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of a group of reinvestment models for estimating "keep-up" costs for major maintenance and
renewal of a facility, which can be classified as falling within the class of models known as a lifecycle
The formula was developed and published in 1981.
Elements of the SD Formula
The Sherman-Dergis formula (see figure 1) includes three key variables:
Purpose of the SD Formula
The primary purpose of the Sherman-Dergis formula is as follows:
Evaluation of the SD Formula
The Sherman-Dergis formula has the following general merits:
Classification of Reinvestment Models
Reinvestment formulas can be grouped into three general categories, as follows: Each class of reinvestment models has merits and limitations that are discussed in more detail on the separate pages of this glossary.
Expenditure Quantification Models
Other similar formulas include: These answer the question, "How much money will we need?" They are part of the expense analysis.
Funding Allocation Models
Models to determine actual funding allocations once the quantum is known. These answer the question: "How much money will we have?". This is part of the funding plan.
Fig. The Sherman Dergis formula for estimating capital funding requirements for a facility.
Fig. Examples of different types of capital projects that are contemplated in facility reinvestment formulas, such as exterior painting, roof renewal project and boiler retrofit.
Fig. The relationship between the tactical and strategic planning horizons, where activities in the former will affect the timetable of the latter.
Fig. Model to indicate the quantum of capital renewal costs at different stages in a facility life cycle.
Fig. Lifecycle funding trajectories and inflection points resulting from three alternative funding formulas.
Fig. Major maintenance tasks mapped to the P-F Curve.
Fig. Some of the different applications of thermographic scans to various assets.
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