By Jeff Evans

Formulating Roof Replacement Budgets for Retailers

One of the roof management challenges we see our retail clients face is establishing a suitable, defensible budget, particularly for reroofing expenditures.  Faced with large numbers of roofs of varying ages and conditions, multi-facility managers face the risk replacing roofs too early or too late, of spending too little or too much.  Upper management pushes to reduce roof expenditures, yet complains loudly about leaky buildings. 

The best solution for this budgeting and prioritizing dilemma is to conduct a company wide roof inspection program.  When completed, this program can define what the roofing assets are, what condition they are in, prioritize roofs by condition, and provide expected replacement timing and costs.  This type of effort results in enough information to make good roof management decisions.  But this effort requires an investment of both time and money, scarcities to most retail facility managers.  Short of a full roof survey program, there are several other budgeting calculations that I have named “Average Roof Life” and Aged Roof Life” can be used to project a roof replacement budget.

How Long Should Roofs Last?

The first task in using the two budgeting models is to define how long your roofs are going to last.  Roofs have a finite life, that is, they all “fail” at some point and need to be replaced.  Years ago I met a roof consultant who said he could predict, within a few months or so, when a roof was going to fail.  He claimed he could tell this just from a visual inspection, coupled with his vast experience and some innate roof sense.  I was relatively new to the roofing game, and was very impressed with this gentleman’s “gift”. How useful would this gift be in helping building owners accurately predict the timing of roof replacements?  I pondered the idea of this gift for several years, and I eventually came to the conclusion that this consultant was full of horse manure. 

In 2003, the National Roofing Foundation commissioned a study to determine the average roof service life of low-sloped roofs.  This study, conducted by Ducker Worldwide, asked for roof service life data from architects, engineers, roof consultants, building owners, and manufacturers.  The question asked was basically, “How old have roofs been when you replaced them?”  The study used data collected from all areas of the country, for all types of roofs, on a wide variety of occupancies.  Using these thousands of data points, they determined the average life expectancy of 17 years.

One of the problems with both the roof consultant’s “gift” and the NRF study is that the critical term “failure” has no single meaning.  For example, to a facility manager of a hospital, a few repetitive roof leaks over an operating room would be serious enough to call the roof failed.  Yet, the same roof over an operating warehouse would be considered a good performer.  Simply put, one man’s junk is another man’s treasure.  At what point in a roof’s service life can you definitively declare the roof has ceased perform?

Another deficiency with the NRF study is that it does not share with us the differences in life expectancy for the various generic roof systems.  It would be quite helpful to a facility manager to know if the type of roofs he has in the fleet are generally expected to last 15 years or 25 years, on average.  

If you have some roof life history in your roofing fleet, you can use that as your average.  For example, I have a retail client that would definitely be classified as frugal, like Jack Benny type frugal.  They consider roofs that are 25 years old as being just “broken in” and will go to fairly extreme measures and expense, to coax the last few years from a failing roof.  If you looked at their organization’s roofing fleet as a whole, (and we have), their historical roof replacement budget actually requires that they get an average roof life of 34 years.  This is exactly twice the recently established national average roof service life! 

This client gets twice the national average roof life by active roof management, but truth be told, they also have a fairly high tolerance for roof leaks.  They have made delaying and deferring roof replacements an art form.

So, determining your average roof life expectancy is somewhat based on leak tolerance, and how much time and expense you are willing to put into a declining roof asset.    

Cost of Re-Roofing

Another key element in developing a projected budget is to determine your average roof replacement cost.  Our experience would suggest that the majority of retail roof replacement costs for reroofing range from $3.50 to $6.50 per square foot, depending most on whether the project is a recover or removal/replacement effort.  Surprisingly, the generic type of roof system chosen is less a factor.  While we generally find single plies the least-cost option, followed by built up and modified bitumen, this order can flip flop depending on the project’s location and accessibility.  

One caution I should offer is that there is a problem using an “average replacement cost” as a method of budgeting for a single project.  Even within a common mall, the cost of reroofing is significantly affected by ease of access.  If a raise mall concourse is being reroofed, materials may need to be double hoisted, or adjacent roofs may need to be protected.  So using an average replacement cost on a single project could result in an inaccurate budget, but when used to estimate an appropriate level of spending for a larger set of roofing assets, an average cost is useful and appropriate.

The “Average Roof Life” Budget Method

This budgeting model uses, as part of the calculation, an assumption of average roof life expectancy.  For example, if you have determined that your average roof service life in 20 years, then theoretically, 5% of roofs in your portfolio should require replacement each year. 

As an example, if a roofing fleet encompasses 10 million square feet, the average annual square footage projected for replacement is appropriate 500,000 square feet.  If your average replacement cost is $5, then an appropriate annual replacement budget is $2.5 million.  A rate of inflation could be used to project an annual budget need.

The one caveat for this option is that it assumes that the roofs in the data set are fairly evenly distributed in terms of age.  If all your roofs are clustered in a narrow range, then this method may not be as useful as the “Aged Roof Life” method.

The “Aged Roof Life” Method

This method requires the user to categorize the roofs in the data set by age.  Again using our 10 million-square foot example, suppose the distribution of roofs by age looked Figure 1 (please see Figure 1 below).

Figure 1