Lifecycle Costing Applications

How Does Constructability Concept During Planning Phase Contribute to Cost Certainty in Infrastructure Projects? Mega infrastructure projects are inherently risky, with many uncertainties involved. Statistics show that, on average, real infrastructure projects deliver 67% over budget and 44% behind schedule. Therefore, proactively predicting future risks/changes that may be encountered during construction, operation, and maintenance phases is critical for reducing the reported overruns and achieving cost certainty goals. Constructability is a commonly used framework for owners to proactively identify the sources of future changes, preventing unnecessary costly expenses during and post-construction phases. Research shows that effective constructability reviews during the design development phase can resolve up to 75% of field problems and mistakes. According to a case example provided by CII (2009), the life cycle costs of an Oil Production Facility in the US were reduced from $3.8 billion to $1.4 billion, mainly due to the upfront implementation of a constructability program during the design development phase [1]. Research conducted by [2] highlighted the importance of focusing on project life cycle costs during constructability review rather than just design and construction costs, as owner organizations have been suffering from the costs of reworks during the O&M phases of their projects. The attached figure shows that these two phases include around 50% to 80% of the total life cycle costs. Despite the high cost, the risks associated with these phases (operability & maintainability) are often underestimated during constructability reviews, causing significant changes and overruns during these phases. In my recent post, I emphasized the significance of Early Contractor Involvement (ECI) through collaborative contracts and incentivization strategies for managing life cycle risks early on. Despite many public owners in North America adopting and accelerating these contracting models, there remains skepticism in the market regarding the value and cost-effectiveness of ECI during the planning phase. The above research shows that the cost of early contractor involvement during planning is minor (if implemented effectively) compared to the cost of resolving field problems and mistakes. Addressing 75% of field problems and mistakes early provides several times the cost savings compared to dealing with them later. In your view, what are the benefits and challenges of implementing constructability reviews during the planning phase? Your thoughts are appreciated. Source: [1] https://lnkd.in/giEQnBGp [2] https://lnkd.in/gqDiJiBY #riskmanagement #decisionmaking #value #constructability #costoverrun #costsaving #infrastructure #transit #rial #uncertainty #moeroghabadi Hatch

Incorporating economic factors into Life Cycle Sustainability Assessment (#LCSA) is crucial for achieving a holistic understanding of sustainability. By evaluating the life cycle costs (#LCC) alongside environmental and social impacts, we can make more informed decisions that promote sustainable product development and enhance transparency and comparability across industries.   In the context of the OrientingEU project, colleagues from VTT have contributed to a research study on LCC methodology published in the International Journal of Life Cycle Assessment. The methodology is designed for use within LCSA frameworks and includes a detailed, step-by-step guide on applying LCC in LCSA. The article features two case studies from Stora Enso  and Ternua Group, showcasing the practical application of the methodology. Key Insights:   >> Comprehensive Methodology: A robust and operational methodology for LCSA of products was developed, covering the economic dimension through LCC. This methodology is not tailored to a specific type of product, making it versatile for various applications.   >> Double Counting: The methodology explicitly addresses double counting within LCC and LCSA, ensuring more accurate and reliable results.   >> Stakeholder Perspectives: It considers different stakeholder needs and perspectives, suggesting alternative aggregated economic indicators.   >> Cost Breakdown Structure: Practical guidance on data collection and management is provided through an extended cost breakdown structure, which helps in the allocation of product-unspecific costs.   >> Case Studies: The methodology was tested in two case studies - a business-to-business “beverage carton package” and a consumer product “outdoor wool jacket”. These case studies demonstrated the practical application and effectiveness of the methodology.   >> Confidentiality and Data Quality: The research highlights the challenges of data availability, confidentiality, and quality, which remain barriers to publishing LCC results.   The article was authored by Till Bachmann, Jonathan van der Kamp, Marco Bianchi, Hanna Pihkola, and Mateo Saavedra del Oso.   Explore the research further: https://lnkd.in/deefDcz3   #LifeCycleCosting #LifeCycleSustainabilityAssessment #Sustainability #ProductDevelopment #SustainabileBusiness #CircularEconomy #LifeCycleAssessment #LCA #VTTBeyondTheObvious

The Not-so Hidden Cost of Doing Things "On the Cheap" I recently completed my term as an elected local official and chair of the board. It was quite an experience and an enormous struggle convincing board members that life cycle cost analyses outweigh the upfront cost and doing things on the cheap. Choosing the lowest-cost option often seems smart - until hidden costs emerge. Cutting corners may save money upfront but it often leads to much higher expenses over time, especially in maintenance & repairs. Key Insights: 1️⃣ Maintenance Costs Can Match Initial Investment: Cheap initial builds often require costly upkeep. For example, maintenance expenses can equal the original construction cost within a decade. 2️⃣ Life-Cycle Cost Analysis (LCCA) Matters: Evaluating total costs (including construction, operation, and maintenance) helps avoid false economies. Spending more upfront on quality & planning reduces long-term expenses. 3️⃣ Deferred Maintenance & Cost Overruns: Skimping initially leads to deferred repairs & skyrocketing costs later. Many projects exceed budgets because the initial estimates ignore long-term needs & costs. 4️⃣ Ethics & Responsibility: Professionals & policymakers increasingly emphasize sustainable, responsible decisions that prioritize long-term #value over short-term savings. 🌟Here’s the Bottom Line🌟 The cheapest option today often becomes the most expensive tomorrow. Investing wisely upfront through comprehensive cost analysis ensures durability, safety, and financial sustainability. Responsible #management demands thinking beyond the initial cost and to focus on true cost & value over the project’s lifetime/lifecycle. What is your opinion? Engage with me in comments below👇🏼 #TCO #FiscalResponsibility #Budget Town of Dresden #OnTheCheap #LifeCycleCostAnalysis