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Operating Costs (OpEx)
Also referred to as "Operating Expenses" or "opEx".

The day-to-day expenses incurred in running a building or facility and all its physical assets, including:

Examples of Operating Costs:
Listed below are some typical examples of operating costs:
  • Photocopying and distribution of notices and minutes of meetings of the owners.
  • Premiums for insurance coverage for the building.
  • Gas consumption and electrical consumption for boilers and other equipment used to heat the building and the domestic water.
  • Vacuuming of the carpets and washing of the windows as part or a routine maintenance program.

Attributes of Operating Costs:
Operating costs generally have the following attributes:
  • The costs are frequently occurring (recurring costs) that is they occur once a year or more often (monthly, quarterly, etc).
  • The costs are relatively low when compared to capital costs. See: materiality.

Analysis of Operating Costs:
The following asset management concepts provide further insight into operating expenses:
Operating costs typically represent about 50% of the total cost of ownership (TCO) of a building.


Management of Operating Costs:
  • The individual operating costs are reflected as line items in the operating budget.
  • The budget is approved once a year.
  • The costs are subject to annual cash flow cycles.
Some of the complexities associated with classification, management and financing of small capital expenses are addressed through the following principles.
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Fig. Annual landscape maintenance is an example of an operating cost.

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Fig. Window washing is an example of a typical annual operating cost
.

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Fig. Meetings of the owners are a an operating expense.



Fig. Distribution of annual routine maintenance costs across the different systems of a building.

See also:
Compare with:


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