Whole Life-Cycle Costing: Risk and Risk Responses

Abdelhalim Boussabaine d'Ingenieur d'Etat, MSc, PhD is a Lecturer at the School of Architecture, at the University of Liverpool. He has written widely on cost modelling for researchers and professionals and is the lead author of Whole Life Cycle Costing: Risk and Risk Responses (Blackwell, 2004).

Preface xi Acknowledgements xiii Part I: Fundamentals of Whole Life-cycle Costing 1 Towards an Understanding of Whole Life-cycle Costing 3 1.1 Introduction 3 1.2 Whole life-cycle costing: a brief history 4 1.3 Defining whole life-cycle costing 7 1.4 Risk and uncertainty in WLCC 9 1.5 Subjectivity in WLCC 9 1.6 Summary 10 References 10 2 Whole Life-cycle Costing Risk Management 12 2.1 Introduction 12 2.2 Why has the construction industry failed to embrace WLCC? 12 2.3 Why risk assessment in whole life costing? 13 2.4 Data requirements in whole life-cycle costing and risk assessment 15 2.5 Specifying a comprehensive set of objectives and measures for each WLCC component 17 2.6 A framework for whole life costing risk management 22 2.7 Summary 26 References 26 3 Key Decisions in the Whole Life-cycle Costing Process 28 3.1 Introduction 28 3.2 Justification for investment and extraction of client requirements 29 3.3 Key decisions at the conceptual development stage 31 3.4 Key decisions at the detailed design stage 32 3.5 Key decisions at the production stage 33 3.6 Decisions at the operational stage 34 3.7 Decisions at the end of economic life stage 35 3.8 Summary 35 References 36 4 Fundamentals of Whole Life-cycle Cost Analysis 37 4.1 Introduction 37 4.2 Concepts of the time value of money 37 4.3 WLCC calculation models 38 4.4 Measuring economic performance in whole life-cycle costing 41 4.5 WLCC forecasting methods 49 4.6 Benchmarking and key performance indicators 52 4.7 WLCC key performance indicators 53 4.8 Summary 54 References 54 5 Whole Life Risk Analysis Techniques 56 5.1 Introduction 56 5.2 Risk analysis 56 5.3 Qualitative risk analysis 58 5.4 Risk matrices 58 5.5 Risk registers 60 5.6 Event trees 61 5.7 Influence diagrams 62 5.8 SWOT analysis 63 5.9 Brainstorming sessions 63 5.10 Quantitative risk analysis 64 5.11 Probabilistic approaches to risk 64 5.12 Simulation 71 5.13 Sensitivity analysis 74 5.14 Markov theory 74 5.15 Deterministic measures of risk 75 5.16 Mathematical and analytical techniques 77 5.17 Artificial intelligence and fuzzy set theory 78 5.18 Summary 81 References 82 Part II: Whole Life-cycle Costing: The Design Stage 6 Design Service Life Planning 87 6.1 Introduction 87 6.2 Estimation of service life for new structures 88 6.3 Estimation of the remaining service life for existing structures 95 6.4 Summary 103 References 104 7 Design Environmental Life-cycle Assessment 106 7.1 Introduction 106 7.2 Life-cycle assessment 107 7.3 Life-cycle assessment for design optimisation 110 7.4 LCA tools 112 7.5 Environmental life-cycle cost 114 7.6 Case study 117 7.7 Summary 120 Reference 121 8 Whole Life-cycle Cost Planning at the Design Stage 122 8.1 Introduction 122 8.2 Design whole life-cycle cost planning 122 8.3 An integrated framework for WLC budget estimation 123 8.4 Benchmarking WLC budgets 126 8.5 Whole life cost planning 128 8.6 Summary 141 References 141 9 Whole Life Risk and Risk Responses at Design Stage 142 9.1 Introduction 142 9.2 Design whole life risk 143 9.3 WLC risk identification and risk response measures at design/precontract stages 146 9.4 WLCC risk categorisation 154 9.5 Design WLCC risk quantification 154 9.6 Design risk response measures 159 9.7 Summary 161 References 162 10 Whole Life-cycle Costing of Mechanical and Electrical Services: a Case Study 163 10.1 Introduction 163 10.2 Modelling the whole life cost of air-conditioning systems 164 10.3 Data and methodology 166 10.4 Results and discussion 170 10.5 Summary 174 References 174 Part III: Whole Life-cycle Costing: Construction and Occupancy Stage