Life Cycle Cost (LCC) is a term that describes the total cost of an asset, including all expenses from its construction to its end-of-life, while meeting the required performance standards. In simpler terms, it’s about understanding the full financial picture of a building or its components over time.
Life cycle costing involves systematically evaluating the economic aspects of a building’s life over an agreed period, according to the guidelines in BS ISO 15686-5.
Whole life costing takes this a step further, considering not only life cycle costs but also additional factors like non-construction costs and potential incomes, providing a comprehensive financial perspective.
Life cycle costs can be broken down into several categories, each playing a crucial role in the overall financial assessment.
This category includes various elements such as building works, external works, furniture, fittings, and services provided by specialist contractors and artists.
Encompassing initial construction phase expenses, these costs may include site-enabling works, consultancy fees, planning fees, and more.
Maintenance costs involve efforts to extend a building’s life, covering repairs, regular servicing, and potential replacements for components like boilers or roof tiles.
These costs pertain to ongoing building operations, including cleaning, energy costs, administrative expenses, waste management, and insurance.
Dependent on building usage, these costs may include internal moves, ICT services, telephone services, catering, and hospitality.
Costs and credits associated with the end of the analysis period, covering disposal inspections, demolition, reinstatement, and considering residual building or site value.
Life cycle costing involves various stages:
Analyzing historic data and physical performance to understand the actual costs of occupying a building.
Strategic planning to control occupancy costs throughout a building’s life, ensuring optimal value for the client.
Predicting future costs, evaluating alternative techniques, and making choices for maximum client benefit.
Life cycle costing finds practical use in several scenarios:
In essence, understanding the life cycle cost of a building is a comprehensive and practical approach to financial planning, ensuring informed decision-making from construction to the building’s end-of-life.