Whole Life Costing
Prepared by
Nurul Fadhlina Bt Abd Fatah
Safiqca Bt Adam
Siti Faridah Bt Mamat
Syed Mohd Hashim B Wan Othman
Tan Peng Kiat
Vincey Chew
Wan Nor Adzahari Bin Wan Tajuddin
Wan Wei Lynn
Won Huey Si
114742
114766
110726
110738
110740
114815
110748
110749
110750
Definitions
The total cost of ownership over the life of an asset
- Association of Local Government Engineers New Zealand: "Infrastructure Asset
Management Manual"
the systematic consideration of all relevant costs and revenues associated
with the acquisition and ownership of an asset Constructing Excellence, 2006
A method of evaluating or comparing building materials and components by
looking at installation costs, lifespans, running and maintenance costs
Linkhousing, 2014
WLC is the systematic economic consideration of all whole life costs and benefits
during the period of analysis
RICS iConsult, 2013
Initial Cost
Initial Cost is estimated &
Planned Functional Life is decided
Initial Cost
Planned functional Life
Occasional Future Cost
Occasional Future Cost is predicted & adjusted
to Present Worth using Present Value table.
Example
Example
Roof
Roof (flashing)
(flashing)
Rainwater
Rainwater goods
goods
Sewerage
Sewerage
Water
Water reticulation
reticulation
Initial Cost
Planned functional Life
Present Worth
Present Worth is using Present Value
schedule. (Table C)
Present Worth
Initial Cost
Planned functional Life
To pg 16
PRESENT VALUE OF $1 Table
To pg 19
Present Value of $1
The amount should be invested TODAY in order
to received $1 at the end of n year, at an interest
rate of i % per annum
end of year n
Beginning of year 1
Value
TODAY??
$1
$?
Interest rate = i %
Present Value of $1
Source: [Link]
Equal Annual Costs
Equal annual costs are predicted and changed into
Present Worth by using Present Value schedule.
Present Worth
Examples:
Examples:
Air-conditioning
Air-conditioning system
system
Lift
Lift service
service
Escalator
Escalator service
service
Fire
Fire fighting
fighting system
system
Painting
Painting
Present Worth
Initial Cost
Planned functional Life
Present Value of $1 per Annum/ Present Value of Annuity
Present value of a future stream of expenses
Interest rate i %
End of yearr 2
3
4
1
$?
Value
TODAY??
Present Value of $1 per Annum/ Present Value of Annuity
Source: [Link]
Cost in Use
Present Worth is using Present Value schedule. (Table C)
Present Worth
Present Worth
Initial Cost
Planned functional Life
Cost in Use
The Total Equivalent Capital Cost are breakdown into
Annual Equivalent
Present Worth
Present Worth
Initial Cost
Planned functional Life
Cost in Use
Cost in Use
Present Worth
Cost in use
Present Worth
Initial Cost
Planned functional Life
Examples
Page 15
Example 1
Example 1
Find the Present Worth of costs of a
building given the following
information:
Life of building
40 years
Initial cost
40 000
Annual cleaning cost
300
Internal and external painting 2000
every 5 years
New roof covering
8000 every
15 years
Interest
5%
est
5.00%; 40 years
Calculation :
Initial cost
Cleaning 300 17.16
PaintingYr 5
0.784
Yr 10 0.614
Yr 15 0.481
Yr 20 0.377
Yr 25 0.295
Yr 30 0.231
Yr 35 0.181
2000
2.963
40 000
5148
5926
New roof Yr 15 0.481
Yr 30 0.231
8000
0.712
5696
Total Present Worth
56 770
Example 1
From the table of
Present Value of
Annuity
From the
table of
Present
Value
Example 1
Interest
10.00%;
Calculation : 40 years
Initial cost
Cleaning 300 9.7791
PaintingYr 5
0.6209
Yr 10 0.3855
Yr 15 0.2394
Yr 20 0.1486
Yr 25 0.0923
Yr 30 0.0573
Yr 35 0.0356
2000
1.5796
40,000
2,933.73
3,159.20
New roof Yr 15 0.2394
Yr 30 0.0573
8000
0.2967
2,373.60
Total Present Worth
48 466 (10%)
Example 2
Example 2
Find the Present Worth of costs of a
building given the following information:
Life of building
Initial cost
Annual cleaning cost
Internal and external
every 5 years
New roof covering
30years
Interest
50 years
50 000
200
painting
1000
10 000 every
5%
Example 2
Items
Year
Discount
Factor @ 5%
Discount
Factor @10%
50,000
Initial Cost
50,000
Cleaning
200
Painting
1000
18.26
3,652
9.9148
1,982.96
0.784
0.6209
10
0.614
0.3855
15
0.481
0.2394
20
0.377
0.1486
25
0.295
0.0923
30
0.231
0.0573
35
0.181
0.0356
40
0.142
0.0221
45
0.111
0.0137
3.216
3,216
1.6154
1,615.40
0.231
2,310
0.0573
573.09
Total Present Worth:
59,178
From the table
of Present
Value
New roof
10,000
From the table of
Present Value of
Annuity
54,171.45
Example 3
Example 3
Assume that example 1 and 2 represent
alternative proposals for a certain
project. It will be seen that the first
proposal appears cheaper valuable
comparison ca be made by convering
each of costs to an annual equivalent
over its expected life span. Calculate the
Cost in Use for each proposal.
Interest 5%
Example 3
Calculations:
Proposal described in Example 1
56770 0.0583
Cost in Use = 3310
@ 10% = 4953
Proposal described in Example 2
59178 0.0548
Cost in Use = 3243
@ 10% = 5466
Conclusion
COST-IN-USE
LIFE-CYCLE COSTING
WHOLE-LIFE COSTING
NOTE
For Net Present Value a higher NPV would be preferable
(e.g. gross PV less investment cost)
For Present Value / Worth a lower NPV would be preferable
as it would mean a cheaper alternative over the long-run
Thanks
To pg 16
PRESENT VALUE OF $1 Table
To pg 19
Present Value of Annuity
To pg 16
To pg 19
