Building Cost Management
CHAPTER ONE
Aim and Objectives of the Study
The study aims to assess the use of whole life cycle costing as a design tool in building cost management with a view to improve application. To achieve this aim, the objectives are to:
- determine the benefits of whole life costing in building design cost management;
- evaluate level of use of whole life costing techniques in building design cost management; and
- Examine factors influencing the use of whole life costing in building design cost management.
CHAPTER TWO
REVIEW OF LITERATURE
INTRODUCTION
Our focus in this chapter is to critically examine relevant literatures that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.
CONCEPTUAL FRAMEWORK
Whole-Life Costing
There are several definitions for whole life costing, but one currently adopted by the Construction Research and Innovation Strategy Panel (CRISP) is: “The systematic consideration of all relevant costs and revenues associated with the acquisition and ownership of an asset” (CBPP 1998). However, the British Standard, (BSISO156868- 1:2011, part 1 of service life planning) defines WLC as: “A technique which enables comparative cost assessments to be made over a specified period of time, taking into account all relevant economic factors both in terms of initial capital costs and future operational cost” (BSI 2011). Although both definitions are from authoritative bodies, they are vague definitions, given the overabundance of cost items that could be included in each cost group. In spite of the above, both definitions agree on one theme, the inclusions of all relevant cost. Clift and Bourke (1999) argue that, WLC should take into account initial construction or major refurbishment cost plus the recurring or occupancy cost such as cleaning, maintenance and repair. WLC is a technique that quantifies financial values for a structure from inception throughout a structures life. WLC is about understanding the balance between capital cost and cost in use. WLC Working Group (2002) believe that WLC helps clients to differentiate between best value and lowest price. However, it does not review how this could be achieved. Essentially, the Construction Best Practice Programme (CBPP 1998) explains that all the costs associated with various options for a project are added together to represent a total cost while future costs are discounted to a present day value. WLC aims to look at every relevant cost incurred in respect of an asset or a facility from inception to disposal; that is the total costs associated with procurement use during service-life, and disposal at the end of life. You can estimate the real cost of ownership by using WLC. In other words, WLC is a means of comparing options and their associated costs over a period of time (Hutchins 2005). WLC is therefore relevant when considering whole estates, whole facilities as well as individual buildings or components. WLC is therefore a tool for encouraging the design of buildings that are more compatible with the concept of sustainable construction. Good design, sound buildings and well maintained homes will be the outcome of the adoption of the WLC process. WLC is valuable for comparing alternative building designs, enabling operational cost benefits to be evaluated against any initial cost increase (Cole and Sterner 2000). Several authors, including Flanagan et al. (1989), Bull (1993), Clift and Bourke (1999), Addis and Talbot (2001), Kishk et al. (2003), and Boussabaine and Kirkham (2005), have highlighted the lack of standard methods and format for calculating WLC as a barrier to its application.
Several definitions of whole-life costing exists BSI( 1999) defines whole-life costing as a tool to assist in assessing the cost performance of construction work, aimed at facilitating choices where there are alternative means of achieving the client’s objectives and where those alternatives differ not only in their initial costs, but also in their subsequent costs. Another useful definition is adopted by the Construction Best Practice Programme (CBPP, 1998a): The systematic consideration of all relevant costs and revenues associated with the acquisition and ownership of an asset. The whole-life costs of a facility (often referred to as through-life costs) are the costs of acquiring (including consultancy, design and construction costs, and equipment), the costs of operating and the cost of maintaining a facility over the whole life through to its disposal. That is, the total ownership costs (AECP, 2003). Cost management is the process of planning, estimating, coordinating, controlling and reporting off all cost related aspects from project initiation to operation and maintenance and ultimately, disposal. It involves identifying all the costs associated with the investment, making informed choices about the options that will deliver best value for money and managing those costs throughout the life of the project, including disposal (AECP, 2003).
CHAPTER THREE
RESEARCH METHODOLOGY
AREA OF STUDY
Akwa Ibom is a state in Nigeria. It is located in the coastal southern part of the country, lying between latitudes 4°32′N and 5°33′N, and longitudes 7°25′E and 8°25′E. The state is located in the South-South geopolitical zone, and is bordered on the east by Cross River State, on the west by Rivers State and Abia State, and on the south by the Atlantic Ocean and the southernmost tip of Cross River State.
Akwa Ibom is one of Nigeria’s 36 states, with a population of over five million people in 2016. The state was created in 1987 by Ibrahim Babangida from the former Cross River State and is currently the highest oil- and gas-producing state in the country. The state’s capital is Uyo, with over 500,000 inhabitants. Akwa Ibom has an airport and two major seaports on the Atlantic Ocean with a proposed construction of a seaport at Ibaka, Oron. The state also has a 30,000-seat sports complex. It is shaped like the Allianz arena stadium. Akwa Ibom state is also home to the Ibom E-Library, an information centre. In addition to English, the main spoken languages are Ibibio, Annang, Ekid, Oro and Obolo.
