Better Roofs are Less
Expensive
by
Richard A. Boon, P.E., CCI
“The cost to
install a roof is only a portion of the total cost of owning a roof”
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.
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.
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.
Conclusion
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.
Life-cycle cost
analysis is also 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.
Richard A. Boon,
P.E., is an independent roofing consultant with Construction Support
Services Inc. of Littleton, Colo. He is a past director of The Roofing
Industry Educational Institute and serves on
Roofing
Contractor's editorial advisory board.
Bibliography:
ASTM E 833-91a,
Standard Terminology of Building Economics, Volume 4.07 Building Seals and
Sealants; Fire Standards; Building Constructions, ASTM, 1916 Race Street,
Philadelphia, PA, 19103-1187
ASTM E-917 Standard
Practice for Measuring Life-Cycle Costs of Buildings and Building Systems,
Standard Terminology of Building Economics, Volume 4.07 Building Seals and
Sealants; Fire Standards; Building Constructions, ASTM, 1916 Race Street,
Philadelphia, PA, 19103-1187
Life Cycle Costing: A Practical Guide for Energy Managers, Robert J. Brown
and Rudolph R. Yanuck, 1980, The Fairmont Press, Inc. Atlanta, GA
Financial Decision
Making in the Process Industry, Woods, Donald, Prentice-Hall,1975
Life Cycle Costing
for Design Professionals, 1981, Dell'Isola and Kirk, McGraw-Hill Book
Company
"Financial Aspects
of Roof Management," RIEl lecture notes, The Roofing Industry Educational
Institute, 1993