Relationships between life cycle assessment and risk assessment. One method for executives, building owners, and facility managers to make informed decisions between investment alternatives is life cycle cost analysis lcca. The australian and new zealand standard life cycle costing an application guide asnzs 4536. Abstract this paper deals with the whole lifecycle costing wlcc on the example of construction industry because wlcc methods is well elaborated in this area. Life cycle costing lcc is defined in the international organization for standardization standard, buildings and constructed assets, servicelife planning, part 5. Life cycle cost analysis ankur bansal 09010408footer text 1122012 1. Lifecycle costing focuses on a products entire value chain from a cost perspective. Risk and risk responses abdelhalim boussabaine, richard kirkham on. Approach on life cycle costing lcc and its benefits. Lifecycle costingiso 156865 as an economic assessment considering all agreed projected significant and relevant cost flows over a period. Lifecycle cost analysis for management of highway assets. It is necessary to estimate a long time many of the above factors, such as operating costs and maintenance costs, discount rates and the inflation rate itself. Whole lifecycle costing, risk and risk responses, blackwell.
Life cycle cost analysis performance testing, such as the apa, can be used to ensure that mixes will meet the required life span mixes can be reformulated to be better performers and last longer lcca shows that if a mix lasts a little longer, it can mean great savings. Boussabaine and kirham demonstrated in their book whole lifecycle costing. Capmanex covers the work that goes beyond routine maintenance to repair and replace. Integrated life cycle assessment and activity based life. The general concept of a life cycle cost is not new.
What is life cycle costing analysis all about and what are the advantages and disadvantages of the life cycle costing approach. Whole lifecycle costing wlcc is rapidly becoming the standard method for the longterm cost appraisal of buildings and civil infrastructure projects. Cycle costing wiley online books wiley online library. The future is unknown, but lcc encompasses a countless deal of forecasts and assumptions of the future. Evaluation of life cycle cost analysis methodologies senthil kumaran durairaj, s. Wholelife cost is the total expense of owning an asset over its entire life, from purchase to disposal, as determined by financial analysis. This article presents an integrated approach of lcaactivity based lcc to minimize the environmental impact across the life cycle as well as to identify.
Other countries, such as canada, australia, and egypt, have also developed life cycle cost analysis methodologies. Life cycle costing lcc, by definition, refers to an analysis technique which encom passes all costs associated with a product from its inception to its disposal. Life cycle assessment lca enables the evaluation of environmental impacts associated with the processes. Risk analysis and life cycle costing are conducted at the beginning and. Lcc was originally developed as a formal analysis tool by the us department of defense. Evaluation of life cycle cost analysis methodologies. An integrated environment for life cycle costing in. Lifecycle cost analysis lcca is a tool to determine the most costeffective option among different competing alternatives to purchase, own, operate, maintain and, finally, dispose of an object or process, when each is equally appropriate to be implemented on technical grounds. Risk analysis in the theory of whole lifecycle costing. Life cycle costing spreadsheet instructions 2 the only information the user needs to input into the front sheet is the number of systems being costed out. As a result of growing awareness of whole life costing among corporate occupants. Risk analysis risk analysis helps to estimate the levels of risk and uncertainty within final economic decision measures such as bcr and npv, from uncertainty in the key input variables feeding into the project evaluation process. Risk assessment methods for life cycle costing in buildings.
Lifecycle costing is a methodology where costs of a given asset are considered throughout its lifecycle 201424eu art. Expenditure on asset renewal, replacement and rehabilitation costs, based upon serviceability and risk criteria. Risk and risk responses boussabaine, abdelhalim, kirkham, richard on. Lifecycle costing financial definition of lifecycle costing. What is life cycle costing life cycle costing lcc is a methodology that enables you to incorporate costs and benefits that occur over the entire life cycle of a product into your procurement decisions rather than considering the initial capital cost of a product only costs and benefits. Decisions made during the design and construction phases of a project can have a lasting impact on. Note 1 lifecycle costing takes into account cost or cash flows, i. Trbs national cooperative highway research program nchrp synthesis 494. Life cycle costing is methodology for the systematic economic evaluation of life cycle costs over a period of analysis, as defined in the agreed scope. It tracks and evaluates costing from the research and development phase of a products life, through design, manufacturing, marketingdistribution and finally customer services. Whole life risk and risk responses at construction stage.
Whole life costing is relevant when considering whole estates, whole facilities, individual buildings or. Undertake a risk and sensitivity analysis of the key variables to predict best and worst case scenarios. L ife cycle cost analysis is a method of determining the entire cost of a structure, product, or component over its expected useful life. Lifecycle cost analysis for buildings is easier than you. Tan after the emergence of life cycle engineering as an effective tool for analyzing the various environmental impacts of a product in the stages of designydevelopment, manufacturing. Various risk assessment techniques could be used to assess that risk. The first use is to compare the costs between two or more of the same system type. Overall, the chair is assumed to have a life time of 2 years, which is. Relationships between lca and risk assessment isbn 91. The vice provost for land and buildings convened a team of staff from departments within land and buildings, along. Life cycle costing lcc life cycle costing, lcc, is the process of economic analysis to asses the total cost of ownership of a product, including its cost of installation, operation, maintenance, conversion, andor decommission. Whole life and life cycle costing view case studies. Whole lifecycle costing risk and risk responseshalim a. Life cycle costing includes all expenses from research and development, marketing, customer services and so forth.
