Whole-life costing (or life-cycle costing) is an essential foundation for sustainable design. The idea is very simple: when comparing alternative strategies for a construction project, don’t select the cheapest but the one that is most economical in the long term.
A durable and efficient building is often better value and more sustainable than a cheaper design with high running costs – but not always. It isn’t certain that spending more will give higher long term value.
There are two pitfalls to be avoided:
- under-investment when too little is invested: a higher specification would have given benefits that justified the extra cost
- over-investment when too much is invested: the benefits from the higher specification are too small to justify the extra cost.
In simple cases it can be easy to compare the whole-life costs of alternatives, so long as the question is asked (it isn’t always!). But quite quickly it becomes useful to employ a systematic approach to whole-life costing.
A ‘standard’ method of whole-life costing was established over 30 years ago and is now set out in guidance documents and international standards. CAR can apply this established method – but more importantly CAR has been active in developing new and better techniques.
The weakness of the ‘standard’ method is its assumption that precise data about the future is available. This is rarely if ever the case. CAR’s new approach takes account of future uncertainty. It prioritises flexible strategies that create ‘life-cycle options’, allowing future decision-makers to respond to unfolding during the building’s life cycle.
The life-cycle options approach is the best way of analysing the whole-life cost of projects that are subject to uncertainty about future events, which means practically all projects.
How to find out more:
The life-cycle options approach to whole-life costing is described in the book New Generation Whole-life Costing: construction and property decision – making under uncertainty, written by CAR members Ian Ellingham and William Fawcett (published by Taylor & Francis, 2006), available from RIBA Bookshop.
A second book explains how to make sense of long-term sustainability: Whole Life Sustainability by Ian Ellingham and William Fawcett, (RIBA Publications, 2013), available from RIBA Bookshop.
CAR was an active participant in the CILECCTA project, an EC-funded research project that developed new tools for whole-life costing.
W Fawcett, I Robles, H Krieg, M Hughes, L Mikalsen & O Ramón Ramos Gutiérrez (2014) ‘Cost and environmental evaluation of flexible strategies for a highway construction project under traffic growth uncertainty’ Journal of Infrastructure Systems Online publication Sept 2014
W Fawcett, M Hughes, H Krieg, S Albrecht & A Vennstrom (2012) ‘Flexible strategies for long-term sustainability under uncertainty’ Building Research & Information vol.40, no.6.