LIFE CYCLE COSTING

(LCC)
PREPARED FOR:
DR ABDUL HADI AHAMAD

PREPARED BY:
1. KU SYAZLEEN SYAFIKAH BINTI KU SUKIMAN
2021609596
2. MUHAMMAD SYARIZ IMAN BIN SUHAIMI
2021604084
3. NUR AMALIA BINTI ANUAR
2021826488
APP224
4. NURIN JAZLINA BINTI JAMIL 4A
ANUAR
2021829452
5. PUTERI NUR ATIQAH FARHAH BINTI HARIYANTO
2021835016
INTRODUCTION
The definition of LCC

Blakely-Gray (2018) portrays LCC or as known as whole-life costing as an

approach of roughly calculating the total expenditure on a property throughout
their entire span. LCC able to assist client in deciding whether to proceed or cease
the desire of owning an asset.

Aspects that is included in LCC

In general, the estimating of life cycle costing includes various class of costs
such as acquisition prices, running costs, operational expenditure, financial
expenses, salvage value and decommissioning costs ("Life cycle costing",
2023). This provide an overview to the client on the expenses they must
finance.

Method of estimating

Life cycle costing may be executed at any phase of development process.

Furthermore, LCC is significantly functional to evaluate other current property
systems. Nowadays, LCC can be calculated via several known software.
 INTRODUCTION
(TYPES OF COSTS)
Acquisition costs
Costs imposed in procuring the property.
For instance, upfront charges namely
Sales and Purchase Agreement, loan
agreement, Memorandum of Transfer,
bank processing fees and property agent
fees (" 5 hidden cost, n.d.).
Operational costs
Costs for managing the property.
This is to hinder any interruption and
discomfort while employing the property.
To illustrate, real estate tax, utility bill,
home insurance and society sustenance
(Desai, 2022).
Salvage value
Evaluate the loss value of a property after
some time by simply based on operating or
by other influences such as inflation
(Catalano, 2023).
This way, client can outweigh the
advantages and disadvantages of owning
an asset.
Running costs
Costs for preserving the condition of the
asset.
This is because the asset are meant to be
utilized in the long run.
To exemplify, cost for landscaping,
cleaning ventilation systems, unclog rain
gutters, pest control and change alarm
batteries (Dellinger & Segal, 2023).
Financial costs
Waingankar (n.d.) explains that it is the
fees from induced by the firm during debt
capital.
Since purchasing property involves an
amount of money, client usually borrow it
from money lenders.
The rate varies depending on the price and
economic during the time.
Decommissioning cost
Costs for disposing the property once no
longer in use.
The client shall finance the contractor for
the decommissioning works.
Concept of LCC
Objectives

To determine all expenses including those that a company might

not have considered in the beginning.
To compare many design options and choose one that offers the
best value with the highest quality
To create an accurate budget that reflects the true costs incurred
by the company, preventing overspending and negative cash flow
(Grey, 2018) .

Application

The application of LCC allows for comparison to be done to the

overall costs of various design options. A product design can promise a
lower cost but with lowest quality. Planners can choose which design
elements are within budget and ultimately more cost-effective by
evaluating the entire product life-cycle costs of various product designs.
The budget acts as a client's financial plan by describing expected
maintenance expenses in the future. It enables efficient financial
planning and resource allocation by assisting clients in managing and
forecasting ongoing building expenses (Rahman, 2022).
.
 PHASES
1
Planning
Collecting data and then analyse to
estimate the expenses and resources needed
for the project

2
Design
The selected design is produced in detailed
plans and specification in the form of
blueprints and engineering drawings

3
Construction
Constructing the project in accordance
with the design specifications agreed

4
Operations/ maintenance
The project enters this phase after
completion of a project. It requires
frequent maintenance, repairs or even
upgrades to guarantee its optimum
performance and lifespan.

5 Replacement or disposal
The decision of whether to replace or
discard it must be made when a project's
useful life is up. Any waste materials or
components should be recycled, sold, or
disposed of responsibly.
 LCC SOFTWARE
COMPARISON
Windchill LCC BACKGROUND Oracle Primavera

PTC Windchill LCC is a software tool for

monitoring company cost breakdowns,
combining customized breakdown structures
with user-defined formulas. It accurately
predicts costs associated with a product's life
cycle, allowing manufacturers to analyze cost
implications, calculate sensitivities, and
anticipate expenses throughout the design,
production, maintenance, and disposal phases of
a project's life cycle.
Oracle Primavera is a project portfolio
management software that helps organizations
efficiently plan and manage their projects. It offers
features for scheduling, resource management,
cost control, and risk analysis. It is widely used in
industries such as construction, engineering, and
manufacturing.

