ABSTRACT
The second part of the chapter looks at the growing importance of life cycle cost analysis in view of the longer-term interests contractors are now taking in buildings. Contractors are often no longer appointed to simply construct, or design and construct, buildings. They can also be tasked with funding projects and taking a long-term interest in assets by providing core services to employers over concessionary periods of 25 to 40 years, in return for annual unitary charges, rather than simply construction phase interim payments. Consequently, construction organisations are asking quantity surveyors to forecast and value engineer operational costs of buildings over these longer periods. Contractors look to design teams to achieve a value for money balance between capital and operational costs of buildings. This can be with a view to reduce the long-term financial risk of maintaining assets to no more than 2% of capital costs per annum. Given the increase in focus towards operational (life cycle) expenditure, the second part of this chapter introduces the principles life cycle costing.
