Value Management & Life Cycle Costing
The life cycle costing evaluates lowest cost of ownership of a projects life span. Also determines the cost of project from design to completion. This analysis not only calculates capital cost but maintenance and operation cost also.
Value management deals with requirements of a client for the project. It helps to identify the alternatives to increase the achievement of goals and efficiency at lowest cost possible. Value management helps to reduce the risk of delays, failure, cost and increases quality and performance to ensure safety and reliability.
Data collection using questionnaire is more reliable than interviews, interviews are more inclined to bias involves personal opinions knowingly or unknowingly in the data collection. Which is difficult to deduct from the research.
Life cycle cost technique
Life cycle costing is mainly used to calculate the future cost of project. It correlates initial cost with expected future costs such as maintenance, alteration and operation. LCC provides economic comparison for present and future. LCC evaluates how much it will cost to achieve future benefit in the life span of project. Therefore it is needed to calculate the maintenance and operation cost of the project for client’s investment. Life cost of a project has to be determined at the conceptual stages of the project to calculate the maintenance and running cost. There must be balance to ensure the cost such as energy usage, disposal, and so on are also taken in to account. Clients these days are more concerned about future value of their money, LCC helps to evaluate the value of money.
The term Value engineering is also used for value management. After World War II manufacturing industry faced materials and component shortage so value management was developed. This is the process to acquire services, designs, and facilities at lowest cost to provide durability and quality. VM is a problem solving management system. VM helps from beginning to completion. It balances between quality, safety, cost, and reliability. VM can be introduces at any stage in construction project, more useful if used from the beginning.
Value management / engineering removes unnecessary cost in construction project and helps to increase better quality and performance at lower price. Workshops and seminars are held for value management where client, suppliers, contractors, and other stakeholder participate for investigations and suggestions. Value management can be categorized in different phase mainly evaluation and development phase.
1- The evaluation phase:
This phase is also called investigation phase, evaluation phase is important strategic process primary activities of this phase are modifying, elimination, pruning, and combining ideas. Mostly availability, cost and technology are evaluated on merits, constraints, easiness, safety, coordination and effect on schedules.
2- The Development phase:
This phase depends on result of evaluation phase. Where all participants agree to recommendation made and milestones are also identified. Which is to prepare for alternative design and cost so that feasible proposal can be drafted and presented to client.
In sum, performing both Value Management analysis and Life Cycle Costing can be extremely beneficial for construction projects.