Payoffs to Calculating Life-Cycle Costs

By Karen Kroll  

Given the tight hold that many building owners are keeping on their pocketbooks, purchasing a floor covering that will stand the test of time with a price tag that won’t be a deal-breaker can be a tricky proposition.

“If there’s a budget crunch, initial cost is the only thing that gets looked at,” says Dee Dee Trumpler, advertising and promotions manager with Roppe Corp. in Fosteria, Ohio. “Everyone is worried about getting the project done on budget.

What’s more, floor covering can be particularly vulnerable to changing budgetary priorities, as it’s one of the last items to be installed during a construction or renovation project, says Mike Norton, head of Performance Consulting in Dalton, Ga. It’s not unusual to find a long-lasting floor covering has been replaced by a product that’s less expensive to compensate for cost overruns elsewhere in the project.

However, even as budgetary constraints loom large for many facility executives, trying to approach a flooring purchase from the perspective of its overall life-cycle cost — rather than just initial costs — usually pays off. “You want to look at buying carpet by the year vs. by the yard,” says Ron Rose, executive vice president of sales with DuPont Flooring Systems in Kennesaw, Ga.

That philosophy applies to all types of floor covering. Because the initial cost of a floor covering is substantial, it can be easy to overlook the other expenses incurred after the product is installed, such as maintenance, disposal and replacement costs. Those items can add up, making a purchase that seems less expensive initially cost more in the long run.

Although budget limits play a significant role in any floor covering decision, most industry experts agree that it’s not necessary to spend an inordinate amount to purchase a floor covering that will perform well. What is necessary is to spend time calculating the life-cycle purchase cost of flooring options. First, the facility executive will want to analyze the function of the space and consider the sorts of use — and abuse — the floor covering is likely to receive.

Next, it’s important to estimate all the costs associated with each floor covering option. These include the initial expenses of purchase and installation, as well as the costs of maintenance over time. The analysis should also include the cost of disposing of the material.

In addition, the facility executive, working with other professionals in the organization, will want to estimate the expected life of the floor covering. The choice of floor covering hinges on whether it’s expected to last five or 25 years. “One of the primary things that can affect the formula is how long the flooring will last,” says Amanda Kimbell, director of marketing with J&J Industries in Dalton, Ga.

Finally, the facility executive and others involved in the decision need to bring together these facts and figures to estimate the total cost of a floor covering over its life.

Function of the Space

A first step in determining the life-cycle cost of a floor covering is assessing the function of the floor that’s to be covered. “What is the space and the application?” asks Brian Saker, marketing manager with Armstrong Floor Products in Lancaster, Pa. For instance, if employees in a commercial office building frequently move offices and bring their information systems equipment with them, the appropriate floor will allow for easy access to the cabling and wiring underneath. Similarly, the floor covering in a health care or dining facility should be easy to clean, given the high likelihood of stains.

It’s important to look at different areas of a facility separately, says Saker. For instance, the floor covering in school corridors will receive patterns of wear and tear that differ significantly from the flooring within a classroom.

That’s why it often makes sense to consider using a variety of floor coverings in different areas. For instance, a less-expensive floor covering may hold up reasonably well in areas that receive less traffic, and leave more dollars for a higher quality floor covering in areas that receive more abuse. “You can use different types of floor covering to get an overall cost that fits the budget,” says Saker.

With floor covering, as with most purchases, the adage that “you get what you pay for” holds true. “The single biggest influence on the life-cycle cost is the performance of the product,” says Zahir Khan, director of growth strategies with Milliken Commercial Carpets in LaGrange, Ga.

Trying to skimp on quality can backfire. For starters, a poor-quality floor covering almost always is replaced more quickly than a higher quality product.

And the quality of the floor covering also can have an impact on the morale of employees and influence the impression customers receive when they visit the facility. How the facility looks will be a direct reflection of the corporate culture, says Marc Ahrens, market segment manager with DuPont Antron in Kennesaw, Ga. “It also affects how customers feel when they enter the space.” Admittedly, these costs are difficult to quantify. But that doesn’t make them any less real.

Design and color also are critical elements in the longevity of a floor covering. “Use traditional, timeless patterns in neutral colors,” says Sam Bracken, vice president of marketing with Mohawk Group in Kennesaw, Ga. “They’ll look good with a variety of paint colors and furniture styles.” Use new furniture or paint, rather than the floor covering, to keep up with trends.

