1 BUILDING MAINTENANCE

AND
MANAGEMENT I
AP225 : BACHELOR OF ESTATE MANAGEMENT (HONS)
Fakulti Senibina, Perancangan & Ukur,
Kompleks Tahir Majid
UNIVERSITI TEKNOLOGI MARA
DR. Noraliza Basrah
Nurzafira Zainul Abidin
Sr Dr Nur Lesya Firsya Binti Johaimi Ling
 LESSON 9
COSTING

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 LIFE CYCLE COSTING

MEANING OF LIFE CYCLE COSTING

■ LIFE CYCLE – originally indicates a biological term to describe the series
of phases through which an organism passes from a specified early
stage (conception) to the identical stage in succeeding generation.
Consequently, the term life cycle applied originally to life forms and not
objects.
■ Linguistic scientists, who deal with the meaning of the words and with
the development and change in these meanings, view language as non-
static, and observed the biological meaning of life cycle change when
applied to inanimate objects as purely an analogy. The object being
described is considered as undergoing a cyclical existence from
inception to destruction and possible renewal through re-cycling of
material.
■ In modern business economic terms, life cycle is applied to the part of
the cycle over which the client has financial interest and therefore the
term life cycle cost has the implied prefix of economic within that
context.

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 *LCC IN BUILDING MAINTENANCE

■ Life cycle cost (LCC) is the total relevant costs over the life
of any system including cost of acquisition, operation,
maintenance, modification, and disposal for the purpose of
making decision (Shear, 1993).
■ LCC takes into account initial and other running costs (total
cost of operation and maintenance of a system) over a life
of the buildings.
■ It can help in determining how the owner’s money is
distributed during the life period of the facility.
■ It is used to determine the most economic way of meeting a
need of space.
 LIFE CYCLE COSTING
(also known as cost-in-use, total cost or ultimate cost)

LCC is an approach aimed at It is a cyclical interest in techniques

establishing the total cost of which view the total cost of an asset
maintenance costs, replacement costs (property / building) over its lifetime
and residual value or cost. against the cost of its initial provision.

One of the basic attributes of this
technique is discounting whereby all
sums of money are transferred to a
common point in time, allowing
comparison between different design
solutions to be made.
The “scientific” approach suggested by LCC
has, however, FAILED in practice because
sufficient funds were not available, often
being cut or deferred in budget decisions,
because maintenance is not a high-profile
activity and because maintenance
managers also have been lowly valued.

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 BUILDING INFORMATION
MODELLING (BIM)
WHAT IS BIM?

Software?

3D Model of buildings?

Process?

Building Data Collection?

BIM is all of the above and more.

BIM is a 3D visualisation simulating the

actual building to act as the quality
assurance for the building data
management on its operation and cost
throughout the building’s life cycle

BIM for building life

cycle costing
https://www.youtube.com/watch?v=Pimh2ahKeoo
 HOW TO (ACCURATELY) CALCULATE LCC?
■ In LCC and its variants, there is
an expectation of being able to
calculate a “right” or “best”
answer or solution to the
“problem”.
■ Much depends on what was
included in the calculation, the
assumed life expectancy of
components and the interest
rate selected.
■ Calculations for LCC are so
dependent upon the
assumptions made for inflation,
interest rates, decay and
depreciation that the danger is
upon the selection of such rates
in which it is possible to support
almost any desired results.
■ In reality, the maintenance could
face a set of different
challenges, thus providing a
different story.
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 MAINTENANCE FUNCTIONS

■ Cleaning and servicing

should be carried out
regularly and may be
CLEANING &
SERVICING combined with a system
of reporting faults, so
that rectification can be
carried out soon after
faults are detected,
therefore, avoiding the
RECTIFICATION need for more expensive
REPLACEMENT
& REPAIR
repairs or even
replacement at a later
stage.

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 IMPORTANT CONSIDERATIONS

Appraisal
Buildings should techniques Initial and
be appraised at such as cost- running costs, Maintenance
the design stage in-use, site conditions should be
or at the time of discounted recognized as
purchase so as and labour costs,
to determine cash flow and building design part of the
both the initial cost-benefit and fabric used, process of
and long-term analysis can the budget creating new
maintenance help constraints and assets.
costs. determine how to cope with
costs. uncertainty.

