KING FAHD UNIVERSITY OF PETROLEUM & MINERALS DHAHRAN, SAUDI ARABIA ARE-512

1. KING FAHD UNIVERSITY OF PETROLEUM & MINERALS DHAHRAN, SAUDI ARABIA ARE-512 Life Cycle Costing – Cost Data Bank For By G. C. SOFAT S.K. TYAGI Presented By Abdulwahid Al-Zahrani For Dr.Sadi Assaf January 14, 2008

2. OUTLINE 1- SUMMARY 2-INTRODUCTION 3-LIFE CYCLE COSTING – BASIC CONCEPT 4-COST DATA AND PREDICTION FACTORS 5-MAINTENANCE COST 6-INFLATION RATE 7-LIFE OF MATERIALS AND COMPONENTS 8- CONCLUSIONS

3. 1- SUMMARY A comparison of the initial costs of alternative specifications, techniques or materials may not lead to judicious economic conclusions unless the implications of future costs spread over the whole life of the building are taken into account. Life cycle cost analysis is the answer for such a comparison which allows cost assessment of alternative solutions on the basis of all relevant economic consequences over a given period of time. Studies are being conducted at the Central Building Research Institute (CBRI), India to build up a viable cost data bank for life cycle costing. The analysis of the data collected so far will be discussed in the paper.

4. 2- INTRODUCTION A true assessment of the effect of planning and design on the cost of a building can best be judged by considering the interactions between various design features and their construction and recurring costs. In order to obtain the best value for the money spent, a judicious selection of construction materials, techniques and specifications is assuming importance in our developing economy. Application of value management is one of the means to ensure the optimum value for money spent associated with acquiring and owning a building. The essential features of such value management are designing and planning the building to the minimum life cycle cost (LCC) - a concept in value engineering that takes into account the total costs over the entire productive life of a building rather than just the initial cost of construction.

5. Application of this technique (LCC) requires a considerable amount of prediction of cost data which is difficult to obtain at present. Efforts are being made by the CBRI to develop a viable data bank on recurring costs of various components/specifications of buildings which are discussed in the paper.

6. 3- LIFE CYCLE COSTING – BASIC CONCEPT It is a matter of common observation that there are more than one alternatives for an element or component of a building to satisfy a given function. Cost evaluation of these alternatives on a common base is prudent and desirable to effect economy as cost is now becoming a predominant factor in construction industry. The economic assessment of these costs is also necessary to provide some basis for selecting the best investment in building and get the optimum ownership cost. The system of considering only the initial costs for comparative purpose is not rational as the subsequent costs associated with running and maintenance of building are also equally important. So it would be misleading to judge the design entirely in relation to the first costs without considering the implications of the future costs.

7. The life cycle cost analysis offers a solution for comparison of various alternatives which involves all relevant economic consequences spread over the entire productive 1ife of the building. This technique provides an essential tool to the designers and planners for evolving ultimate economical or alternative solutions at the design stage itself. The most economical solution for an element will be the one which has the minimum aggregate of the initial cost and capitalized future costs.

8. 4- COST DATA AND PREDICTION FACTORS The technique of life cycle costing is relatively new in our country and has not found general acceptance of the designers. This is particularly due to non-availability of data on these hidden costs without which the evaluation will not yield desirable results. Studies are now in progress at the Institute to build up a viable data bank of maintenance and recurring costs of various alternatives an prediction of life of different components.

9. 5- MAINTENANCE COST Maintenance cost assessment is one of the prerequisites for application of life cycle costing. A study was taken up by the Institute to compile the maintenance cost of various specifications which is one of the most complex problems in the whole process of maintenance of buildings. Assuming that, the data worked out today will be applicable in future also. The study was based on the maintenance work being carried out by various organizations in different zones of the country. It was restricted to residential construction only and the buildings were chosen carefully so as to cover different types of occupancy, age of building and a variety of specifications.

10. The record of four years maintenance work in northern zone was analyzed with the price level of 1984. The details of the specifications/alternatives covered in the study and their maintenance cost per year is given in the following table.

11. Table 1 Maintenance Cost of Various specifications (Cost in Rupees Per Year)

12. 6- INFLATION RATE The general approach with life cycle studies is to relate all prices to a common base. Since the maintenance costs given in Table 1 are based on price level 1984, there is a need to update these costs for future accountability. New construction works are overweighed in cost of materials and maintenance jobs are overweighed in Cost of labor. So the trend of inflation in both the cases is likely to be different unless the escalation of prices of all materials and labor is uniform -a phenomenon which rarely occurs. So there is a need to work out a methodology for computation of maintenance cost indices.

13. A new methodology has been proposed for computation of maintenance cost indices with the help of weighting diagram. This weighting diagram is given in the following table along with the procedure to compute cost index.

15. 7- LIFE OF MATERIALS AND COMPONENTS The life of structure depends upon many factors like the type and quality of construction, nature of occupancy, surround­ing environments, materials used for construction, standard of upkeep and maintenance etc. The life of different components and elements are also equally important in such analyses. These are essential, particularly when the life of the component is expected to be less than that of the building, as it determines the frequency of replacement of the component. These can be predicted based on the past performance of the specifications with respect to their replacement an maintenance cost.

16. A few years back, an attempt was made at the Institute to predict the life of different components of the building. The study was based on the survey of property records and past history of about 850 dwellings maintained by works departments. The study was restricted to predict the above factors only. But the process of predicting these costs is not free of errors. There maybe many factors contributing to these errors but the root cause is the uncertainty of the future. The study gives the tentative lives of a few items which are shown in the following table.

18. 8- CONCLUSIONS The life cycle costing is a valuable tool for evaluating various alternative investments, particularly for projects with long live span. The successful application of the technique depends upon the reliability of the cost data. Initial steps have been taken up to build up information on the recurring costs and life of different components. Efforts should be continued to improve its value by developing a viable cost data bank on various types of construction with different specifications in different situations.

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