8/13/2019 Assignment 27.Group 6

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Fauziah hanum binti Abdullah 51015960BUILDING ECONOMICS AA! "15#$

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a) Explain the three fundamental problems with applying life-cycle costing inpractice.

b) Fundamental problem with applying life-cycle costing in practice. is to forecast long time ahead (say, 40 years from now)

First, it is difficult to predict future cost of materials/components andlabor. Future cost are less visible, as they are often hidden! withingeneral operating expenses, but they can have significant impact on thefuture viability of an organi"ation.There could be technology changes that happen in the future thatreplace todays materials and/or components.

Anything can happen in the future, such as war OR naturalcalamities that affect the building greatly, hence affecting the cost ofrepair/maintenance. #ome events can be predicted and therefore assessed. $thers are %ustimpossible to forecast

&ifferent types of clients have different emphasis on '. .Owner occupier ( !! "ery important. #eed to pay cost ofmaintenance, repair and refurbishment. To budget cash flow

properly for the life span of the building$ Speculative Developer (e.g. build house for sale$ (#ot important atall, because the buyers will be responsible for maintenance etc.$ Build Buildings For rental (e.g. shopping complex) ( !! may beimportant because the building is still under the owners name andresponsibility, e"en though some aspects of the maintenance (eg.%tility bill$ may be borne by the tenants.

Complex process n ' analysis involves a large number of assumptions, some complex

calculations and the ability to forecast costs often *0 years or more intothe future.

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+his high level of complexity is something that many uantity surveyorsare simply not comfortable with and ma-es them bac- off from practicing' .erceived inaccuracy of results

/t may be that within the industry ' is deemed to produce relatively

accurate results +his would be difficult to concur with, however, as it is unli-ely that onewould go bac- and compare how accurate the forecast of whole life costsreally was.

+he perceived inaccuracy of an ' analysis can be countered byunderta-ing certain processes, such as ris- assessments and sensitivityanalyses.

+he use of ris- assessments reminds those reviewing an ' analysisthat there are inherent ris-s and that the final costs will never be exactlythe same as the forecast

#ensitivity analyses enable the surveyor underta-ing the exercise to test

the parameters of the calculation to reduce the inaccuracies.Artificialit of the process

$ne cannot avoid the fact that the process of ' is artificial. hilst an ' exercise may be ta-en seriously when it is first underta-en

the reality of the situation is different when it comes to testing its relevancein the future.

/f for example an ' analysis is underta-en for an asset with a life of *0years, once the actual costs are realised *0 years later it is unli-ely thatanyone will go bac- and compare it with the original forecast costs.

+he ' process is less artificial when it is underta-en on components

that have shorter life spans rather than on whole buildings. /t could be argued that ' has more relevance for smaller scaleanalyses of components than for the analysis of a complete asset.

1educing the scope of ' analyses to ma-e them more relevant couldtherefore result in increased usage levels.

A!sence of a standardi"ed methodolog 2o specific method declared. &ifferent pro%ect different methods and

understanding. +herefore to do analysis and differentiate with each pro%ectcannot be determined.

it is necessary to set down consistent procedures to be used in life cycle costing ifmisallocations as a result of inconsistencies are to be avoided.

Some of the methods by which consistency can be obtained in these assumptionscan themselves lead to a misallocation of resources so that it is necessary toexplore the means by which consistency in these areas can be achieved. Since the

projections must be made under conditions of uncertainty, it is essentially that themethods by which risk analysis should be incorporated into life cycle costing.

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b) 3our client is planning to build a 4 #tar otel and 1esort development bythe seaside in ulau 'ang-awi. s the consultant rchitect for the pro%ect,

identify 5 (three) possible types of window (i.e types of material) that maybe used for the pro%ect, and explain the implications of their use from 'ifeycle ost perspective.

Procedure for submission

1. students in a group

!. Students are to use the standard form for assignment". #ame and matriculation number must be clearly shown.