Civil Engineering Reference
In-Depth Information
Clearly spending more on the construction of the 1940s pier
has paid signifi cant dividends in terms of reducing life-cycle
costs by minimising the expenditure required upon mainten-
ance and repairs. However, the neighbouring pier has to be
considered to be an example of a low performance concrete
structure. In this case, buying cheap (lower fi rst/direct cost)
has resulted in a need to pay much more in the later stages by
way of higher through-life operational costs, as the neighbour-
ing pier would need to be rebuilt.
Whilst the above example was for a concrete structure,
similar considerations apply to assets constructed in other
materials. Furthermore, there are additional factors relating
to life-cycle costs that may introduce other considerations
into an owner's decision-making process. For example,
the cost of capital, as represented by bank interest or dis-
count rates, may alter the balance between various technical
options. Lower discount rates favour a longer-term perspec-
tive, which would typically involve higher initial costs as por-
trayed by Approach 2 shown in
Figure 5.4
. Higher discount
rates encourage a shorter-term perspective, which puts the
focus on minimising initial costs, as portrayed by Approach 1
shown in
Figure 5.4
.
High discount rates have a damaging effect on proper LCC
or WLC provisions as it makes it very diffi cult to justify
higher current expenditure, leading to a scenario that 'cheap-
est is best', even if it implies the need to rebuild the asset in
30 or 40 years. Such an outcome cannot be compatible with
the goal of minimising the use of natural resources, as would
be generally be expected as society seeks to move towards a
sustainable future.
There is also concern amongst some experienced engin-
eers and construction personnel that quality management
procedures employed during the design and construction of
assets do not always achieve satisfactory product quality and
hence durability. An aspect of these concerns is that the over-
all standard of workmanship being achieved during the con-
struction phase (now commonly referred to as the execution
stage) is not always suffi ciently high. Such problems can also
adversely affect the life-cycle cost and environmental impact
of an asset. However, these problems will often have their
roots within earlier stages of the project; such as when the
design, detailing or material specifi cation tasks are carried
out. Special efforts, primarily in the form of pre-planning con-
struction activities and verifi cation of the processes adopted
during execution, can be required to overcome these potential
diffi culties.
In addition, as the above example of the Progreso piers illus-
trates, there can be a marked difference between employing
what in isolation might be taken to be either high or low per-
formance materials and actually achieving a high performance
asset which also achieves adequate durability. Thus careful
choice and astute specifi cation of materials in design, tak-
ing account of construction processes and circumstances, can
produce high performance assets; whereas less well-informed
choices and decisions can result in the opposite outcome and
incur signifi cantly greater life-cycle cost and overall environ-
mental impact.
5.3.4 Achieving through-life value
It can be seen from the above considerations that the cost and
perceived 'value' of different service life design strategies can
change markedly for different circumstances and in response to
the assumptions being made, such as those about the through-life
care and management of the asset. These diffi culties are com-
pounded by the fact that the perception of value is subjective,
with different people applying different criteria and 'weightings'
to assess whether something is 'good value'. This highlights the
need for a standardised way of evaluating the 'value' achieved.
Procedures exist for establishing and managing the achievement
of value, which in more explicit terms is taken to be 'value for
money'. In this context, value is now commonly and formally
defi ned as the following ratio between achieved benefi ts and the
use of resources (and is often known as the 'value ratio'):
Satisfaction of needs
[Both of monetary and non-mone
Satisfaction of need
[Both of monetary and non-monet
ary nature]
[Both of monetary and non-mone
t
ary nature
Valu
Value
∝
Use of resources
[Cost, time, human, energy an
Use of resource
[Cost, time, human, energy and
material, etc
material, etc]
fits
Expenditure
Bene
Bene
fits
(
(.)
(
(
53
(
(.
5
53
=
Expenditure
The formal procedures for evaluating and managing value
in a wide range of circumstances has become known as 'man-
agement of value', and this recognises that many benefi ts are
not solely fi nancial in nature. This means that the differing
viewpoints of a variety of stakeholders need to be considered
when seeking to come to an evaluation of the 'value' of a par-
ticular option. The evaluation also needs to consider expen-
ditures that relate to both short- and long-term needs and to
take account of the fact that resources to meet the requirements
are limited and should be conserved, so that they are utilised
in a manner that ensures their availability for future genera-
tions. In essence, what these processes are seeking to do is to
achieve an acceptable balance between the benefi ts gained for
the expenditure and environmental impacts incurred, consider-
ing the potentially diverse range of views and requirements of
the various stakeholders involved, for the resources that can be
drawn upon.
Clearly this type of evaluation can be conducted in fi nancial
terms, such as on the basis of either whole-life cost or life-
cycle cost. However, it is also notionally possible that an evalu-
ation could be undertaken on the basis of a number of other
criteria, such as the environmental impacts associated with
meeting the defi ned needs. Thus, Equation 5.3 could poten-
tially take a number of different forms, although it is probably
fair to say that it is likely to be expressed in a fi nancial format
in most current applications.
