SCIENCE AND MATHEMATICS, Thesis of Medical Sciences

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LIFE-CYCLE-COSTING

CONTENTS

▪ Introduction ▪ Concept of Life-Cycle-Costing ▪ Definitions andTerminology ▪ Objectives of LCC ▪ Life Cycle Cost Planning, Management and Analysis ▪ The Concept of Levels for LCC ▪ Factors to consider ▪ Obsolescence < > Deterioration ▪ Maintenance ▪ Applications of LCC ▪ Disadvantages of LCC ▪ LCC Methods ▪ Valuation Tables: Amount of 1 , Present Value of 1 , Amount of 1 p.a, Present Value of 1 p.a & Annual Sinking Fund ▪ Annual Equivalent Method ▪ Exercises

LCC Roles : Attempt to price as many of the

factors affecting the value of the building

or project cost

By bringing the value to one single cost

Compared with other design solutions or

others

INTRODUCTION

▪ In addition, for cost planning to be effective, initial cost and future cost must be taken into consideration. ▪ That include construction cost, modification and alteration cost, and servicing cost, which are spread in a stream of costs over the life of building. ▪ These costs are measured in different units: unit payable today at various times in future

INTRODUCTION

DEFINITIONS

▪ Therefore, LCC has replaced CIU

▪ LCC depends on owners, users, designer’s

efforts to minimize recurring costs

Construction Commission Demolition CIU – recurring costs Inception LCC

TERMINOLOGY Initial costs User costs Running costs (^) Occupational charges TOTAL COSTS (over the life span of building) ▪ Land ▪ Construction ▪ Professional fees ▪ Agency fees, etc ▪ Taxes (assessment and quit rent) ▪ Insurances ▪ Modifications and alterations ▪ Management cost ▪ Demolition cost ▪ Maintenance ▪ Operating charges, fuel, machine/plant ▪ Operating bills

THE CONCEPT OF LEVELS FOR LCC LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 Inception Feasibility Scheme Design Detail Design Production Information Bills of Quantities Early LCC (where not much detail is available) Budget LCCP Brief LCCA Brief LCCP Detailed LCCA Detailed LCCP Detailed LCCA Detailed LCCP LCCM LCCM Detailed LCCM The Relation of Levels (source: Flanagan and Norman in Brandon, p.142)

FACTORS TO CONSIDER

1. Life of Investment
2. Building’s Life ▪ Physical or Structural Life ▪ Economic Life
3. Component’s Life
4. Interest Rate
5. Changes in Money Value
6. Obsolescence ▪ Physical ▪ Economic ▪ Functional ▪ Technological ▪ Social or legal

THE DIFFERENCE BETWEEN OBSOLESCENCE AND DETERIORATION OBSOLESCENCE DETERIORATION Controllability Much more difficult to control – concerned with uncertain events – e.g. prediction of changes in fashion, technology development and innovation in design and use of buildings A function of time and use – can be control by selecting appropriate materials and components and correct maintenance while in use Continuity of process Process is random – building that become obsolete accept that better facilities are available elsewhere Process is continuous – results in absolute loss of use of facility Predictability Cannot be forecast – difficult Is predictable - can be remedied at a price

OBSOLESCENCE Therefore, obsolescence can be defined : ‘‘as value decline that is not caused directly by use/passage of time’’ Because of the large investment when it comes to building construction, demolition due to obsolescene, is a last resort and will only takes place when building no longer capable of: i) renewal, or ii) is in a wrong or decaying environment, or iii) the site on which the building stands may be required for other purposes

MAINTENANCE ▪ Prime benefits of maintaining a building: i) To retain the value of the investment ii) To maintain the building in a condition in which it continues to satisfactorily fulfil its function; and iii) To present a good appearance to the public.

TYPES OF MAINTENANCE Planned Maintenance Unplanned maintenance Maintenance Preventive maintenance Corrective (including emergency maintenance) Condition-based maintenance Schedule maintenance Corrective (including emergency maintenance)

DISADVANTAGES OF LCC

1. The difficulty of accurately assessing the maintenance and running costs of different materials, processes and systems
2. Three types of payments involved which are initial, annual and periodic
3. Tax
4. Interest rates
5. Inflationary
6. Project sold as an investment on completion
7. Limited intial funds
8. Changes in taste and fashion, stutory requirements, etc., ‘‘future cannot be forecast’’
9. Life of buildings, materials and components

VALUATION TABLES

▪ Concept of time/value of money affect LCC

calculations

ie initial costs is unlikely the user costs

▪ Face value of money remains the same but the

actual value differs

▪ ‘‘Compound interest table’’ is used to rationalize

the face value or cost

▪ To evaluate both initial and future costs

Reduce the costs to PV or AE

Requires knowledge of:

valuation tables, their application and use