Advantages and Disadvantages of Life Cycle Costing

Advantages of Life Cycle Costing

1. Assess use of existing projects / components vs. new construction/installation
2. Comparison of alternates i.e. Project / design, product / component, materials
3. A management guide to the owner
4. Aids energy conservation
5. Combination of time, cost & quality

Disadvantages of Life Cycle Costing

1. Financial problems may spoil maintenance schedules
2. Unexpected repair by design or construction failures
3. Repairs cost may change due to future difficulties (Ex. Increase of occupants)
4. Unexpected labour strikes, material shortages
5. Annual sinking fund method not suitable for short life projects

Type of Obsolescence in Project Life Cycle 

1. Physical obsolescence - Structural stability, demolition, repair & renovations
2. Economic obsolescence - Cost of repair & renovation, land value worth more for potential development
3. Functional obsolescence - Cease to function for the original purpose, refurbishment
4. Technological obsolescence - Change of technology
5. Social obsolescence - Changing living standard, changing culture
6. Legal obsolescence – Laws / regulations / standards, compulsory purchases