Life cycle costing and cost-effective design solutions

Abstract

Economic optimisation is the process whereby economic analysis is applied to determine the most economically efficient or cost-effective choice among alternatives. Moreover, the attainment of optimum economic efficiency reflects a fundamental goal of the majority of investors. Whereas traditional economic evaluation methods offer varying degrees of proficiency in determinini optimum investment desirability, they fail to identify and evaluate the explicit relationships between capital costs and operating expenses. These inadequacies are especially relevant when viewed from the perspective of property investment evaluation. Recognising the intimate links between imtial acquisition costs and subsequent running costs is fundamental to establishing the most cost-effective property development solution. Llfe Cycle Costing (LCC) represents a financial assessment technique whereby these issues are addressed.