The database
The dataset is drawn from audited or certified Service Charge accounts with 'year end' dates falling within the 2006 calendar year.
The database is split into two property types, air-conditioned and
non air-conditioned. The 'Definition of terms' describes the principal
cost categories and geographical regions utilised within the report.
We have been working to align Office OSCAR with the new RICS
Service Charge Cost Code. This year we have refined the categories
further and we anticipate we will be fully aligned to the Code next year.
Insurance
Insurance costs are excluded from OSCAR for two reasons:
- firstly, insurance premiums now rarely feature within service charges and are typically direct-charged to tenants instead.
- secondly, there is little point comparing insurance costs without having regard to the breadth and quality of cover, together with the nature of commission payments.
Interest
To facilitate level benchmarking, we have elected to disregard any interest receipts included within the service charge reconciliations contributed to the dataset. However, in future OSCAR reports interest will be shown as a separate income line, consistent with the recommended RICS Cost Categories.
Exceptional Expenditure
Exceptional Expenditure is excluded, allowing like-for-like comparison of Base-level service charge costs. However, in-line with the RICS Service Charge Code, future reports will show Exceptional Expenditure as a distinct cost category. This will allow the benchmarking of full service charge costs (i.e. Base-level plus Exceptional Expenditure).
Office OSCAR is intended principally to assist in benchmarking and forecasting service charge costs. However, buildings differ substantially in terms of construction, age, layout, gross to net floor area ratio, staffing and security levels, hours of operation and standards of maintenance and management. All these factors must be taken into account when drawing from the data found within OSCAR. To assist, we provide what may be regarded as an acceptable range in service charge costs. This is done by quoting upper and lower limits that capture the middle 50% of sample values. However, this is not to say that, in certain circumstances, there may be good reason for bona fide costs to fall outside these boundaries.
Statistical technique
- The upper and lower limits quoted are calculated at plus and minus 0.7 standard deviations from the arithmetic mean. This is designed to capture the middle 50% of values, assuming that the data has normal distribution.
- As a consequence of items of Exceptional Expenditure being excluded from the OSCAR dataset, it is considered appropriate to use the arithmetic mean as a measure of central average, rather than the median.
Conventions
- In line with market practice, OSCAR data is quoted excluding VAT.
- In order to allow level benchmarking every effort has been made to exclude Exceptional Expenditure from the analysis.
- Metric equivalents have been shown where practical, rounded to the nearest convenient equivalent, but the analysis is principally in imperial data.
- The costs do not include the direct recharges borne by occupiers in relation to their own demised areas.
- Interest payments credited to the service charge accounts are currently excluded from the dataset to avoid potentially distorting the underlying operational costs.
- In-line with market practice, any insurance costs are removed from OSCAR.