Installation and Maintenance

When it comes to installing the floor covering, it’s sometimes assumed that anyone can handle the job. That misperception can be costly, says Rose of DuPont Flooring Systems. A qualified installation team will take responsibility for such tasks as making sure the floor covering materials get to the job site and are stored, if necessary. It’s also necessary to ensure that the proper adhesives and sealers are used. Some initial preparation can mean savings over the life of the floor covering.

Maintenance costs also play a significant role in the lifetime cost of a floor covering. “The maintenance cost is ongoing; it’s every day, every year,” says Ahrens. The expense adds up.

Facility executives will want to consider the manufacturers’ directions for their floor covering. For instance, a manufacturer may recommend that its floor covering be maintained with a high-speed burnisher. In a school, these will work well in corridors but are too bulky to maneuver around classrooms filled with desks. “You need a simple system that will work in classrooms,” says Denis Daragh, general manager for North America with Forbo Linoleum Inc.

If it’s necessary to use a complicated cleaning process in the classrooms, either costs will go up, or the recommended procedures may be ignored, shortening the life of the floor covering. For instance, a spill may sit on a carpet until it’s smeared in. Even if the floor covering camouflages the stain, damage still is being done. “The stain chemically alters the color,” says Bracken. On the other hand, following through on a thoughtfully designed maintenance program can boost both the appearance of a floor covering and its longevity.

Life Span

The longevity of a floor covering is a crucial factor in calculating life-cycle cost. In some facilities — retail often is good example — floor coverings are replaced every couple of years to keep the space looking new. In those cases, a less-expensive floor covering often makes the most sense. In general, a time frame of 10 to 15 years is realistic, says Khan of Milliken.

While the calculations vary from one installation to another, a floor covering that costs more initially, but lasts longer, might well be the less-expensive choice over time. Consider a facility executive purchasing 10,000 square yards of flooring who has narrowed the selection to two choices. One is $16 per square yard and should last 10 years; the other is $20 per square yard and should last 15 years.

The cost per year of the first covering will be $16,000, calculated as 10,000 square yards, multiplied by $16, and divided by 10 years. The cost per year for the second will be $13,333, calculated as 10,000 square yards, multiplied by $20, and divided by 15 years.

An option to consider as a way of minimizing life-cycle costs is carpet tile. While tiles are slightly more expensive, they can extend the life of the floor covering, says Carrie Edwards, sales development manager with Shaw Industries in Cartersville, Ga.

“Typically, 20 percent of the carpet gets 80 percent of the wear,” says Marianne Cone, sales manager with Solutia Inc. in Kennesaw, Ga. A facility executive can install carpet tiles and annually replace the 20 percent that receive the most wear, either by rotating the tiles on the floor, or by taking new tiles from stock.

Down the road, facility executives might need to give more consideration to the environmental impact of a floor covering as they calculate its life-cycle cost. They will want to consider the potential impact of emissions from volatile organic compounds (VOC) from the floor covering. VOC emissions’ effect on buildings and their occupants is an area of great debate among scientists, says Dominic Tulk, head of Amtico International’s manufacturing facility and technical services department in Madison, Ga. Some say the emissions lead to sick building syndrome and lower employee productivity; others say the cause-and-effect can’t be shown. “It’s a very contentious area at the moment,” says Tulk.

To be safe, however, facility executives will want to be aware of the potential effects on and the costs associated with different floor coverings.

It also makes sense to consider the expenses associated with disposing of flooring. Hauling it to the landfill can get expensive. In addition, some states now prohibit disposing floor covering in a landfill, forcing facility executives to transport the covering elsewhere, usually at higher cost, says Ahrens of DuPont Antron.

Replacing a floor covering involves significant costs, of course. It also generates “soft costs,” which are less easily quantified but still very real. For instance, employees almost always find that their workplace is disrupted or unusable while the new flooring is installed. The less frequently that the floor covering needs to be replaced, the lower these soft costs will be.

Making the Case

In most cases, of course, several individuals within an organization will have responsibility for deciding on the appropriate floor covering for a facility. Selecting the best one typically means making trade-offs between appearance, durability and cost. “It’s important that the facility executive engage in that discussion,” says Rose of DuPont. “You don’t want the budget to compromise you so much that you pay more later.”

The facility executive should work with others to devise credible estimates of the likely long-term cost of possible floor coverings. Then, facility executives need to present their findings to top management.

To the extent possible, facility executives will want to keep the focus on the cost of the floor covering over its life. “You want to look long-term and look at the hidden costs,” says Rose. “Too many times, things get picked apart line-item by line-item.”

Karen Kroll is a contributing editor who covers real estate and facility issues.

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  posted on 4/1/2003   Article Use Policy

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