Life Cycle Costing Assessment

When comparing design alternatives, the one with the lowest initial investment may not perform best over the long term. A highly specified alternative often performs better over the life-cycle, despite higher investment in construction. But not always – investing more doesn’t necessarily give good value. It is important to avoid under-investment, when life-cycle performance suffers due low initial investment; but it is equally important to avoid over-investment, when initial investment is too high to be offset by savings during the service life. The principle is simple, but a systematic methodology is needed for life-cycle evaluation in complex, real life construction projects.

There is an important distinction between life-cycle evaluation that is carried out in terms of money, which is called life-cycle costing (LCC), and life-cycle evaluation that is carried out in terms of environmental impacts, which is called life-cycle assessment (LCA). Money-based LCC is relatively well established and there are many data sources for the cost ofbuilding materials, building construction and running costs.Environmentally-based LCA is a more recent development, but with concerns about climate change it is being given increasing attention.However, data sources for LCA are less complete but they are improving rapidly.

Up to now, LCC and LCA have been regarded as separate studies using different evaluation tools, but the CILECCTA system will combine both,creating a tool for life-cycle costing and assessment.

Current methods of life-cycle evaluation (both LCC and LCA) assume that exact data about the future is available, but this is rarely if ever true. CILECCTA takes account of future uncertainty, replacing a single prediction about the future with scenario modeling over a range of possible futures. In CILECCTA it will be possible to describe factors like component service lives and future costs by a range of values, not a single predicted value. With inputs of this type, the findings of the life-cycle evaluation will take the form of probability distributions, providing a more realistic basis for decision-making.

CILECCTA's probabilistic approach allows a further advance, by providing for the evaluation of flexible design alternatives. Flexibility can be an effective strategy when the future is uncertain, because it allows new decisions to be made in the light of unfolding events that are unpredictable at the time of design. By reducing the impact of uncertainty, flexibility increases project value. And the greater the level of uncertainty, the greater the value of flexibility .

CILECCTA's assessment methodology will link LCC and LCA, adopt a probabilistic approach and evaluate flexible design alternatives. This will support improved decision-making in construction industry, leading to more sustainable buildings and infrastructure .