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What Makes Lifecycle Costing Assessments Significant in Construction Projects?

10 May 2022

Not all buildings are similar. Many elements during their construction phases can be different. From the materials down to their general plan and design, they are expected to boast unique qualities that can be reflected by their overall property value.

The value of properties may change over time. Depending on their usage, maintenance, and other factors, they might end up getting more valuable if they have been managed by responsible property owners. On the other hand, properties that are constantly ignored and neglected may boast depreciating value. These properties can even pose risk to the safety of occupants.

But before buildings are constructed, their owners should hire professionals to conduct a series of assessments first. One of the assessments they must carry out is the lifecycle cost assessment.

The Purpose of Lifecycle Cost Assessment

Lifecycle cost assessment is a type of analysis that determines the lifetime cost of a property. Costs that may occur during the construction, the usage, and the upkeep of a property are all evaluated under lifecycle cost assessment. This assessment also touches on the end-of-life cost of a property. All these elements must be evaluated so that contractors, building owners, and other involved people can determine the potential long-term savings and costs of the property.

A Quick Overview of Building-Related Costs

As mentioned earlier, lifecycle cost assessments cover various types of property costs to help valuable people decide on crucial matters about the project. Here are some of the costs covered by the lifecycle costs assessment. 

  • Initial Costs – Initial costs are expenses intended for the land acquisition, construction, or renovation of a property. They may also cover the expenses generated by equipment pieces that are essential in operating the building or facility.
  • Utility Costs – Utility costs are operational expenses of water, power, and other essential utilities. The projected value of these costs relies on the potential consumption of property occupants, current rates, and price projections. 
  • Operation and Upkeep Costs – A building is often constructed to serve a specific purpose. An office building, for instance, provides a complete working space for employees. A retail building, alternatively, maximises the majority of its space in showcasing products. All costs needed to keep a property operational and functional can determine its operation and upkeep costs.
  • Residual Costs – The residual costs of a building are determined by its remaining value at the end of the covered study period. The value of these costs depends on a building’s resale value, salvage value, scrap value, and disposal cost.

Key Benefits of Lifecycle Cost Assessments

When conducting lifecycle cost assessments, property owners and contractors can easily verify if the property’s value will remain high throughout its building life. Necessary adjustments, after all, can be done to retain the highest possible value of a property. 

Lifecycle cost assessments can also be beneficial for property owners and contractors since they can already establish plans that retain the value of a building. Any financial risks and surprises can even be mitigated once these assessments have been carried out.

To know more about these assessments, you can call us at Fairdinkum Technical Services.

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