India Biannual Construction Review 3Q/4Q 2023
Spotlight on Whole Life Cycle Costing (WLCC)
WLCC is a methodology for systematically and dynamically assessing all costs and benefits throughout the project lifespan under the defined scope. It is an investment appraisal and management tool that involves a holistic approach to estimate and evaluate all project requisites and deliverables from its concept to the end-of-life stage.
The WLCC technique can control a project's direct and indirect costs while also ensuring its value. It factors the assessment of the investments that go beyond the project's capital expenditure from the cost of land to disposal at the end-of-life, including concept refinement, exploring feasible alternatives, technological transformation, etc.
Figure 31
WLCC and life cycle costing (LCC) are two closely related concepts. LCC considers the total cost of an asset over its entire life cycle, all direct costs, namely the cost of acquisition, installation, operation, maintenance, repair, and replacement. The scope of WLCC is more holistic, and in addition to direct costs, WLCC also accounts for indirect costs, such as the environmental impact of the asset and the social costs of its production and use.
Objectives of WLCC adoption
The primary objective of WLCC is to ensure the total cost of asset/project ownership over its entire lifecycle is optimised. WLCC adoption is critical to making well-informed investment and operational decisions considering social, environmental and cost parameters.
For any project, deciding on a particular approach towards enacting WLCC is challenging. The selection of suitable materials and components and the use of energy-efficient technologies are considered the preferred choices. In addition, active and passive design practices, effective refurbishment, preventive maintenance to extend lifespan and circularity practices are vital in WLCC assessment.
Benefits
WLCC offers several benefits for the stakeholders as it can help optimise the overall costs and improve the project’s sustainability and environmental performance. It facilitates making well-informed decisions not only in the project phases like the design, construction and maintenance but also in the end-of-life disposal stages. The environmental sustainability aspects represented by parameters like the whole-life carbon and end-of-life circularity principle and practice shall make the WLCC approach more beneficial.
The survey respondents ranked demonstrable cost savings and achieving sustainable design solutions as the leading benefits of incorporating WLCC in projects.
Challenges:
The Indian construction industry appears nascent in adopting this methodology compared to other countries. This was evident from our survey, wherein most respondents (84%) said they do not often perform WLCC analysis for their projects.
When asked about barriers to adoption, it was discovered that few decision-makers in the built environment (46.5%) know WLCC or its benefits. This can make getting buy-in for WLCC studies difficult. Given the complexity and uncertainty involved in a project’s conception, delivery, and performance, as well as a lack of expertise and resource/record backup, it often becomes difficult to estimate future costs accurately. Therefore, all the built environment stakeholders must put their best foot forward in encouraging early collaboration and remaining agile in an otherwise fragmented industry approach. There are encouraging signs with the increasing digitalisation of the industry.
Despite these challenges, WLCC is vital for making long-term, efficient, cost-effective, and informed decisions. An overwhelming three-quarters of the respondents to the survey were willing to increase WLCC adoption in their organisational endeavours.
Technological enablers for WLCC adoption:
In a recent global survey by the RICS, nearly 57% of organisations agreed that digital tools complement the whole-life and whole-asset thinking for their businesses. This will increase collaboration across the asset life cycle while ensuring a value-driven delivery and easier management of the asset and its performance, demonstrating better return and benefit realisation from the investment.
The model-centric advancements (BIM, digital twins) and data-driven analytics (carbon calculation tools) are the primary technologies increasingly adopted in organisations. They help calculate, benchmark and report the commercial, environmental, and social value of the endeavour before making concrete investment decisions.
Common data environment (CDE)
Advanced data analytics
Building information modelling (BIM)
Common data environment (CDE)
Advanced data analytics
BIM
Modular/offsite manufacturing
Smart sensors
Drones
Modular/offsite manufacturing
Smart sensors
Drones
As more organisations adopt WLCC, acquiring the tools and resources required for the analysis becomes easier. Furthermore, WLCC is a key element of many globally practised sustainability assessment schemes, including BREEAM (Building Research Establishment Environmental Assessment Method), LEED (Leadership in Energy and Environmental Design), Green Star, DGNB (German Sustainable Building Council), and HQE (Haute Qualité Environnementale).
These schemes may have discrete requirements for WLCC, but they generically require project teams to consider the whole life cycle costs of the project and to identify opportunities to reduce costs and ensure sustainability.
WLCC may be used in the following ways in sustainability evaluation schemes to ensure sustainability development goals:
- To compare the long-term viability of various design and construction solutions
- To evaluate the cost-effectiveness of various sustainability measures
- To make informed decisions on the refurbishments or replacement of an asset
- To decide on the most sustainable option for the end of life of a product
Despite the inherent challenges, WLCC is steadily gaining traction in India, as organisations worldwide are now beginning to witness tangible benefits. These practices will enhance India's competitive edge in the global market and be pivotal in achieving national ambitions on global Sustainable Development Goals.
