• Life cycle costing - theory and practice
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Life cycle costing - theory and practice

Life Cycle Costing enables project sponsors and delivery teams to evaluate the combined capital and operating costs of construction work. This is important to make sure that the client is getting long-term value for money from the project. For public sector projects, Life Cycle Costing is required by Treasury guidance.

Projects can range in size from small plant replacements, to major refurbishment and new-build works. But the same Life Cycle Costing principles must be applied in each case.

This two-day training course has been specifically designed to bring together the theory behind  Life Cycle Costing and the practical calculation of whole life costs. Delegates work through example calculations to apply the underlying theory and to become familiar with the concepts, pitfalls and watch-points so that they can apply this technique to their own projects.

Some of the questions that  Life Cycle Costing will enable the user to answer are: 

• Under what circumstances will it be cheaper for my organisation to replace existing boiler plant with new, more energy efficient plant, if we only expect to be in this building for the next 5 years?
• For this office upgrade project, will it be more cost effective to install high-cost-low-maintenance fittings or low-cost-high-maintenance fittings?
• How do I compare two technical options if one is forecast to last 11 years and the other is forecast to last 17 years?
• How do possible changes in energy costs affect the financial viability of my project to upgrade heating and cooling plant?
• My budget has just been cut - which of the projects that I could previously have funded should I now shelve?

Day 1
09.00 Coffee & registration
09.30 Introductions & overview
09.50 Session 1 - The concept of Life Cycle Costing analysis
           Session 2 - The building blocks of Life Cycle Costing
11.15 Coffee
11.30 Session 3 - Identifying data for  Life Cycle Cost calculation
12.45 Lunch
13.30 Session 4 - Calculation  Life Cycle Costs
14.45 Tea
15.00 Session 5 - Dealing with more complex cost profiles
16.15 Summary of Day 1.

Day 2
09.00 Review of Day
09.30 Session 6 - Testing the sensitivity of the Life Cycle Cost Model
11.00 Coffee
11.15 Session 7 - Analysis of several projects
12.30 Lunch
13.30 Session 8 - Watch points for Life Cycle Costing Analysis
14.15 Session 9 - Where to go next
15.00 Tea
15.15 Concluding discussion and Q&A.
16.00 Close

Delegates attending this course will gain a greater understanding of:

• Key components of Life Cycle Costing Analysis
• What information is required to build the mathematical Life Cycle Cost Model
• How to estimate actual service life for components in their projects
• Familiarity with the way whole life costs are calculated and what the results mean
• How to use Sensitivity Analysis to test the robustness of the Model
• How to use Savings-to-Investment ratio to select the most economically effective projects

 Delegates are provided with a copy of all the slides presented and BSRIA publication BG 5/2008 Whole-Life Costing Analysis. Copies of this publication are available for purchase from the BSRIA Bookshop

The Lecturer - David Churcher
David Churcher is trained Civil Engineer and has spent most of his career helping the building industry implement best practice. He provides consultancy on Life Cycle Costing to BSRIA clients and is involved in major European research projects on LCC.