Public Asset Management—Concept and Framework for Public Schools with the Life-Cycle Costing Model Reversed LCC

Abstract

The public sector in Norway is often challenged to improve the management of public sector assets with due focus on life cycle—and maintenance. In order to contribute to the life-cycle process, this paper brings the Life-Cycle Costing (LCC) framework Reversed LCC utilizing Depreciated Replacement Cost (DRC), Factor, and Monte Carlo-methods. The tool targeted some newly constructed or renovated schools, to highlight the possibility of accelerated depreciation for construction elements and technical equipment, based on how rates in operating leases correlate with the useful service-life. This can help simulate different rent-scenarios, for instance; ‘rent up to date’ with underfunded maintenance budgets, and ‘activity-based rent’ with activity-based rates in their leasing operations by including upgrading- and development costs. The paper underlines the usability of Reversed LCC as a decision basis for public sector assets with specific focus on public schools.