Life cycle cost models

Life cycle costing is no longer an afterthought. The life cycle costing plan needs to develop alongside the capital cost plan, from £/m2 costs through to elemental cost plans and fully worked up cost plans, based on proposed design alternatives.

Life cycle cost models vary greatly in complexity and resultant outputs. Most models are based on assumptions. Spreadsheets or database applications are usually developed for carrying out life cycle cost calculations. Many are developed in-house but commercially available packages are also available, including BCIS Building Running Costs Online, some of which rely on user generated inputs.

A life cycle cost model should clearly state:

• scope and purpose;
• derivation of the data used;
• the period of the evaluation; and
• relevant cost items which are included.

It should also make clear which costs are excluded (for example, professional fees, VAT, land costs).

The analysis may conclude with 1 or 2 figures summarising all the data on which to make a decision. It is important to present the supporting calculations and underlying reference data to allow appraisal and understanding of the life cycle cost result.

Housing models

BCIS produced 2 reports for the Housing Corporation on the whole life costs of social housing. The 2003 report produced benchmark whole life cost models based on 6 capital cost models used in the Housing Corporation’s total cost indicators, to allow both the Corporation and registered social landlords (RSLs) to compare the whole life cost performance of proposed schemes with definable standard schemes. The 2007 report provided guidance on the assumptions made in calculating the target, to assist associations in making a meaningful comparison with their own life cycle cost calculations.