Project Context

The traditional approach to costing building projects has been to focus primarily on capital costs.

However, with occupancy costs representing up to 70% of the total cost of a building over its entire life cycle this pre-occupation with capital expenditure has led to designs which do not offer the client best value for money in the long term. With the introduction of PFI procurement strategies, it is important to understand the benefits of whole life costing (WLC). Furthermore, in the last decade there has been a dramatic shift in the balance between the initial capital cost and the running costs of buildings. Many of the running costs items for buildings are labour-intensive and there has been a steady annual increase in labour costs. Energy prices have also risen and are subject to wide price fluctuations. As a result, clients are more aware that running costs should be examined very closely. In addition, mounting concerns over the long term environmental impact of a building have forced designers to adopt a more holistic attitude and to look more closely at the costs incurred over the whole life cycle, from conception to demolition. Therefore, more clients have demanded that decisions should be based on life-cycle costs. Besides, owner-occupier clients have begun to recognise the importance of having their own databases to monitor the cost-in-use performance of facility components. Awareness has also been seen amongst contractors especially those involved in the private finance initiative projects.    

This strong desire to implementing whole life costing in practice has faced a number of substantial obstacles including, amongst others: failure of designers to be able to visualise and therefore to include life cycle cost goals in their design criteria; failure of owners or managers with short-term responsibility for an asset to consider effectively the longer-term impact of their decisions on the asset’s operations and maintenance requirements; general desires to minimize the initial expenditures in order to increase return on investment, meet budgetary restrictions, or both; and lack of data and accepted industry standards for describing the maintenance effect and operational performance of asset components. 

In order to overcome these problems and be able to influence the uncertain relationships between present and future costs there was an urgent need to designate a clear and simple way for WLC analysis. Thus, this project was proposed as a joint project between two groups of academics with a record of research excellence in their disciplines. The first team from the Robert Gordon University would lead the life cycle costing element of the project whereas a second team from the university of Salford would lead the IT development required for this project.

Research Team

RESEARCH TEAM:

PARTNERS:

FUNDING BODY:

Method & Achievements

State-Of-The-Art Review 

A state-of-the-art review of whole life costing in the construction industry has been carried out to identify the strengths and gaps in existing knowledge in order to inform the development of WLC applications. Issues covered included decision-making criteria, mathematical models, the nature and sources of various WLC data requirements, handling uncertainty and risk in WLC modeling and effective implementation of the technique. This review has been published through the RICS research paper series (Kishk et al., 2002e). This review revealed that there are many difficulties in the implementation of WLC in the industry and methods designed to tackle some of these difficulties exist but are, in general, disjointed. Besides, WLC databases mentioned in the literature are ‘constructed’ rather than ‘historical-based’ in that they are mostly based on ‘expert opinion’, trade publication data, and data in manufacturers’ literature. Besides, they have two major limitations. First, a simple data normalization procedure of cost per unit area of the building is usually employed. This ignores other crucial information such as hours of use, occupancy profile, building size, building height, building type, quality and performance requirements. Secondly, statistics and other measures indicating the type and level of uncertainty of various data elements are not recorded.

Existing applications that provide whole life costing support have been also reviewed in terms of four criteria:

  1. availability;
  2. WLC models employed;
  3. risk analysis capabilities; and 
  4. scope of application.

In almost all these applications, an NPV model with a generic cost breakdown structure (CBS) is employed. Besides either the SA and/or MCS is used to risk assess the results. The main limitation existing applications is that the CBS is built manually by the user and is mostly non-elemental. Besides, various facets of uncertainty in WLC data are not effectively handled. Thus, special emphasis has been put on the design of an effective CBS to accommodate the context information of WLC data and all the necessary measures that can reflect various facets of uncertainty of this data.

Implementation Framework

A 5-step framework for implementing WLC in the design stage has been proposed (Al-Hajj et al., 2001). The main feature of this framework is that it employs two databases: a resource database and a project database. The purpose of the first one is to accommodate all the necessary information about various options for every element in the work break down structure. This database is utilized by a WLC Decision-making application to generate a set of design alternatives for a given building element and identifies the ideal option for that element by minimizing its whole life costs. The second database is a ‘project database’ to store the selected options for various elements of the building under consideration. This database is used as for collecting and recording actual data of the building during the occupancy. This data is analysed by a WLC management application and feeds the information back to the resource database to be used in the design of similar future buildings. Besides, a conceptual framework for the integration of various applications and the CAD application has been proposed (Aouad et al., 2001, 2002). The development of both frameworks meets the requirements of the first objective of the project, i.e. to develop an information management system, appropriate for use in whole life costing data collection, recording, analysis and feedback.

Detailed Design of WLC Databases

This was followed by detailed design of various components within the proposed implementation framework in five major steps. In the first step, a generic WLC resource database has been designed and implemented into MS ACCESS 2000 (Kishk et al., 2002a). The database structure was designed on the basis of an in-depth analysis of the requirements of effective WLC decision-making during the design stage within an integrated environment and the limitations of previous efforts to utilize databases to facilitate whole life costing. The unique features of this novel structure include:

  • The data structure is kept as flexible and general as possible.
  • WLC data can be extracted on four levels: the element, the activity, the cost item, and the cost component levels
  • The number of activities required to construct, maintain/operate and dispose/resale each building element is unlimited
  • The number of cost items required to perform any activity is unlimited• Cost items rates can be entered as all-in-one rates or detailed.
  • The cost rates are not restricted to the simple £/unit area.
  • Various facets of uncertainty can be easily represented.
  • Three user-friendly input forms were designed to facilitate editing data of the main database tables.