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 THE BUILDING LIFE SPAN
Three (3) Distinct Lives
■ Physical life – assuming the
building is structurally sound,
this life can be extended
almost indefinitely by careful
maintenance
■ Functional life – a building
may no longer fulfill its original
functional intention due to
social and technological
changes. It may be possible
to adapt the building to
different usage.
■ Economic life – a comparison
of costs of maintaining a
property against replacement
is an indicator of economic
viability.
Factors affecting the
USEFUL life of a building
■ The extent to which
maintenance was considered
and included in the design
■ The degree to which the
occupier/manager carries out
maintenance work during the
life of the building
■ The economic considerations
whether to continue
maintaining, or to be adapted
to a more suitable usage
■ The options to demolish and
rebuild.
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 TYPES OF COST

COMMITTED COSTS
cannot normally be
altered during
accounting period

VARIABLE OR
MANAGED COSTS
ENGINEERED
are uncommitted
COSTS are
and not directly
closely related to
related to the
the output of the
volume of activity.
unit
TYPES OF COMMITTED COST CONSIDERATIONS
(LEE, 1987)
Costs per Unit of Accommodation
■ It measures the maintenance cost per the number of people that occupied the building. This
method doesn’t obtain the accurate level of expenditure on the maintenance work. However, it
can be used for a rough forecast of the maintenance cost for buildings of the same use
categories
Cost per Unit of Volume
■ To use this method, some other factors (i.e. number of buildings) should be considered at the
time of assessment the maintenance costs
Costs per Building Elements
■ The assessment of maintenance cost based on building elements will provide a rational
amount to be spent on maintenance of each element. The total costs are either to be related
to the total floor area or the area of that particular element
Costs per Functional System
■ The level of maintenance expenditure is related to the need of the end users
 FACTORS INFLUENCING MANAGING THE
MAINTENANCE COSTS
■ Satisfaction of user requirements: the basic
requirements of the user
■ Value consideration: the value of any building to be
maintained is determined by the need for it services.
■ Statutory constraints: it is limited for the most part in the
buildings, which affect health and safety. The main
building regulations which are important to the
maintenance manager may be classified as:
– Those which apply to the design and physical requirements of new
construction.
– Those, which are of a continuing nature and apply during the occupation
of the building
 CAUSES TO VARIABLE COSTS
■ Poor Quality Control
– During the construction and maintenance
stages, quality control program should be
set out. It is used to control, inspect and
test record of activities in accordance with
the contract requirement and
construction procedures.
■ Unfamiliarity with Maintenance Methods
– The effect of adoption of inappropriate
method is not limited to increase the cost
of the particular work, but may also have
an adverse effect on the long-term
durability of the building and the cost of
subsequent maintenance
■ Unfamiliarity with Site Conditions and
Environmental factors
– The designer should have an idea about
the building location and type of plants
and insects existing in the area. Designer
and maintenance labour should be
familiar with buildings site condition such
as soil condition. Ignoring variation in soil
condition will cause setting, which will
cause cracking of structural elements
■ Failure to Identify the True Cause of
Defect
– This will not only do nothing to rectify
the original defect but may
substantially worsen the condition of
the building
■ Unavailability of skilled labour
– Skilled labors are important for
maintenance work and they should
be available to perform job and
utilize equipment
■ Fluctuation of Materials Prices
– Recently, there have been obvious
fluctuations in construction and
finishing materials. Example of this
materials price fluctuation is cement
MANAGEMENT PROCESS OF CONTROL

Setting Taking
Measuring
performance appropriate
actual
standards at action in the
performance
the appropriate event of actual
and comparing
level to achieve performance
it with the
a given deviating from
standard
objective the standard
CRITERIA FOR TOTAL COST CONTROL

A sound knowledge of the A logical breakdown of the budget

relationship between budgeting and into specific sections under capital
finance; and revenue, with particular
reference to renewals and
replacements;

A method of calculating economic

Reasonable assessment of the
assessments of capital, renewal and
factors affecting the budget,
replacement expenditures, using
including a plan for maintenance;
discounted cash flow analysis;

Evaluation of the results of non- Budgetary control, including a

maintenance suchlike lost amenities calendar programme for
/ production due to breakdown, authorization and implementation of
excessive running costs and plans for capital, renewal and
increased health hazards; replacement expenditures; and

The use of accurate costing

technique, including cost coding and
classification systems, methods of
cost.
SOURCES OF INEFFECTIVE COST

