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Cost analysis error? Exploring issues relating to whole-life cost estimation in sustainable housing

Tokede, Olubukola, Wamuziri, Sam, Sloan, Brian and Brown, Andrew 2014, Cost analysis error? Exploring issues relating to whole-life cost estimation in sustainable housing, Journal of financial management of property and construction, vol. 19, no. 1, pp. 4-23, doi: 10.1108/JFMPC-02-2013-0003.

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Title Cost analysis error? Exploring issues relating to whole-life cost estimation in sustainable housing
Author(s) Tokede, OlubukolaORCID iD for Tokede, Olubukola orcid.org/0000-0002-5116-3390
Wamuziri, Sam
Sloan, Brian
Brown, Andrew
Journal name Journal of financial management of property and construction
Volume number 19
Issue number 1
Start page 4
End page 23
Total pages 20
Publisher Emerald Group Publishing
Place of publication Bingley, Eng.
Publication date 2014
ISSN 1366-4387
1759-8443
Keyword(s) Continuity
Cost modelling
Lighthouse
Present-value
Whole-life costing
Zero-carbon
Summary Purpose: The main purpose of the study is to promote consideration of the issues and approaches available for costing sustainable buildings with a view to minimising cost overruns, occasioned by conservative whole-life cost estimates. The paper primarily looks at the impact of adopting continuity in whole-life cost models for zero carbon houses. Design/methodology/approach: The study embraces a mathematically based risk procedure based on the binomial theorem for analysing the cost implication of the Lighthouse zero-carbon house project. A practical application of the continuous whole-life cost model is developed and results are compared with existing whole-life cost techniques using finite element methods and Monte Carlo analysis. Findings: With standard whole-life costing, discounted present-value analysis tends to underestimate the cost of a project. Adopting continuity in whole-life cost models presents a clearer picture and profile of the economic realities and decision-choices confronting clients and policy-makers. It also expands the informative scope on the costs of zero-carbon housing projects. Research limitations/implications: A primary limitation in this work is its focus on just one property type as the unit of analysis. This research is also limited in its consideration of initial and running cost categories only. The capital cost figures for the Lighthouse are indicative rather than definitive. Practical implications: The continuous whole-life cost technique is a novel and innovative approach in financial appraisal [...] Benefits of an improved costing framework will be far-reaching in establishing effective policies aimed at client acceptance and optimally performing supply chain networks. Originality/value: The continuous whole-life costing pioneers an experimental departure from the stereo-typical discounting mechanism in standard whole-life costing procedures.
Language eng
DOI 10.1108/JFMPC-02-2013-0003
Field of Research 120201 Building Construction Management and Project Planning
1202 Building
0905 Civil Engineering
Socio Economic Objective 970112 Expanding Knowledge in Built Environment and Design
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2014, Emerald Group Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30088138

Document type: Journal Article
Collection: School of Architecture and Built Environment
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