Over a typical lifetime of a building, the operational costs are likely to be four to five times greater than the construction cost. Risk and risk responses with its mixture of established theory, best practice and innovation wholelife costing. Life cycle costing lcc is a method of economic analyzing of all costs. He has written widely on cost modelling for researchers and professionals and is the lead author of whole life cycle costing. Life cycle costing financial definition of life cycle costing. Given a situation like network upgrading and the project team chooses to use this approach, what will be the benefits and disadvantages. Ghg reduction goal 30% by 2016 from 2006, including growth at the university level, lcc allows for a common set of financial metrics to. For example, for a highway pavement, in addition to the initial construction cost, lcca takes into account all the. It is calculated from the beginning of a products research to its estimated date of withdrawal from the market.
Harvard university life cycle cost calculator overview introduction to life cycle costing lcc why do we use it. The prevalent market conditions have momentous influence on lcc. Risk management and life cycle costing of infrastructure project 1amaan iqbal thakur, 2sakib khan, 3mohd junaid siddiqui 1,2,3civil eng. Abdelhalim boussabaine dingenieur detat, msc, phd is a lecturer at the school of architecture, at the university of liverpool. Boussabaine liverpool school of architecture and building eng. Risk and risk responses that decisionmaking uncertainty in wlc can be reduced by basing choices on sound risk management principles, identifying a systematic approach to planning the postoccupancy costs 48. Life cycle costing and calculation of value added in openlca.
Design decisions made at this project phase are determining the whole life effectiveness of. This paper traces the development of the life cycle costing lcc technique in the united states and classifies documented lcc literature by both model type and application. The standard defines it as the process of assessing the cost of a product over its life cycle or portion thereof. Life cycle costing helps a company determine whether or not a product is going to be profitable.
A life cycle cost analysis of rigid pavements project. Considering that project managers in construction have key roles for a broader application of sustainable building it is interesting to investigate the interrelation between project management practice and lcc thinking. It is also known as a lifecycle cost, which includes. Lifecycle costs approach lifecycle costs refer to the costs of ensuring adequate water, sanitation, and hygiene wash services to a specific. Lifecycle cost analysis for management of highway assets documents the state of the practice of lifecycle cost analysis lcca and riskbased analysis into state highway agencies asset management plans for pavements and bridges on the national highway system. These include the maintenance and operating costs, rate of interests, inflation, material and component prices. Life cycle costing in construction projects a case study. At one extreme lies the purely multicriteria analysis, which employs weights from.
Life cycle costing and risk management request pdf. Aiktc, panvel abstract risk management is a concept which becomes very popular in a number of businesses. Figure 1 harveys life cycle costing procedure the life cycle cost of an item is the sum of all funds expended in support of the item from its conception and fabrication through its operation to the end of its useful life,2o, p 39 thus, the lcc of a physical asset begins when its. Life cycle costingtheory, information acquisition and.
The optimization of the lifecycle cost of a project, construction, and. Through lcc one seeks to minimize the cost of obtaining a cer tain level of output. Risk management and life cycle costing of infrastructure. Life cycle costing is trying to calculate the future. Recognizing its benefit, several agencies have implemented lcca programs and have successfully saved. Life cycle costing and calculation of value added in openlca version. It has now been successfully applied in the industrial and consumer segments. Using activitybased costing and monte carlo methods to manage future costs and risks. Life cycle cost analysis lcca is a datadriven tool that provides a detailed account of the total costs of a project over its expected. Integrating life cycle costing and life cycle assessment for managing costs and environmental impacts in supply chains. Definition, objectives and benefits of life cycle costing lcc 2. Life cycle costing is the comparison of alternatives, the life cycle costs and consequently the lcc data should be presented in a way that enables that comparison. The cost of operating, maintaining, and using the item is added to the purchase price. Part i deals with the fundamentals, providing the general background to appreciate wlcc concepts and whole life risk management techniques at the key decisionmaking milestones through a projects life.
The case study is a about the life cycle of a wooden chair, the functional unit defined as sitting on the chair for ten years. Risk and uncertainty is endemic to life cycle costing, and requires that an effective risk management system be an integral part of life cycle cost analysis. The factors affecting the investment life of a project 3. The costs and values included in a life cycle costing exercise. The questionnaire responses were assigned cresswell 35 indicated that the most. This project represents an advancement in life cycle cost analysis, providing as it does a. Life cycle costing lcc enables the attainment of economic aspect of sustainability. Life cycle costing seems still to be missing within project management practice. The front sheet can be used for two different purposes. Lifecycle cost analysis for buildings is easier than you thought.
Life cycle cost optimization within decision making on alternative. Many companies often establish a risk management procedure in their. With clients now demanding buildings that demonstrate value for money over the long term, wlcc has become an essential tool for those involved in the design, construction, operation and risk analysis of construction projects. Life cycle costing for facilities download ebook pdf. Typically low risk investment lesseeoccupiers ones who rent space in a bldg through a. Risk analysis in the theory of whole lifecycle cos ting ing. Despite existing life cycle costing models, descriptions and practicable suggestions for conducting life cycle cost analyses, no systematic anatomy on actual implementations of life cycle costing methods exist in indian context including defence procurements.
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