Life-cycle cost (LCC) analysis of real estate
In tandem with representatives from GEFMA (German Facility Management Association) and various other project partners, IFMA (International Facility Management Association) Switzerland has developed a life-cycle costing model for real estate.
Life-cycle costing facilitates an integral approach whereby cost information on all the life-cycle phases of a property are fed into the decision-making processes. The balanced view achieved by collecting and applying characteristic values from the various life-cycle phases of a building eliminates the risk of one-sided optimizations, e.g. in favour of either construction costs or cost-in-use. The results of life-cycle cost analyses can be used as decision-support in the comparison and fine-tuning of investment options, as well as for optimizing building designs. The guideline offers a straightforward introduction to life-cycle costing for a wide range of professionals while paving the way for the application an associated benchmarking system.
Part 1 of the publication ("Model", 36 pages) starts by discussing the application of and background to life-cycle costing, before focusing more closely on key determining factors – specifically, the period of analysis, system boundaries, forecasting approach, computational method and parameters. It then proceeds to give recommendations on the management of forecast uncertainty and assessment of the analysis results.
Part 2 ("Application") comprises an easy-to-use, Excel-based life-cycle costing tool, which is equally suitable for new-build and modernization projects. The applied computational parameters and benchmarks can be adapted to the specific property features.
The publication "Life-Cycle Costing of Real Estate" targets all property professionals who act as decision-makers or are involved in the design and optimization of entire buildings or individual parts and systems. These include property owners and their agents (e.g. project, asset and property managers), investors, developers, designers, consultants, building contractors and facility managers.