MEASURING AND TENDERING WHOLE LIFE COSTING

Measuring and Tendering Whole Life Costing



Measuring and Tendering Whole Life Costing

Introduction

The process of Whole life costing (WLC) can prove to be extremely beneficial for controlling the financial and non-financial risks of many construction related organizations. This has particularly some relevance with regard to financial performance, customer service and some internal business processes. Due to WLC the approach to facilities and construction management, procurement, delivery of major benefits and procurement is changing. Most of the clients from the private and public sector now utilize the method of cost of ownership, non capital cost for the procurement (Your, development, 2008). According to the Building Research Foundation, the awareness among the construction industry has increased that unexpected and unplanned cost of refurbishment and maintenance may equal to the half of the amount which is being spent on the new buildings.

There are estimates that the value of the unplanned share of construction in UK is in the range of between £8bn and £20bn in a year. It is the very reason that the whole-life costing (WLC) has gained momentum and it is playing a very important role in the management of the projects (Bourke, 2005). There are two main reasons of global warming and PFI due to which WLC is likely to stay this time. Most of the commercial agreements today between the provider and client are made on the basis of the PFI. Similarly, due to global warming everybody is forced to think about the future consequences of the building (Martin, 2008).

Discussion

In the present everything is changing with rapid pace including the economy and society. In this scenario there has to be changes in the building industry as well. Historically, the emphasis of the building designs was aimed at the reduction of the initial construction costs only. But, however, in the 1930's most of the users of the building started to identify that running costs involved in the building like management costs, maintenance costs and energy costs started to greatly affect the budget of the occupier (Bull, 1993). It has also been found hat the construction and use of the building contributed to the emissions of the green house gas emissions (Addis and Talbot, 2001).Similarly, the decisions regarding the procurement are also based most of the times on the lowest price. It is unfortunate that lowest price most of the times does not decrease the overall costs or the cost of acquisition, disposal and operation. The recent rise in the costs of energy and increasing building maintenance price has increased the need to create high performance and energy efficient buildings.

It has been estimated that out of the yearly turnover involved in the construction industry almost 45 per cent is spent on refurbishment and maintenance. Similarly, it has also been found that unexpected or unplanned amounts of fuel equals to almost half of this percentage (Cliff and Bourke, 1999). However, due to some government initiatives taken recently the life cycle costs are analyzed from the initial stages ...