ABSTRACT
Due to the ever-increasing quest for tertiary education in
the country, there have been annual increments in enrolments in the various
public universities in Ghana over time, leading to pressure on the limited
academic facilities. At a high cost of expanding their infrastructural bases,
focus has primarily been centered on the cost of construction much to the
neglect of overall life span costs of projects. Using a mixed methodology
approach, the study aimed at exploring the use of Life Cycle Costing (LCC)
practices in GPUs by assessing the level of understanding of practitioners on
the technique, documenting existing practices and barriers effective
application as well as identifying pre-requisites for effective implementation
of the tool. Through a thorough literature review, a questionnaire was
developed and administered to 40 practitioners in the built environment
(Architects, Engineers, Quantity Surveyors, Project Managers, Estate Officers
and Procurement Officers). The study revealed that there is general knowledge
and awareness of the LCC tool though rarely applied consciously in practice as
confirmed from literature. The study further identified that the involvement of
maintenance personnel at the early stage of projects was the most practiced LCC
technique and major barriers to the practice have been with bureaucratic
structures in administrative procedures as well as poor maintenance culture.
Other factors identified included the difficulty in assessing reliable data for
analysis, the unavailability of an abridged standardized LCC approach for local
practice, insufficient expertise of professionals, the ever-growing challenge
of balancing and satisfactorily meeting multiple institutional stakeholders’
needs as well as the effects of inflation on forecasted figures among others.
Identified measures for effective implementation of the tool in GPUs are the
need to develop institutional design and maintenance standard manuals as well
as training of practitioners to gain workable knowledge in the
application of the tool. Serving as an eye-opener to the exploration of LCC
practices in Ghana, this research will be useful for management of GPUs and professionals
in the Ghanaian Construction Industry (GCI). The study further recommends that
future researchers can explore the perception of built environment
professionals on the use of LCC within the GCI.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
In Ghana, the desire for achieving
academic qualifications has been on the rise over the years. Educational
institutions at all levels are therefore into expanding infrastructure to
create the enabling environment for meeting the teaming demands. These infrastructural
expansions encompass the construction of halls of residences, lecture halls,
office blocks, commercial and recreational facilities as well as road networks.
These physical projects require strategic planning and implementation of best
practices to achieve the desired results. According to Yale Facilities
Construction & Renovation (2005), universities engage in these physical
projects in order to achieve their strategic goals and upgrade the quality of
their infrastructure of which considerable funds are committed.
Due to the highly capital-intensive
requirements on these projects, innovative capital financing methods have been
sought after over the years, with even higher demands placed on better fiscal
management practices for the achievement of best value. Managers and users are
into finding the very best practices that provide economic advantages over the
life span of projects. With the adoption of sustainable principles in the
construction industry, the concept of life cycle costing has become necessary
in decision making. Stakeholders therefore require professionals to adopt
processes that include life cycle costing in the long-term planning of physical
projects (U.S. Department of Energy, 2014).
With the launch of the Sustainable
Development Goals (SDGs), more emphasis have been placed on moving away from
the over-concentration on short-term effects of decisions
taken for developmental projects. Sustainability as a principle involves
creating and maintaining conditions for humans and nature co-habit in
productive harmony. As construction feeds on nature for the bulk of its
material resource inputs, the recent alarm of resource depletion is of great
concern for all and sundry within the built environment. This new trend has led
to the conscious consideration of sustainable technology, sustainable
development and sustainable built environment principles which also
incorporates the necessity of conducting life cycle studies on proposed
developments as part of value-for-money assessments (Ametepey & Aigbavboa,
2015; Djokoto et al, 2014; Thiébat, 2013; Davis Langdon, 2007).
Life cycle costing (LCC) as a
principle is applicable in many spheres of human endeavour for optimum resource
allocation and achievement of best value for money. It involves identifying and
detailing the initial capital cost and future costs of owning a facility over
its lifetime (Rum & Akasah, 2012). Flanagan & Jewell (2005) describe
the term to have evolved from cost-in-use, whiles in other settings it is also
referred to as Whole Life Costing (WLC) and Whole Life Appraisal.
The terms LCC and WLC have most
often than not been used interchangeably. However, whilst LCC concerns the
costs related directly to the construction and operation of a facility, WLC includes
other costs associated but indirectly related to the acquisition and use of the
facility such as land costs, procurement costs and even revenues obtained from
commercially-run facilities. Irrespective of the terminology assigned to the
practice, the focus remains on the importance of considering all costs
associated with the development and use of capital projects within the built
environment (Willmott Dixon, 2010).
Ghanaian Public Universities (GPUs)
offer a wide range of academic programmes. As the annual turn-out of graduates
from the senior high schools increase coupled with the backlog of hopeful
applicants and additional academic programmes that are constantly being
developed to meet industry requirements, universities are focusing on expanding
academic facilities to strategically position them to meet this demand. These
infrastructural developments come at a high cost with funding balanced between
the government, donor agencies and internal funds.
To ensure that these costs are well
managed, these universities have established technical departments-
Estate/Works and Physical Development Offices as well as Procurement Units-
that handle the development, construction and management-in-use of their
facilities. These departments work together to ensure that all capital projects
are managed to the highest standards for capital optimization in these
institutions. Though the services of these departments bring a lot of relief,
the focus has mostly been on the initial costs (Ametepey & Aigbavboa, 2015;
Djokoto et al., 2014).
Research has shown that the running
cost of some facilities rise as high as 40% of capital cost or even more (Rum
& Akasah, 2012). Coupled with the continuously less funding for capital
projects (Pearce et al., 2009), the government and Council of the various
public universities may have to reconsider their priorities. There must be a
paradigm shift from the traditional award of contracts based primarily on the
initial construction cost (University of California, 2014) into more proactive
requirements and standards for selection. The perspective should be expanded to
include the costs of operation, maintenance and replacements to the initial
acquisition costs to enable effective value-for-money assessment of projects.
This is possible with the use of LCC and related practices to ensure that
projects are well assessed for decision making.
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