Planned Replacement or Major Renovation - Effective Building Maintenance: Protection of Capital Assets - page 62

This is short-sighted and, ultimately, more costly approach.
Inevitably, the longer it is possible to avoid replacing or renovating a
failed building component, the more it will cost and the greater risk there
is that costs will be significantly greater:

• Normal cost escalation due to inflation will occur and future costs

will be higher than today's costs.

• There are often costs for “collateral damage” caused by the poor

performance of a failed component. For example, a roof that is not
replaced when needed will result in an increased incidence of water
leaks and these leaks may cause corrosion, wet rot, mold infesta-
tion, or other problems that must be repaired with the roof is finally
replaced. In an HVAC system, failure to replace an AHU drain pan
can also result in water leaks. A fan bearing that is not replaced may
score the fan shaft or seize on it, requiring replacement of the shaft
and, probably, the fan wheel.

Studieshaveshownthatdeferredmaintenancecostsincreaseby2to4times
thecostoftherepairorreplacementwhenitshouldhavebeendone,assuming
nosubstantialcollateraldamageresultingfromdeferringmaintenance. So the
question must be posed: if building owners cannot allocate the required
funds when needed initially, how will they be able to come up with 2-4
times that funding level within some reasonable time frame in the future?
Obviously, they cannot, and too often once maintenance is deferred, that
maintenance never re-enters the maintenance program and can only be
funded as part a major capital improvement program with new fund-
ing, typically borrowed. School systems and governments throughout
the United States routinely must issue bonds to fund the replacement or
renovation of failed or failing buildings that got that way by deferring
maintenance to some future time that, essentially, never came.
So, adequate funding for replacement and renovation is required to
eliminate deferred maintenance. To make sure the funds are there when
needed, a budgeting plan, utilizing the concept of funded depreciation, is
required.