WORK ABOVE AND

OVER REQUIREMENT

MAKING GOOD THE

EFFECT OF NEGLECT

RECTIFICATION OF
DESIGN DEFECT
 UNECONOMIC WORK

NON-PRODUCTIVE IMPROPER WORK LACK OF

ITEMS METHODS MOTIVATION

CHANGES TO
INAPPROPRIATE
LACK OF SCOPE OF WORK
TENDERING
EFFICIENT SYSTEM AFTER
PROCEDURES
COMMENCEMENT
 INADEQUATE WORK

FAILURE TO LACK OF
IMPROPER
IDENTIFY ADEQUATE
EXECUTION
TRUE CAUSE SAFEGUARD
OF WORK
OF DEFECTS IN CONTRACT
THE MAINTENANCE CRITERIA
 TECHNICAL FACTORS
Maintenance Criteria

AGE OF BUILDINGS

NATURE OF DESIGN

MATERIAL SPECIFICATION

PAST STANDARD OF MAINTENANCE

COST OF POSTPONING MAINTENANCE

 POLICY CONSIDERATIONS
Maintenance Criteria

MAINTENANCE NATURE OF EXTENT TO

PRODUCTIVITY
USAGE
PRESTIGE

STANDARD IN THE PAST AND WHICH

KEEPING WITH CURRENT PRODUCTIVITY
THE IMAGE OF USAGE OF MAY BE
ORGANIZATION BUILDING REACHED
 ORGANIZATIONAL CONSIDERATIONS
Maintenance Criteria

POSITION OF BUILDING MAINTENANCE

DEPARTMENT

KNOWLEDGE DEGREE OF
AND DETAIL AND
EXPERIENCE OF PERSONALITY FORMALITY OF
DECISION OF MANAGER THE
MAKER IN TOP BUDGETING
MANAGEMENT PROCESS
 FINANCIAL FACTORS
Maintenance Criteria

• CASH FLOW
AVAILABILITY • LEVEL OF • SIZE OF DIRECT
PROFITS LABOUR FORCE &
ITS FINANCIAL
• EFFECT OF THE IMPLICATIONS
CASH FLOW • PRICES &
GENERAL LEVELS • TIMING OF
OF COSTS WORKS
PROGRAMME
ECONOMIC CRITERIA
Maintenance Criteria

EXTENT TO WHICH
BUILDING
MAINTENANCE IS SEEN
AS A FACTOR IN THE
TOTAL PROBLEM
WITHIN THE
ORGANIZATION
 ENVIRONMENTAL CRITERIA
Maintenance Criteria

GENERAL ECONOMIC ENVIRONMENTAL

SYSTEM OF TENURE
CLIMATES CHANGES
 OBJECTIVES OF COSTING SYSTEM

The system would be useful if

To allow manager to make
it improves the way in which
objective decisions leading to
future problems are tackled by
effective cost control and then
understanding how well or
study the possibilities for cost
badly the previous decisions
reduction.
have worked out in practice.
FUNCTIONS OF MAINTENANCE COSTING

BASIS FOR OBJECTIVE PROVIDE A CLEAR RECORD

DECISIONS LEADING TO OF THE RUNNING COSTS
IMPROVED AND EFFECTIVE FOR A BUILDING / GROUP
COST CONTROL OF BUILDINGS

COLLECT DATA ON
SORT MAINTENANCE
EXPENDITURE THOUGHOUT
INFORMATION ACCORDING
THE YEAR INTO SUITABLE
TO LOCATION / TYPE
EXPENSE CENTRES

CONSTRUCTING
APPROPRIATE COST
CODING SYSTEM
GATHERED FROM LOG
CARDS, TIME SHEETS AND
STORES ISSUE NOTES
 CONCLUSIONS
■ The anticipated life span of the
building, or part thereof, should
be carefully examined as this
figure will fundamentally affect
decisions regarding capital cost
expenditure and future running
costs.
■ It is important that the
requirements of each project are
considered independently and
that generalities are not applied.
■ The residual value is the
anticipated value at the end
of the anticipated economic
life.
■ Residual value may be
– positive (a value to the client),
– or negative (a cost to the client)
– or may have no value (demolition
and removal equals value of the
material)
■ Future decisions to renovate,
refurbish or redevelop would
depend on this.
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