FUNCTIONS

offers industry-standard cost breakdown

Project Management: It enables users to create
analysis tools, along with a flexible equation
project plans, optimize schedules, allocate resources
editor supporting a range of variables and
efficiently, and monitor project progress.
functions.
Cost Control and Risk Management: Allows
PTC Windchill LCC provides a powerful,
organizations to control project costs by establishing
flexible life cycle cost tool to meet the cost budgets. It also supports risk management by
analysis needs unique to your organization or identifying, assessing, and mitigating project risks.
industry.

FEATURES

Account for many different types of costs over

the lifetime of a product
Calculate costs, including total lifetime cost,
overall system costs, and line-item costs
Compare the cost impact of alternate designs
side-by-side
Supports parametric, analogy, bottom-up, and
direct cost analysis calculation types
Perform sensitivity calculations and Net
Present Value (NPV) calculations
Perform design and development cost analyses
to calculate system planning, concept design,
and preliminary system design costs
Oracle Primavera offers a range of features
including project planning, resource management,
scheduling, cost control, risk analysis, collaboration
tools, reporting and analysis capabilities, and
integration with other systems. These features
enable organizations to efficiently manage projects,
allocate resources effectively, control costs, mitigate
risks, and facilitate collaboration among team
members.
 Advantages
of LCC
Improved
decision-making
LCC can assist in determining the most cost-effective solution for a building by
evaluating all costs related to construction, operation, maintenance, and
demolition. LCC are critical for making the best decisions regarding the
project to design, the materials to use, and the construction methods.

reduce the risk of

unexpected costs
LCC can help decrease the risk of unexpected costs during building
development or operation. LCC calculations can help maintain that the project
estimate is reasonable and economical by identifying and quantifying all
potential expenses. Some of the benefits associated with LCC implementation
include the evaluation of design alternatives (buildings or components), the
assessment of a compromise between the technical parameters of the project
and the cost (substitution of materials, technologies, etc.), a greater emphasis
on achieving better "value for money" in projects and improving awareness of
total project cost (Zakaria et al., 2020).

Long term
value

LCC assures that the project has the maximum potential value, even if initial
costs are not greatly lowered. The lifetime perspective of LCC results in higher
durability, less maintenance, fewer risks, and reduced operational spending,
and can even result in an increased building lifespan. As a result, it is evident
that focusing on asset maintenance and operating costs rather than
construction expenditures alone can yield considerable long-term financial and
environmental benefits ((Norsett, 2014).
 Disadvantages
of LCC
Cost

LCC can be costly to execute, especially for large or complex projects. Some
consumers refused to employ the LCC strategy due to operational costs (Zaki
et al., 2019). Because LCCs may have greater initial costs and may require us to
invest more in design, quality, or durability in order to lower future costs.

Data availability

LCC requires a greater amount of data gathering, analysis, and forecasting

than typical cost accounting approaches, which might raise the complexity and
uncertainty of your estimates. LCC estimates, for example, necessitate accurate
and dependable data on construction, operation, maintenance, and demolition
costs. This information may not be available for all building types or in all
areas. Furthermore, cost data are difficult to obtain and analyze because there
is no institutional structure outside of the federal government and federal
buildings for gathering data from several sources..

Uncertainty

LCC is predicated on a number of future assumptions, such as the cost of

energy, the building's lifespan, and the future value of money. How a building
and its functional subsystems operate is dependent on the building's design and
construction, the weather, the building's users and operators, and material
variations. These assumptions may be incorrect, resulting in inaccurate LCC
estimates. Furthermore, if the projected project life is excessively long then
more money is likely to be invested in the original project than is justified
(Remer, n.d.).
 CONCLUSION
Based on above findings, there is no doubt that LCC plays an
important element for client in decision making.
With the help of technology, the process of calculating LCC is way
easier.
The software contributes tremendously in construction industry
and spread awareness to the client to estimate before acquire an
asset.
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