Lifecycle Costing

Lauren Williams

What remains a constant no matter the industry, is that everyone involved with a project wants to feel like they got the best value for their money and lifecycle costing is one way to achieve that. This approach is more transparent and allows clients to evaluate options they may not have considered on upfront cost alone.

What is it?

Life-cycle costing is a technique used to combat the increasing competitiveness of business as well as the looming threat of dwindling resources. It functions by considering all the operating costs of a building during its lifespan (Wooward 1997 p.335).

Life-cycle costing aims to better represent the monetary value of an asset beyond just the initial purchase price. Cheaper isn’t always better and given the climate crisis, scarce resources and land coming at a premium, it is more crucial than ever to get good value for money.

Typically, 75-95% of the cost for running, maintaining and repairing a building is determined at the procurement stage (Cartlidge 2022 p.121).

APplication?

Life-cycle costing is a valuable exercise for the benefit of the client in revealing the option that works out cheaper in the long run yet would potentially be overlooked because of the initial price tag being higher.

While it is a good exercise to partake it, it is difficult to lifecycle cost without a detailed design and specification for a building. Without knowing the level of thermal transmittance throughout the building determined by size, shape and materials, it is difficult to make an accurate assumption.

Because of this, below are some examples of what a client may choose in order to receive the payoff later in the asset's lifespan.

Photovoltaic Panels

Photovoltaic panels (PV), which harness energy from the light of the sun, are an attractive option and fairly commonplace as a source of low-carbon energy (Lang, Ammann and Girod 2016 p.77).

One of the main reasons they are seeing a greater uptake is the ability to provide energy to your building, be it small residential or large educational, directly, bypassing the more expensive grid power (Lang, Ammann and Girod 2016 p.77).

PV panels are both attractive for an owner but also a large commitment as the average ‘payback period’ of the panels is around 15, though that is expected to shorten as production benefits form economies of scales and advancing technology (Reid and Wynn 2015 p.7826).

Energy Efficiency

Building an energy efficient property is another way which money can be saved within the lifespan of the asset. Having a well-insulated but also breathable interior is key to keeping costs low year on year – less money spent on energy to both heat and cool.

It is a battle between the those holding view that being deemed ‘green’ should add to the value of a property, and those which are sceptical of the benefits matching the increased price tag of certain systems and techniques (Zalejska-Jonsson, Lind and Hintze 2012 p.211).

Constructing a building to Passivhaus standards costs up to 17% more than a conventional build (Zalejska-Jonsson, Lind and Hintze 2012 p.212).

Building to such a standard is perhaps more attractive of an option for an asset which one intends to maintain control over and subsequently has to pay the bills such as in their own home, for developers’ there is often some reluctance to spend extra for a benefit they will not experience.

Durability

Another consideration is that of the material or component’s durability – how it survives overtime.

Timber frames for example are criticized due to their perceived shorter lifespan than steel or concrete. This leads certain developers to shy away from the idea despite the being the obvious choice for a material which is renewable with low embodied energy whilst still being great for structures.

BS5268: Part 5: 1989 dictates the service life of a timber frame structure should be 60 years. (Structural Timber Association 2013 p.3).

Value Management/Engineering

Elements of life-cycle costing coincide with practice of value engineering in which the aim is to objectively judge options against criteria and identify the best solution (Cartlidge 2022 p.127). Sustainability, maintenance and repair are all considerations for determining the lifecycle cost of an asset and such may also be considered during the process of value management.

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