At last the accounting standards authorities, particularly the International Accounting Standards (IAS), have discovered that a building is not a single component with an expected life but a collection of components each with their own life. The problem is translating words into practice. What components should be differentiated? Any with ‘substantially different useful economic lives’ I was told and given the some examples that included roof. However, the roof trusses on my house have been there since 1690 but the roof coverings were last replaced in the 1930’s.
While pondering this PD 156865 part 5, life cycle costing, landed on my desk. PD 156865, if you have not seen it, is a standardized method of life cycle costing. Very good too. In it they recommend that the replacement costs should be structured using the BCIS standard form of cost analysis taxonomy. Now if we need to identify components with different lives for life cycle costing and also for accounting purposes shouldn’t we be making connections? I like the word connect; it is the essence of one of my favourite quotes in Howard’s End.
With this connection in mind a colleague of mine went to a BCIS Whole Life Costing Seminar. When he raised the subject nobody there had made the connection and the idea didn’t seem to cause much reaction.
Am I missing something?
Thursday, 21 January 2010
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