Uyo is the state capital of Akwa Ibom, South South Nigeria. It became the capital on September 23, 1987 when Akwa Ibom was created from the former Cross River State. According to the 2006 Nigerian Census, the population of Uyo (including Itu) is 427,873, while the greater urban area, including Uruan, has a population of 554,906. Ibibio is the primary indigenous language.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of seventy-two (2) questionnaires were administered to respondents of which all were returned and validated and was used for analysis in this study.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
CONCLUSION
In this study, our focus was to assess the use of whole life cycle costing as a design tool in building cost management using Uyo Municipal, Akwa Ibom State as a case study. The study specifically was aimed at determining the benefits of whole life costing in building design cost management; evaluate level of use of whole life costing techniques in building design cost management; and examine factors influencing the use of whole life costing in building design cost management.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 72 responses were validated from the enrolled participants where all respondent are Quantity surveyors in Uyo Municipal, Akwa Ibom State.
The findings revealed that optimizing total cost of ownership, assessing future energy and running cost comparing various options at building level, and allowing more accurate forecasting of future maintenance budget are the benefits of adopting whole life costing in building design cost management.
Also, the findings revealed that the level of use of whole life costing in building design cost management in Uyo is high.
The findings further revealed that the factors affecting the use of whole life costing for building design cost management are lack of skills and knowledge of whole life costing, lack of client’s understanding, lack of universal methods and standard formats for calculating WLC, lack of motivation on clients to use WLC, lack of reliable and consistent data on, and elements of WLC and the performance of building elements and services.
RECOMMENDATION
Based on the responses obtained, the researcher proffers the following recommendations:
- There is the need to develop and adopt a common methodology for assessing WLC, as well as developing a WLC benchmark in the construction industry.
- The industry should encourage both public and private clients to collect cost data to support WLC best practice. The government could set examples by selecting public procurement and award of contracts based on WLC. This will ensure that WLC is carried out at the early design stage.
- To encourage clients to ask for WLC in their brief, the construction industry can develop guidelines or fact sheets demonstrating the benefits of adopting WLC.
REFERENCES
- (AECP, 2003), Achieving excellence in construction procurement guide 07: whole-life costing and cost management
- (CBPP, 1998a), Introduction to whole life costing, www.cbpp.org.uk/retrieved 15th July, 2006.
- Al-Hajj, A. (1996), Towards a better understanding of life cycle costings in buildings: a simple approach to modeling, Proceedings of the CIB W89 Conference, Beijing, pp. 21- 24, October
- Ashworth, A. (1996), Assessing the life expectancies of building for life cycle costing, Proceedings of the RICS construction and building research conference (COBRA’ 96), RICS.
- Bhuta, C. and Sarma, V. (1997), Life cycle costs and early decision, Building Economist, pp. 4 – 8, March.
- Brandon, P. S. (1987), Life cycle appraisal – further considerations, in Spedding, A (ed), Building Maintenance Economics And Management, E&FN Spon, London, pp. 153-162
- BSI (2000), Building and Constructed Assets: Service Life Planning: General Principles, British Standard Institution.
- Bull, J. W. (1993), The Way Ahead for Life Cycle Costing in the Construction Industry, in Bull, J. W. (ed) Life Costing For Construction, Blackie Academic and Professional, Glasgow.
- Chinyio, E. (1998), Evaluation of the Project Needs of UK Building Clients, International Journal Of Project Management, 16 (6), pp. 385 – 391.
- Clift, M. and Bourke, K. (1999), Study On Whole Life Costing, BRE Report 367, CRC.
- Dale, S. J. (1993), Introduction to life cycle costing, in Bull, J. W. (ed) Life Cycle Costing For Construction, Blackie Academic and Professional, Glassgow.
- Fabrycky, W. J. and Blanchard, B. S. (1991), Life-cycle Cost And Economic Analysis, Prentice-Hall Inc., NJ.
- Ferry, D. and Flanaga, R. (1991), Life cycle costing – a radical approach, CIRIA Report 122, London.
- Flanagan, R. Norman G. Meadows, J. (1989), Life cycle Costing-Theory And Practice, BSP Professional Books.
- Griffin, J. J. (1993), Life Cycle Cost Analysis: A Decision Aid, in Bull J. W. (ed), life cycle costing for construction, Blackie Academic and Professional, Glasgow.
