In the world of asset management, accurate data underpins every sound decision. And when it comes to forecasting lifecycle costs, one critical data point often gets overlooked: unit rates.
Unit rates are essentially the estimated costs for replacing assets – which are the foundation for long-term budgeting and lifecycle planning. At SPM Assets, these rates help determine how much your assets will cost to renew over time. Yet there’s a catch: if those rates are outdated, your forecasts quickly become unreliable.
Let’s take a close look at why keeping unit rates current is so important, and how you can update them effectively within your SPM Assets database – using your team or ours to perform the changes.
Why Unit Rates Matter
Unit rates directly influence the accuracy of lifecycle cost forecasts. These forecasts inform budgeting, funding allocation, maintenance planning, and long-term investment strategies. In short, unit rates shape how you manage and sustain your assets for years to come.
The SPM Assets software is built to support robust lifecycle cost management, but like any system, it’s only as good as the data within it. If your unit rates are outdated - even by a few years - your forecasts may be off the mark.
The Problem: Outdated Unit Rates
Why Are Rates Often Out of Date?
Many organisations set unit rates during the initial setup of their asset database and then leave them untouched. But markets change. Inflation, supply chain issues, material shortages, and labour costs can all shift dramatically over a short period. Rates from three years ago may now be out of date.
SPM Assets, like most asset management platforms, doesn’t automatically update these figures. It assumes that the user will periodically review and revise them based on current market data.
The Risk of Inaccurate Data
Relying on outdated unit rates can have serious consequences:
- Unreliable budget forecasts: You may underestimate how much funding is needed for upcoming maintenance or renewal projects.
- Poor investment decisions: Misleading cost data can skew capital works planning.
- Reduced asset value: Poorly forecasted costs can lead to deferred maintenance and lower long-term asset performance.
SPM Assets and Lifecycle Cost Management
Lifecycle cost management is a core strength of SPM Assets. It helps organisations understand the total renewal cost for the asset base.
Unit rates sit at the heart of this process. They’re used to:
- Predict future costs for maintenance, renewal, and upgrades
- Develop 10, 20, or even 30-year capital plans
- Support evidence-based funding requests
- Optimise long-term investment strategies
Without accurate unit rates, even the most detailed lifecycle model becomes flawed. Fortunately, updating them isn’t as difficult - or time-consuming - as it may seem.
How to Update Unit Rates in SPM Assets
There are several practical ways to update unit rates in SPM Assets software. Each has its own strengths and limitations. The right method will depend on your available resources, data maturity, and need for precision.
Standard Percentage Increase
This is the simplest method: apply a uniform uplift to all rates across the board.
When to use it:
- When you require a quick update
- When detailed data isn’t readily available
- As a stopgap until more accurate updates are possible
Benefits:
- Fast and easy to implement
- Useful for rough-order estimates
Drawbacks:
- Lacks accuracy
- Doesn’t account for variations across asset categories
The standard percentage increase works best as a temporary fix, not a long-term solution.
Use of a Construction Cost Database
There are various widely respected industry sources offering up-to-date construction and maintenance costs across Australia and New Zealand. This includes the Rawlinsons Construction Handbook in Australia and QV CostBuilder in New Zealand.
How to use it:
- Identify relevant cost data for your asset types and asset components where the information exists
- Use these figures as a benchmark
- Adjust your unit rates in SPM Assets accordingly
Benefits:
- Based on current market data
- More tailored than a flat percentage increase
- Offers granular cost details by region and asset type
Drawbacks:
- May not fully reflect your specific asset conditions or procurement approach
- Requires manual comparison and mapping
Detailed Contract or Work Order Review
This approach involves reviewing recently completed contracts or work orders to determine actual costs incurred for asset-related work.
How to use it:
- Extract cost data from your procurement system or contractor reports
- Match actual costs to asset components in SPM Assets
- Update unit rates based on real-world data
Benefits:
- Most accurate method
- Reflects actual costs unique to your organisation and location
Drawbacks:
- Time-consuming
- Requires consistent, high-quality data from recent projects
This method is best suited to asset managers who have access to detailed cost records and want to achieve maximum accuracy.
Hybrid Approach: The Best of Both Worlds
Many organisations choose to combine the methods above to balance accuracy with efficiency.
Example approach:
- Use a construction handbook to establish baseline costs
- Apply a standard uplift to categories where less detail is available
- Validate and refine high-priority rates using actual contract data
This hybrid model gives you broad coverage with enhanced precision where it matters most - such as high-value, highly common or high-risk asset categories.
The Impact of Inflation:
Cost increases in recent years have not been uniform. Our analysis of data through this period shows clear disparities across asset categories – with typically fabric and fit out componentry increasing at a faster rate than plant and equipment:
- Exterior & Sundries: High increases (approximately 30%) driven by materials like fencing, paving, and roofing.
- External Fabric: Significant spikes (approximately 35%) due to high demand, material costs and labour shortages in construction trades.
- Interior finishes: Inflated costs (approximately 30%) for paint, flooring, and fixtures/fittings.
- Electrical Services: Prices have risen by a moderate amount (approximately 20%) due to supply chain issues and evolving tech standards.
- Fire Services & Mechanical Services: Noticeable increases (approximately 20%) linked to compliance changes and supply issues.
These variations underscore why a flat percentage increase simply isn’t enough. Without nuanced updates, your forecasts risk being either too conservative or unrealistically optimistic - and costing you either way.
Time to Take Action
Keeping your unit rates up to date isn’t just a data hygiene task - it’s essential for effective asset management. When your unit rates reflect current market conditions:
- Your budgets are more accurate
- Your investment decisions are better informed
- Your long-term asset planning is more resilient
SPM Assets gives you the tools to manage lifecycle costs with precision, but it relies on you to maintain the accuracy of the data inputs - especially unit rates.
Optimising Your SPM Assets Setup
Log in to SPM Assets software and review your unit rates today. Even a small update can lead to a big improvement in forecast accuracy.
Need help? Contact us to learn more about optimising your SPM Assets software setup. We can assist with rate reviews, data updates, and system configuration.
Want to go deeper? Request a demo today and gain practical insights into using SPM Assets software to its full potential.