Life cycle costing: evaluating its use in UK practice

Abstract

Purpose -The aim of this paper is to establish the extent to which life cycle costing is used as an early stage project evaluation tool by practitioners in the UK construction industry. The use of this evaluation tool has long been advocated by academics as a means of ensuring best value rather than lowest cost is a driver for business decisions related to potential built environment projects. Therefore there is a need to appraise its current uptake levels amongst built environment professionals and assess whether there are any barriers affecting its use in UK practice. Design/methodology/approach -Using a mixed methods approach, the authors present the findings from a survey of construction professionals located in the UK and the results from a series of follow up semi structured interviews designed to further explore the factors found to affect the use of life cycle costing in practice. Findings The study shows that life cycle costing is still not widely used by built environment professionals in the UK. The greatest inhibitor on the take up of the tool is the need of clients to budget on short term horizons. Other factors such as a lack awareness of the tool by practitioners and clients, unreliability of data into the long term and the overriding need for commercially driven projects to achieve maximum return on investment continue to inhibit the widespread adoption of life cycle costing as an early stage project evaluation tool. These findings have implications for the capability of the UK construction industry to deliver on its commitment to enhance the sustainability of the built environment. Originality/value -The paper offers insights into the current use of life cycle costing and the factors affecting its use in the UK.

From Tool-Making to Tool-Using – And Back: Rationales for Adoption and Use of LCC

“…While LCC has existed for more than four decades and despite well-documented benefits of LCC as a means for including long-term economic consequences in building investment decisions, recent research claims that the adoption of LCC within industry is slow (Higham, Fortune, & James, 2015;D'Incognito, Costantino, & Giovanni, 2015). Various barriers have been identified, such as lack of data (Oduyemi, 2015), lack of tool awareness (Olsson, Malmqvist, & Glaumann, 2015), short-term horizons on building investments (Higham et al, 2015) and lack of knowledge on sustainability issues among practitioners (Häkkinen & Belloni, 2011;Olsson et al, 2015). One way forward suggested by Häkkinen and Belloni (2011) is to improve the understanding about procedural difficulties, who the involved actors are and their practical use of these tools.…”

“…The potential for control over life cycle costs is claimed to be greatest in early stages of the design process (Higham et al, 2015;Olsson et al, 2016), which is why real estateand property owners in their role as construction clients are an important target group for LCC use (Opoku & Ahmed, 2014). The client is repeatedly put forward as the key actor and driver for the establishment of an active sustainability practice (Häkkinen & Belloni, 2011;Higham et al, 2015;D'Incognito et al, 2015).…”

“…The client is repeatedly put forward as the key actor and driver for the establishment of an active sustainability practice (Häkkinen & Belloni, 2011;Higham et al, 2015;D'Incognito et al, 2015).…”

Risk assessment methods for life cycle costing in buildings

“…As Higham et al [33] attest, Building's top 100 lists are sufficient in size to allow the whole population to be contacted within the time scale and cost limitations faced by the majority of researchers.…”

“…As with previous LCC studies examining industry practice [32][33][34] the need to ascertain the extent of the use of LCC as an early stage project evaluation tool called for a quantitative research design that made use of a measuring instrument that allowed data to be collected from a large number of practitioners in the field.…”