over its life.
It really does not matter what material is used or how the
roof is attached; the answer is the same. If the roof fails,
then the cost of a new roof is added to the cost.
When most owners look at
roofing, they look at the materials and the systems, and
the only part of the cost they consider is the initial cost.
But the cost to install a roof is only a portion of the
total cost of owning a roof.
The practice of examining the cost of owning a roof over its
entire life is called life-cycle cost analysis. This is the
best way to truly compare the cost/value of roofing systems.
Something that is crucial is: How long do you expect to own
the building? If the answer is indefinitely, then the
analysis should be run for at least 20 years. Some people
will use 30 years. The standard depreciation for roofing is
39 years. There are very few systems that are functional at
the end of this life expectancy.
In a basic life-cycle cost analysis, there are several
factors that need to be considered. The study period has
already been mentioned. The next consideration is the
changing value of a dollar over time. One common method for
relating future expenses to today's costs is to use the
t-bill rate, minus the inflation rate. A time value of
approximately 5 percent is a reasonable number for use in
our analysis.
There are costs associated with other aspects of roofing,
such as installation inspections, semi-annual inspections,
the cost of leak-related repairs, costs associated with
making the warrantor live up to the warranty, and so on.
There are also routine maintenance expenses to consider,
such as cleaning the drains, recaulking the flashings and
performing general housekeeping.
With some systems, the costs of performing some of these
items are covered by the warrantor as a part of a
comprehensive service package. They can also be purchased
from some contractors or roofing consultants for an annual
service charge. All of these costs need to be known or
estimated for the term of the study period.
The last item that needs to be known is the relative life
expectancy of the roofs in question. There are sources for
this information. The most conservative approach is to use
the warranty life as the service life. This is generally
shorter than the real life, except where there is no routine
maintenance done. Then the life may well be shorter than the
warranty.
Life-cycle Cost Scenario
Let's create a simple scenario that illustrates how these
factors combine to produce a life-cycle cost:
The roof in question is bid using two different systems. The
first is a commodity-grade roof with a 15-year warranty; the
bid is $225,000. The second system is a premium roof, and
the bid is $300,000.
We are assuming that the owner is a public entity, so that
taxes can be ignored. We are using our 5 percent for the
time value of the funds.
The cost to maintain the commodity-grade roof is at least
$1,000 per year, to cover the costs of the required
inspections for warranty and the cost of a consultant on the
project during installation (many consultants are
considerably higher).
When that roof is replaced, in its 15th year, its present
value cost is $113,640, representing the initial cost
adjusted by the time value of the funds. When you add the
continuing cost of maintenance, the total-ownership cost for
the commodity roof becomes $354,781.
With the second system, assuming that the premium roof is
replaced in its 24th year, the present value cost is only
$97,671. Since the system supplier provides the required
inspections as a free service, there are no
maintenance-related costs for the first 15 years of the
roof. Let's assume as much as $1,500 in annual maintenance
from years 15 through 23. Let's also assume roof replacement
in year 24, a conservative estimate for a roof that was
warranted for 20 years.
Even with these conservative estimates, the total-ownership
cost for the premium roof is $346,273. As the federal
interest rates drop, the difference in total-ownership cost
increases, making the premium roof an even better buy.
Since the premium roof has a manufacturer's rep on site
during installation, installation-related problems and
add-on inspection costs are minimized. In addition, on-site
manufacturer observation provides the benefit of
single-source liability, should problems eventually occur.
The figures used in this illustration are in accordance with
ASTM E-917, Standard Practice for Measuring Life-Cycle Costs
of Buildings and Building Systems, which provides building
owners with an excellent tool for comparing roofing options
on a sound financial basis.
Other Factors
There are other factors that can be included in a model.
These include a simple energy cost savings as well as the
costs that are associated with any leaks in the system. If a
roof leaks, then the wet areas need to be fixed, as does the
damage done inside the building. The additional energy lost
can be considered as well.
There is also a cost associated with disrupting the facility
to put a new roof on. This should be added to the cost of
the roof. How much does it cost to clean up after a leak?
This too, must be added.
It has been reported that the return on an initial
investment of $10 to $12 can be justified through the
savings of a single dollar per year in maintenance.
So, which of these roofs saves the owner the most money?
Clearly, the higher up-front costs of premium roofing
systems can be fully justified through long-term savings.
By looking at more than just the initial cost of the roof,
the owner is making a better financial decision. This same
analysis is useful for making a multitude of
construction-related purchasing decisions.
Are the published life expectancies of high-performance
roofing products truly achievable? There is no question that
if someone knowledgeable looks at the roof at least once a
year (industry recommendation is twice a year), and the
problem areas are corrected promptly, most commercial roofs
will last significantly longer than their warranties. The
exception is when defective materials cause the roof to
shrink excessively or to shatter.
Conclusion
Life-cycle cost analysis is the best way to discuss making
roofing decisions with financial people. The one that makes
the final decision is the one that signs the checks. Roofing
people are great at providing technical information but poor
at providing the financial information that supports the
right decision.
Improve the quality of your data. Examine your own roofs or
the roofs of others in your area and find out what is
working and what's not. This data can then be used to better
model the true life-cycle costs.
Roofing is often seen as a problem area in building
construction and maintenance. This perception is earned in
part by the people who most often complain about it. The
designers and facility managers that choose their roofing
systems and contractors based on an assumption that the
lowest bid for the least expensive roof is going to provide
satisfactory results. This assumption is based on the idea
that roofing specifications are performance based and that
all contractors are equally qualified to install all
systems. This assumption is false. Unfortunately, it remains
a basic tenant for some in the industry.
About the Author: Richard A. Boon, P.E., is
an independent roofing consultant with Construction Support
Services, Inc. of Littleton, Colorado. He is a past director
of The Roofing Industry Educational Institute and serves on
Roofing Contractor’s editorial advisory board.
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