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BSRIA publishes Whole Life Costing Guide

01 July 2008

BSRIA's new Whole Life Costing guide sponsored by Reliance FM has been written for clients, contractors, consultants and product manufacturers to understand the long-term economic implications of their proposals and decisions.

Whole-life costing analysis is about providing an economic appraisal of different solutions to a given problems, so that better decisions can be made. BSRIA's Guide explains why whole-life costing
analysis is important and sets out when it can be used and the benefits to clients and design teams. It is important that the underlying arguments supporting whole-life costing analysis, its core principles and the restrictions on how it can be used, are understood by everyone involved in scoping, designing and delivering the project.

BSRIA's new Whole Life Costing guide BG5/2008 has been specifically written for clients, contractors, consultants and product manufacturers to understand the long-term economic implications of their proposals and decisions. The guide will be invaluable to those without financial expertise or a track record in life-cycle analysis.

The guide is broken into five sequential colour-coded steps to help design teams adopt the principles easily and quickly.

These are
1 DEFINING THE PROBLEM
2 ALTERNATIVE SOLUTIONS
3 CALCULATING WHOLE-LIFE COSTS
4 FINE-TUNING WHOLE-LIFE COST MODELS
5 INTERPRETING THE RESULTS

The Guide is sponsored by Reliance Facilities Management., and CEO Barry Nealon says in the Preface:
"Whole-life costing is a much more intelligent way of thinking about investments. By taking a longer view we can sow the seeds for a better tomorrow, not only in terms of reducing our operating costs but also in other areas such as reduced energy consumption, reduced environmental impact, reduced maintenance and longer gaps between costly and disruptive replacement projects.

"This isn’t an exact science and I think you’ll find this report reflects and understands that. It will even provide you with some guidance on when it is appropriate to apply the principles and when the potential
benefits are outweighed by the cost of the exercise. However, using the whole-life costing principles correctly in the right circumstances should improve your decision-making.

"Reliance Facilities Management embraces the concept of whole-life costing. Whether you are new to the subject or are brushing up on best practice, I hope you find this publication a welcome addition to
your knowledge."

This guide presents a simple process for the practical calculation of whole-life costs, with examples to show how the different stages of the process relate to one another, to show how the results are obtained and what they mean. Of course, whole-life costing analysis is only one form of project appraisal, focusing on the economic outcome. Ultimately, a decision will be a compromise between this and other assessments, be they technical, environmental or political, but these are outside the scope of this guide.

It has been deliberately kept short by omitting some of the more complex aspects of whole-life costing. Clients, estates managers, engineers, consultants, quantity surveyors or cost advisers will find some parts of the guide more relevant than others, but all are recommended to read the entire guidance.

Whole-life costing analysis is just one of a number of assessment techniques that help identify the appropriate solution to a problem. It focuses on economic assessment using profiles of current and future
costs and benefits to arrive at a discounted net present value of the whole-life costs, incorporating lump-sum investments, operating costs, end of life costs, and end of study benefits such as residual value.


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