The second step was to design and implement a compatible structure of the project database. The unique features of this database include:

  • The database structure has been kept as general as possible. Besides, the introduction of the concept of the ‘building object’ enables manipulating various building components in a practical and convenient manner
  • Data can be manipulated on 4 levels: the object, the element, the activity, and the cost item levels.
  • Various facets of uncertainty can be easily represented.
  • Two user-friendly input forms were designed to facilitate editing data of two main tables of the database.

The other two main tables are designed such that they can be automatically edited.

The WLC Decision-Making Application

In the third step, a novel application has been developed to facilitate effective WLC decision-making within the design stage of projects (Kishk et al., 2002b, 2002d). The unique feature of the application is the automation of the critical stages of the design of building objects as follows:

  • Alternatives are automatically generated
  • Various facets of data uncertainty are dealt with effectively.
  • The ideal alternative is automatically selected.
  • Various records of the object under consideration are automatically updated/inserted.
  • An interface within the CAD application to insert and manipulate various objects has been designed and implemented by the Salford team (see Sec. 3.6).

The WLC Management Application

The fourth step was to meet the second objective and of the project, i.e. to develop a holistic life cycle costing based asset management model. First, the following basic processes of effective WLC management have been identified (Kishk et al., 2002c).

  • Recording the actual performance and cost history of the building.
  • Analysing the recorded data to predict future activities and their associated costs within the occupancy stage of the building (i.e. feed-forward of information) and to inform the design stage of other projects (i.e. feedback of information).
  • Assessing and controlling costs whereby the main activity is to identify cost significant items.
  • Producing various work and expenditure planning profiles.

The project database has been extended to allow the first process and the feed-forward operation of the second process. Besides, the resource database has been extended to allow the feedback operation of the second process.

Then, a WLC asset management application has been developed to automate the second process and facilitate the third and forth processes. The unique feature of the application, amongst others, is that it has an interactive user-friendly interface to visualize various WLC profiles of the building object under consideration. Besides, a useful cost significance relation has been derived to identify cost significant items on the object, element and activity levels. The relation employs a cost significance measure that is based on the remaining whole life costs of cost items and is an extension of previous work on cost significance (Al-Hajj and Horner, 1998; Horner and Zakieh, 1996). These features will be highlighted in a future paper.

Integration of Applications and The CAD Interface

The fifth step (mainly undertaken by the Salford team) was to design and implement the interface within a CAD application to replace the two input forms in the project database by developing the tools required to achieve the remaining objectives of the project. Autodesk Architectural Desktop (Autodesk, 2001) has been selected because it would allow the development of a more robust, complete and professional integrated environment in significantly less time.

Microsoft Visual Basic for Applications (VBA) language version 6.0 has been used to integrate the developed tools through an LCC menu within Autodesk Architectural Desktop. This allowed the automatic identification of the physical dimensions of the object being designed and consequently has led to the full automation of WLC calculations within the design application.

A visualization system has also been designed and implemented. This allowed the user to navigate and walkthrough the building and retrieves the time and cost estimates for any building object by just clicking on it. Besides, the building elements, which need replacement and/or repair at given year, can be visualized using a predefined colour scheme. A snapshot of the system is shown below: 

Lcc fig 1

Publications

Al-Hajj, A., Pollock, R., Kishk, M., Aouad, G., Sun, M. and Bakis, N. (2001) On The Requirements For Effective Information Management In Whole Life Costing Within An Integrated Environment. Proceedings of the Annual Conference of the RICS Research Foundation (COBRA 2001), Glasgow Caledonian University, 3-5 September, 2, 402-413.

Aouad, G., Bakis, N., Amaratunga, D., Sun, M., Kishk, M., Al-Hajj, A. and Pollock, R. (2002) An Integrated Life Cycle Costing Database: System Proposal and Methodology. CIB Working Commission W70 - The Global Symposium on Facilities Management and Extending the Global Knowledge Base, 18th - 20th September, Glasgow, 134-144.

Aouad, G., Bakis, N., Amaratunga, D., Osbaldiston, S., Sun, M., Kishk, M., Al-Hajj, A. and Pollock, R. (2001) An Integrated Life Cycle Costing Database: A Conceptual Framework. Proceedings of the 17th Annual Conference of the Association of Researchers in Construction Management (ARCOM’2001), University of Salford, 5-7 September, 1, 421-431.

Kishk M., Al-Hajj A., Pollock R., and Aouad A. (2002a) A generic database for whole life costing applications in construction. Proceedings of the 18th Annual Conference of the Association of Researchers in Construction Management (ARCOM’2002), University of Northumbria, 2-4 September 2002, Vol. 1, 33-42.

Kishk M., Al-Hajj A., Pollock, R., Aouad A. and Bakis, N. (2002b) A whole life costing application for the optimum design of construction assets. Proceedings of the Annual Conference of the RICS Research Foundation (COBRA’2002), Nottingham Trent University, 5-6 September 2002, 108-119.

Kishk M., Al-Hajj A., Pollock, R., Aouad A. and Bakis, N. (2002c) Towards Effective Whole-Life Management of Occupied Buildings. Proceedings of the third International Conference on Decision Making in Urban and Civil Engineering, 6-8 November, London.

Kishk, M., Al-Hajj and Pollock, R. (2002d) On the Requirements of Effective Whole-Life Costing Based Decision-Making. Proceedings of the third International Conference on Decision Making in Urban and Civil Engineering, 6-8 November, London.

Kishk M., Al-Hajj A., Pollock R., Aouad A., Bakis, N. and Sun, M. (2002e) Whole-Life Costing in Construction - A State of The Art Review. The RICS Research Paper Series, Vol. 4, No. 18.