SCI-Network - Sustainable Construction @ Innovation through Procurement

SCI Network - SCI-Network - Sustainable Construction @ Innovation through Procurement
Life cycle/whole life costing

Life cycle/whole life costing

 

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Whole life costing (WLC) or life cycle costing (LCC ) is the methodology for systematic economic consideration of all costs and benefits accruing to the owner over a set period of analysis. A true WLC approach to a construction project would take into account the costs of planning, development and design, construction and implementation, operation over the life time of the building, and decommissioning costs.

WLC can be used at any stage of a construction project as a tool for assessing the relative costs and benefits of project alternatives – for internal investment decision making and business case development, for application by the design team at different design stages, or as an evaluation tool within competitive tendering procedures.

You can browse through the recommendations and snapshots of this chapter by clicking on the below expandable sections. You can also download the chapter in pdf by clicking here.

Recommendation 7.A: Identify a suitable model for WLC/LCC at project planning stage, which meets the principles of the ISO 15686-5 or equivalent, to inform decisions throughout the procurement process. This should at least cover:

  • total construction costs,
  • annual operation costs,
  • annual maintenance cost,
  • annual occupier staff cost (including training for building users/managers on relevant technologies),
  • end of life costs.

Recommendation 7.B: Ensure facility managers are closely involved in WLC procedures.

Recommendation 7.C: Evaluate the cost of bid during competitive tendering for design and/or construction work using the selected WLC/LCC model, and communicate this, together with the weighting and associated scoring, in tender documentation.

Recommendation 7.D: If a public authority does not have the internal capability to undertake robust LCC/WLC calculations, it is recommended to either:

  • provide training for employees on WLC/LCC based on ISO 15686-5: 2008 to enable quantity surveyors, designers and engineers to incorporate WLC in the design and planning stages of construction projects (preferred option), or
  • outsource the calculation to a third party expert. This is only advisable if the cost does not exceed the cost of increasing internal capability.

Recommendation 7.E: Joint project teams should be established and ‘total budgets’ piloted with both procuring and operating departments, to help share project costs between departments. It is expected this will help identify potential in-use costs and encourage design innovations from the outset.  Facilities Management or Property departments may be asked to pay a percentage contribution towards Capital Cost to influence the management of the operations budget and help optimise WLC decisions at the project outset.

  • Snapshot: Innovative kerb edgings in Wakefield - For the procurement of innovative kerbing in Wakefield (see also section 3), offers were assessed based on whole-life costs. This took into account purchase, delivery, use, and disposal costs. In addition the Council also identified the potential social, environmental and economic impacts and costs throughout the product’s lifecycle. This led to the selection of a lightweight kerbing made entirely from recycled materials, despite a purchase price 235% higher than standard solutions. The whole life cost was ultimately lower, due to improved health and safety associated with manual lifting and vibration from cutting and shaping as well as the need for lifting machinery, improved durability, and lower transportation costs due to the material being considerably lighter. CO2 emissions due to transportation were reduced by 73%, and embodied emissions were also 17% lower.
  • Snapshot: Municipal swimming pool in Olhão - With the aim of reducing dependency on fossil fuels in 2011 the Portuguese Municipality of Olhão in the Algarve tendered for the redevelopment and management of the municipal swimming pool, with bids compared on the basis of whole life costs (WLC). Given the lack of skills and knowledge about WLC application within a regional government agency (the Regional Agency for Energy and Environment of the Algarve) was employed to assist. The procurement process had specific WLC requirements embedded within it, looking specifically at the life-time expectancy and quality of proposed equipment. Each of the applicants for the tender process provided different budgets with different quality standards. By using WLC the real cost of competing bids could be thoroughly assessed leading to a financial and environmentally sustainable project. Through the installation of solar panels and other equipment with a total investment cost of €85,000, the new system will enable the public authority to achieve annual savings of €15,000 in energy costs, resulting in approximately six years of payback.