Risk assessment methods for life cycle costing in buildings

Purpose. There has been a growing consciousness of the significance of considering the costs of buildings and of developing financial methods to evaluate the life cycle costs (LCC) of buildings in use. Before any decision to invest capital in a building project or existing infrastructure is taken, it is essential that all corporate occupants and stakeholders in the policymaking practice are fully aware of the risks that are inherent as any LCC estimate will always involve a degree of risk exposure. Design/methodology/approach. Questionnaire survey to 120 construction professionals was used to gauge the current level of awareness, usage and advocated benefits of risk assessment methods in LCC. The questionnaire comprised three main sections each exploring different parts of the research question. Findings. The key findings of the statistical analysis indicated that there is a low awareness and usage of risk assessment methods and four factors were the most advocated benefits of its application to corporate occupiers and decision makers. This study fills the gap in the existing knowledge by addressing concerns over risk assessment to improve the confidence in LCC. Research limitations/implications. Although the data used in this paper was from professionally qualified members of either the Royal Institution of Chartered Surveyors (RICS), the Chartered Institute of Building (CIOB) and the British Institute for Facilities Management (BIFM), the research is limited in some ways in that it does not cover all the professionals in the construction industry. Nevertheless, all the professionals who responded to the questionnaire have up-to-date level of awareness of risk assessment methods in life cycle costing. Practical implications. As a result of growing awareness of whole life costing among corporate occupants and facilities managers in contemporary building projects, precise assessment of cost is a challenging undertaking as it consists of some measure of risk with regards to the running and maintenance costs during the entire life of the buildings. Thus, the existence of considerable improbability and doubt regarding cost and time evidence of an LCC study would have mind blowing implications on final results and consequently have minute bearing on subsequent decisions made by corporate occupiers. Social implications. Value for money for construction products and its facilities should not be viewed only in terms of costs to design and construction. Rather, it is vital for corporate occupants and society in general to consider other key variables such as operations, maintenance, renovation, replacement, and end of life costs. Originality/value. This paper contributes with new outlooks aimed at assessing the current level of awareness, usage and advocated benefits of risk assessment methods in LCC and adds to the limited empirical studies on risk assessment to corporate occupants and decision makers