From tool-making to tool-using – and back: rationales for adoption and use of LCC
Abstract
Real estate- and property owners’ rationales behind the adoption of Life Cycle Costing (LCC) respectively how LCC is actually used in renovation projects, is investigated through empirical data from a questionnaire survey sent to managers in Swedish real estate organisations. The study shows a positive attitude towards LCC. It is perceived to as a flexible and multi-functional tool with a familiar monetary format. Nevertheless, the study also reveals simplistic and undevel-oped views of how to use LCC. While much research has focused on developing sophisticated LCC tools, the findings indicate that practitioners’ interest in these refinements seems limited. The importance of understanding that LCC is used in a context of multiple and partly competing institutional logics of renovation is emphasised. The paper contributes to a more informed research in development of LCC tools as well as better informed LCC use among real estate and property owners.
Keyword : Life cycle costing (LCC), project management, property management, renovation, real estate, questionnaire, Sweden
How to Cite
Gluch, P., Gustafsson, M., Baumann, H., & Lindahl, G. (2018). From tool-making to tool-using – and back: rationales for adoption and use of LCC. International Journal of Strategic Property Management, 22(3), 179-190. https://doi.org/10.3846/ijspm.2018.1544
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Arja, M., Sauce, G., & Souyri, B. (2009). External uncertainty factors and LCC: a case study, Building Research and Information, 37(3), 325-334. https://doi.org/10.1080/09613210902863609
Ástmarsson, B., Jensen, P. A., & Maslesa, E. (2013). Sustainable renovation of residential buildings and the landlord/tenant dilemma, Energy Policy, 63, 355-362. https://doi.org/10.1016/j.enpol.2013.08.046
Brown, N. W., Malmqvist, T., Bai, W., & Molinari, M. (2013). Sustainability assessment of renovation packages for increased energy efficiency for multi-family buildings in Sweden. Building and Environment, 61, 140-148. https://doi.org/10.1016/j.buildenv.2012.11.019
Caccavelli, D., Krigsvol, G., Thamling, N., & Jaarto, P. (2005). LCC-REFURB guidebook: integrated planning for building refurbishment taking life-cycle costs into account. European Commission, Brussels.
Carifio, J., & Perla, R. J. (2007). Ten common misunderstandings, misconceptions, persistent myths and urban legends about likert scales and likert response formats and their antidotes. Journal of Social Sciences, 3(3), 106-116. https://doi.org/10.3844/jssp.2007.106.116
D’Incognito, M., Costantino, N., & Giovanni, C. M. (2015). Actors and barriers to the adoption of LCC and LCA techniques in the built environment. Built Environment Project and Asset Management, 5(2), 202-216. https://doi.org/10.1108/BEPAM-12-2013-0068
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319-340. https://doi.org/10.2307/249008
Dhillon, B. (2013). Life cycle costing: techniques, models and applications. Routledge.
Ding, G. K. (2008). Sustainable construction – the role of environmental assessment tools. Journal of Environmental Management, 86(3), 451-464. https://doi.org/10.1016/j.jenvman.2006.12.025
Farr, J. V. (2011). Systems life cycle costing: economic analysis, estimation, and management. CRC Press.
Flores-Colen, I., & De Brito, J. (2010). A systematic approach for maintenance budgeting of buildings façades based on predictive and preventive strategies. Construction and Building Materials, 24(9), 1718-1729. https://doi.org/10.1016/j.conbuildmat.2010.02.017
Gluch, P. (Ed.) (2014). Perspektiv på LCC – en bok om långsiktiga beslut och styrning vid hållbar och energieffektiv renovering av byggnader. Report 2014:3, Civil and Environmental Engineering. Chalmers.
