Institutions of higher learning, including research universities
and academic medical centers, face constant budget pressures along
with stringent financial reporting requirements. Transparency in
accounting and efficient use of resources are critical – and
a comprehensive building componentization program can assist
institutions with both, as well as leading to increased indirect
cost recovery.
Building componentization is defined as the allocation
of reported costs for original construction, additions, and capital
renovations on a building-by-building basis to appropriate
categories/components for the purpose of more accurately
calculating financial depreciation. Many institutions assign a
single life – typically 40 or 50 years – to assets
classified as buildings. However, building components such as
building service systems and fixed equipment can have significantly
shorter lives, and thus depreciate at a faster rate. This more
accurate allocation of reported
