An appraisal of the level of application of life cycle costing within the construction industry in the UK

Abstract

Purpose – Life cycle costing (LCC) is a means of comparing design options on the basis of their whole
life cost with the objective of providing value for money for the life of the asset. The process involves
estimating all the cost elements of the particular subject and translating them into a cost at a particular
point in time, the present, enabling comparison. Despite being in theory, a useful tool LCC appears to
experience varied levels of usage. Varied opinions have been expressed about the level to which LCC is
used but there is no doubt that private finance initiatives and public-private partnerships procurement
routes have seen an increase in the use of the technique. The paper aims to appraise levels of
application within the construction industry, in particular the paper will evaluate the existence of
motivators and barriers which affect the decision to undertake LCC analysis in order to identify what
actions can be taken to increase usage levels.
Design/methodology/approach – Following a literature review, empirical research was undertaken
to collect data from construction professionals regarding their views, opinions and experiences of LCC.
In total, 100 questionnaires were sent to construction and professionals in the NorthWest of England.
Findings – The paper suggests that whilst just over 50 per cent of the sample implemented LCC the
data also identified the lack of understanding of the technique and the absence of a standardised
methodology as key limiting factors to wider implementation.
Research limitations/implications – Limitations in both the data collection strategy and sample
size raise the issue that the results obtained cannot necessarily be deemed to be representative of the
construction industry as a whole but merely of the sample and further research is recommended.
Originality/value – The paper concludes that continued professional development for construction
professionals and clients alike together with the development of standardised procedures may enhance
usage levels.
Keywords Life cycle costs, Construction industry, United Kingdom