Life Cycle Costing
Replacement and maintenance cost for sinking funds
Life cycle cost is the total cost of ownership of machinery and equipment, including its cost of acquisition, operation, maintenance, conversion, and/or decommission. The objective of LCC analysis is to choose the most cost effective approach from a series of alternatives to achieve the lowest long-term cost of ownership.
From July 2009, all strata schemes are required by law to have a 10-year sinking fund plan in place (Section 75A of the Strata Schemes Management Act 1996). This means that owners’ corporations must plan how they will cover the costs of future capital expenses, which include for example, painting the building, driveway refurbishment, replacement of common property items like carpets, roofing and guttering and lift overhauls. This is where LCC comes in to produce a sinking fund.
LCC comes in to play with residential developers when determining types of construction materials to be used in the design stage. Through feasibility analysis and LCC, TDQS can help clients to select the appropriate materials to reduce replacement cost in future while maintaining value of the development.
TDQS can help strata managers and residential owners to produce LCC Analysis and monitor fund usage when funds are used to repair works.
Typical Life Cycle Cash Flow
