What Is Life Cycle Costing?
Life Cycle Costing identifies and documents all the potential costs involved over the life of an Asset.
Life Cycle Costing is extremely useful to help Building Owners and Managers to make decisions about when to maintain, renovate or dispose of a Building Asset.
It analyses a Building Asset’s known Costs over its Life, to work out the true Cost of that Building Asset. It projects all of the Cost of Construction, Maintenance Expenditure, Operational Expenditure and Cost of Disposal.
At any given point through-out a Building Assets Life Cycle there are optional alternatives for consideration. These include ‘Do Nothing’, Keep the Status Quo, Renewal, Non-Asset Solutions, Change the Levels of Service and Disposal.
The life cycle cost of an asset can be expressed in the formula:
Life Cycle Cost = initial (projected) capital costs + projected life-time operating costs + projected life-time maintenance costs + projected capital rehabilitation costs + projected disposal costs – projected residual value.
Quantity Surveyors can also play an important role in Life Cycle Costing for Building Asset Management Plans and can also be of great assistance to Asset Managers.
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Life Cycle Costing is a key part of Building Asset Management.