Introduction To Whole Life Costing

Value for money is a concept that is frequently considered, when an individual or an organization is seeking to make a purchase or investment. For example, when acquiring a new car, we may consider the costs of ownership (fuel economy, insurance, maintenance, availability of replacement parts, etc.) when selecting alternatives. Implicitly then, we consider the long-term costs of ownership in the decision making process. Furthermore, it could be argued that the larger the capital cost of a product, the more important it is to consider these long-term costs. Buildings are a prime example of high cost purchases, yet consideration of long-term costs is not given the attention it deserves. The past 30 years have seen many attempts to encourage a holistic approach to what is in effect ‘whole life’ cost analysis. One such technique that is currently emerging in the industry is whole life-cycle costing (WLCC). Whole life-cycle costing is a relatively new concept to the commercial industry, albeit based upon the foundations of analytical techniques that have been in existence for some time. It is in essence an evolution of life- cycle costing (LCC) techniques that are now commonly used in many areas of procurement. Like LCC, the primary purpose of WLCC is to aid capital investment decision making by providing forecasts of the long-term costs of maintenance and ownership of a building or structure. However, unlike LCC it is also a dynamic approach, and can provide up-to-date forecasts on cost and performance throughout the life of the building. Some of the ideas behind the justification for WLCC are synonymous with key issues in today’s commercial industry:

• Sustainability Achieving sustainable design solutions relies on the consideration of long-term operational costs and performance of building components

• Monitoring performance of building assets

• Monitoring cost effectiveness of operational assets WLCC provides the means by which to constantly review this and base future capital investment on this information

• Lean construction by physical performance, waste is minimized both during construction and through the life of the building. Therefore, the aim of this course work is to provide a general overview of the fundamental ideas and principles behind WLC and to demonstrate how it can be of benefit to the commercial industry practitioner.