of several methods for distinguishing between capital costs
(Capex) and non-capital
costs or, alternatively a method for determining what assets
included in the scope of a study.
method establishes that any costs that occur less often than a fixed
interval "x” are capital costs. For example some jurisdictions, or
owners, establish that costs that usually occur less often than once a
year are capital costs, regardless of the amount or the
This is the prevailing standard in British Columbia for strata
examples of capital projects (of relatively low value) that my be
defined by interval method are:
- This method determines which assets are to be included in
the scope of a study based on the service
life of the assets and replacement interval. For example,
assets with a service life of less than 30 years are often considered
legitimate consideration for a reserve
of the batteries on the emergency generator every four years are a
capital cost despite the fact that this item only costs $400.
of the batteries on the fire alarm panel every three years at a cost of
of exterior photocells at a cost of $400 every eight years.
of sand in pool sand filters every 6 years
Some of the advantages of the interval method:
of the disadvantages of the interval method:
Provides the owners with a more complete picture of life cycle costs
not exclude small items that may have material value as a group
the slippery slope of deciding which items are to be excluded,
particularly since the capital cost threshold may be arbitrarily set at
a certain amount (say $1,000).
a greater burden on the consultants preparing the report
result in some confusion between costs that are typically funded from
the operating budget.
Replacement of Generator Batteries (4years)
Fig 2. Replacement of Fire Alarm Batteries (4 years)
Fig 3. Replacement of Generator Hoses (5 yrs)
Fig 4. Repacking of sand in pool filter.