Research on the Life Cycle Cost of Construction and Building

Abstract

Real estate companies should strictly control the cost of real estate projects in order to remain invincible in the fierce competition. Most of the real estate companies only pay close attention on the construction phase while ignoring the other stages, in fact, we should not limit to the cost of the construction phase and should control the entire life-cycle cost control and it is called Life Cycle Cost Control. Introduction With the real estate industry management mode promotes step by step, cost control has become the focus of attention of the real estate industry. To reduce the risk of real estate project development costs and improve real estate project management level, we should strictly control the real estate project life cycle costs. From the perspective of society, the real estate should takes the best way to achieve the lowest cost. The relationship between different stages of life cycle and life cycle cost Real estate project mainly includes the investment decision-making stage, design stage, bidding stage, construction stage, use and maintenance stage, recovery stage and so on. At each stage it will produce cost, the relationship between different stages of life cycle and life cycle cost [1] is shown in figure 1. Fig. 1 Relationship between life cycle and life cycle cost The characteristics in different stages of the real estate project: investment decision-making stage is the critical stage that project cost is planned and controlled; design stage: project design directly affects construction cost and overhead cost; bidding stage: it is the stage that the owner decides bidding control price and determining the final contract price with the contractor; construction stage: It determines the construction cost; use and maintenance phase: At this stage it will generate a lot of management fees. The life cycle cost of the real estate project: the life cycle cost of real estate projects refers to the total cost in above stages of the real estate project, mainly including land costs, early construction costs, construction cost, use and maintenance costs, financial and selling costs. International Conference on Education Technology, Management and Humanities Science (ETMHS 2015) © 2015. The authors Published by Atlantis Press 917 Cost control measures in different stages The different characteristics and relations with the cost control in various stages decide that each stage has its own cost control measures, life cycle cost curve of the building is shown in figure 2. Fig. 2 Life cycle cost curve of the building Land cost control measures: the land cost largely influences the cost of real estate, and land price continues to growing higher at present, so it is necessary to control the land cost reasonably. Because the different ways to get the land will generate different price, we need choose the most favorable way for developers. Location affects land cost, the better, the higher land cost, the higher selling prices. And the shape of the land affects the entire project planning and designing cost, we can see land cost management is an integrated management content. In addition, land cost and the market environment also have close relationship, so we need do market research. Pre-construction cost control: cost control is a close linked entirety, therefore we have to do the pre-construction project cost control. Investment decision-making stages includes project recommendation, feasibility study and project evaluation stages. The project recommendation mainly prepares from two aspects: the project site must be reasonable and make adequate market research. Feasibility studies and project evaluation stage should select the best program and evaluate program to reduce investment blindness. Design Phase: according to the data analysis, design costs in the design stage account for only 1.5% to 2% of the project costs, but the cost impact on the entire project can reach 75%, the relationship of life cycle cost and function are shown in figure 3.In the stage we can control cost through several aspects: (1)Introducing competition mechanism, carrying out the design tender, implementing comprehensive appraisal, and selecting the best design; (2) Carrying out limiting design so that control cost design; (3) Using value engineering to optimal design ; (4) Strengthening the design change management, implementing dynamic control; Fig. 3 Life cycle cost-function of the construction