Find out how development impacts costs including ongoing maintenance, renewal and increasing service levels.
Building a municipality requires investment, not just in the initial capital investment of building assets but throughout the assets’ life. The long-term costs include maintenance, operations, service delivery and reinvestment. For example, the initial cost of 1 kilometre of a typical Edmonton neighbourhood road is about $1.5 million. The road will usually last 25 years, but proper maintenance and renewal could extend its life to 50 years.
The Investment
Throughout the life of the road, it would cost approximately $600,000 to operate and maintain and another $1.9 million to renew and replace. The total cost over its life would be about $4 million. Or about 2.5 times the initial capital investment. For every dollar invested, we need to set aside, on average, 3% of the infrastructure’s value to operate, maintain, renew and replace the road.
A more complicated example is a fire station. One fire station will usually last about 40 to 50 years. Suppose one station costs about $13 million to build, $16 million to operate and maintain, and another $27 million for renewal and replacement. These costs bring the total cost over its life to $56 million. This total cost could be up to 5 times the initial capital investment. For every dollar invested, we would need to set aside at least 6% of its value to sustain the fire station throughout its life.
Although, these estimates do not consider the cost of service delivery. The City would also need to hire at least 25 firefighters and provide them with the proper fire rescue equipment. These needs would cost about $150 million more than the cost of the 50-year life of the asset, or more than $3 million every year. Considering these service delivery costs, we would need approximately 16 times the amount of the initial capital investment to own and operate the fire station.
More Services Means More Costs
There are costs to adding programs or services for residents; more services means more costs. Services, including firefighting, police operations, swimming instruction, and recreation programming, need people and infrastructure to deliver them. The more services offered, the more people are needed. As a municipality expands, service levels and costs increase.
Infrastructure requires maintenance to perform a service to its intended level. More assets mean more maintenance and cost are needed to ensure that assets perform to this level.
Contact Us
Lifecycle Management
12th Floor, Edmonton Tower
10111 104 Ave NW
Edmonton, AB T5J 0J4
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