Book - School of Science and Technology

InsuranceInvestment appraisals 681Currently, insurance and annual inspection is required for plant including steam boilersand receivers, pressure vessels, certain types of ventilation equipment and associatedelectrical power distribution. (Other buildings life safety installations must also beincluded). The same requirements do not apply to low pressure heating systems nor togeneral ventilation and air-conditioning plant, but this matter is under review by theHealth and Safety Commission. Nevertheless, it is customary for the owner of any sizeablesystem to take out insurance as a matter of self-protection, and to cover againstfracture, burn-out and accidents of all kinds.Investment appraisalsAll major decisions concerning proposals for schemes relating capital expenditure torevenue return, ranging from new installations, to modernisation and to energy conservationmeasures, should be subject to some form of economic appraisal. The capital costmay relate to all scales and conditions of building, from the dwelling to the largestindustrial complex and from present stock, having significant useful life remaining, toconcepts as yet undeveloped from a basic client brief.Similarly, revenue return may arise from static measures such as orientation, buildingform and materials of construction or from the dynamic characteristics, life cycle andmaintenance needs of equipment. For a full understanding of the impact of engineeringsystems upon the building, space for plant, fuel storage, service shafts and the like shouldbe a part of the analysis. Obviously, the effect of taxation cannot be ignored, nor indeedcan the impact of investment grants, capital allowances, accelerated depreciation allowancesand so on. Each of these facets of the problem acts and interacts with theremainder.Whole life costsWhole life costing methods, sometimes referred to as life cycle costing, may be used tocompare alternative solutions and would include the total initial cost of the installation,operating costs through the life of the plant, including energy and maintenance, and anydisposal cost at the end of its useful life. Analysis may involve component replacement atintervals, if the total period used for comparison exceeds the expected life of any componentpart. Many economic appraisal methods may be used to produce long term costforecasts to assist in the decision making process. Recourse to this method of analysiswould be made where there is a high initial cost difference, or high energy cost difference,or where there is significant disparity between the expected life of the options. The samefinancial appraisal may be applied to major replacement or repair studies.The financial return from static energy conservation inclusions, orientation, buildingform and shape, solar exclusion, thermal insulation and the like may be assumed to relatedirectly to the remaining whole-life of the building. In the case of dynamic action,however, different criteria obtain, but there is limited information available of an historicalnature with respect to this subject area; in particular on operating costs. Oneimportant aspect is the expected useful life of plant and equipment. Table 23.14 bringstogether information from various sources for a range of systems. The life of anycomponent will depend to a large extent upon the working environment, the quality of