Lifecycle Costing and Office Furniture
Furniture as an investment
Lifecycle costing is an important analytical tool for organizations that recognize systems furniture products as an investment and not an expense. The objective of such an investment analysis is to assess the proper balance between the benefits and costs.
What is lifecycle costing?
Lifecycle costing is typically used to calculate the long-term cost of ownership. It examines not only the acquisition cost of fixed assets, but maintenance and replacement costs that are likely to affect the actual ownership costs of these assets during their useful life.
How does lifecycle cost relate to office furniture?
Systems furniture products evolved in the late 1960s and early 1970s because designers and facilities managers recognized the need to change the layout within their offices. Most compared the cost of conventional office construction with the cost of partitions, work surfaces and lateral file banks that served to divide the space within the office.
Conventional drywall construction generally proved to be the least expensive solution to dividing space from the standpoint of acquisition cost. However, it soon became apparent that while systems furniture represented a higher initial investment, it provided a significant reduction in the cost of change within the office, resulting in a lower ownership cost overall.
The same logic can be applied when evaluating the comparable costs associated with changing workstation configurations within the office. Not all systems products function as well as others when one looks at the various cost associated with the implementation of theses changes.
Typically, facilities managers and procurement specialists look at quotations for systems furniture products on a ‘delivered and installed’ basis and, understandably, try to determine if the least expensive product will satisfy their minimum requirements.
In some cases, the least expensive product may prove to be an acceptable product insofar as being able to satisfy their workstation requirements the day they move into their space. But given the tremendous rate of change and technological demands, people should consider the cost of reconfiguration that will dramatically affect the ownership cost.
In simple terms, this includes the cost of moving an existing workstation to another location or changing the configuration of the station to meet the requirements of another worker or another job function. These changes in configuration are likely to include one or all of the following modifications to the workstation:
- Increase or decrease in panel height
- Change in work surface size or portion within the workstation
- Addition or deletion of storage components
- Addition of electrical circuits or communications cable dictated by a change in equipment within the workstation.
Manage the hidden cost of change
When evaluating the lifecycle cost of systems furniture, consider how the system responds to these changes from the product standpoint. As, well, consider the costs of change before, during and after the actual relocation of workstations within your office. Some of these are not immediately apparent and are likely to add significantly to the actual cost of ownership. One should also consider:
- The cost of additional product that must be ordered to accomplish the change of configuration
- The cost of labour required to disassemble and reconstruct workstations
- Electrical and communications cable as well as overhead cabinets and work surfaces may also have to be removed
- Costs associated with lack of productivity on the part of the workers in the affected stations
- Reconfiguration may also lead to increased inventory costs as you will most likely have some product left over which will have to be stored until such point, if ever, it can be reused in a new application
Some key features to look for when evaluating systems furniture:
- Can you change the panel height or reconfigure the surfaces to accommodate the needs of different workers
- Can work-surfaces, overhead cabinets and pedestals of different sizes be used universally in different panel widths
- Can overhead storage cabinets and work-surfaces be mounted on any panel, regardless of width
- Minimized Inventory
- Can panel surfaces be changed to respond to the occupant’s individual needs
Are work-surface supports non-handed so that they can be used in the left, right or centre positions with work-surfaces of different depths
- Reduced Downtime
- Can changes be made to electrical and communications cables without having to disrupt the workstation
**** (Reproduced with the permission of www.teknion.com) ***
Please contact us for more information on how lifecycle costing can work for you