Gluch, P., & Baumann, H. (2004). The life cycle costing (LCC) approach: a conceptual discussion of its usefulness for environmental decision-making. Building and Environment, 39(5), 571-580. https://doi.org/10.1016/j.buildenv.2003.10.008
Gluch, P., & Gustafsson, M. (2015, August). Acceptance and use of LCC as a decision support tool for renovation investments. Proceedings of the International Conference on Construction and Real Estate Management (ICCREM 2015) (pp. 821-828). Luleå, Sweden. https://doi.org/10.1061/9780784479377.095
Goh, B. H., & Sun, Y. (2016). The development of life-cycle costing for buildings. Building Research and Information, 44(3), 319-333. https://doi.org/10.1080/09613218.2014.993566
Häkkinen, T., & Belloni, K. (2011). Barriers and drivers for sustainable building. Building Research and Information, 39(3), 239-255. https://doi.org/10.1080/09613218.2011.561948
Higham, A., Fortune, C., & James, H. (2015). Life cycle costing: evaluating its use in UK practice. Structural Survey, 33(1), 73-87. https://doi.org/10.1108/SS-06-2014-0026
Hill, S., Lorenz, D., Dent, P., & Lützkendorf, T. (2013). Professionalism and ethics in a changing economy. Building Research and Information, 41(1), 8-27.
Junghans, L. (2013). Sequential equi-marginal optimization method for ranking strategies for thermal building renovation. Energy and Buildings, 65, 10-18. https://doi.org/10.1016/j.enbuild.2013.05.028
Kaklauskas, A., Zavadskas, E. K., & Raslanas, S. (2005). Multi-variant design and multiple criteria analysis of building refurbishments. Energy and Buildings, 37(4), 361-372. https://doi.org/10.1016/j.enbuild.2004.07.005
Kirkham, R. J. (2005). Re‐engineering the whole life cycle costing process. Construction Management and Economics, 23(1), 9-14. https://doi.org/10.1080/01446190410001678765
Korpi, E., & Ala-Risku, T. (2008). Life cycle costing: a review of published case studies. Managerial Auditing Journal, 23(3), 240-261. https://doi.org/10.1108/02686900810857703
Legris, P., Ingham, J., & Collerette, P. (2003). Why do people use information technology? A critical review of the technology acceptance model. Information and Management, 40(3), 191-204. https://doi.org/10.1016/S0378-7206(01)00143-4
Lindholm, A., & Suomala, P. (2007). Learning by costing: sharpening cost image through life cycle costing?. International Journal of Productivity and Performance Management, 56(8), 651-672. https://doi.org/10.1108/17410400710832985
Love, P., & Bullen, P. A. (2009). Toward the sustainable adaptation of existing facilities. Facilities, 27(9/10), 357-367. https://doi.org/10.1108/02632770910969603
Ludvig, K. (2013). Making sense of and managing energy targets in public construction-client organisations (Licentiate degree thesis). Chalmers Univerity of Technology.
Ludvig, K., Stenberg, A.-C., & Gluch, P. (2013). The value of communicative skills for developing an energy strategy. Building Research and Information, 41(6), 611-621. https://doi.org/10.1080/09613218.2013.800735
Mjörnell, K., Boss, A., Lindahl, M., & Molnar, S. (2014). A tool to evaluate different renovation alternatives with regard to sustainability. Sustainability, 6, 4227-4225. https://doi.org/10.3390/su6074227
Morrissey, J., Meyrick, B., Sivaraman, D., Horne, R., & Berry, M. (2012). Cost-benefit assessment of energy efficiency investments: accounting for future resources, savings and risks in the Australian residential sector. Energy Policy, 54, 148-159. https://doi.org/10.1016/j.enpol.2012.11.005
Oduyemi, O. I. (2015). Life cycle costing methodology for sustainable commercial office buildings (PhD degree thesis). University of Derby, UK.
Olsson, S., Malmqvist, T., & Glaumann, M. (2015). Managing sustainability aspects in renovation processes: interview study and outline of process model. Sustainability, 7(6), 6336-6352. https://doi.org/10.3390/su7066336
Olsson, S., Malmqvist, T., & Glaumann, M. (2016). An approach towards sustainable renovation: a tool for decision support in early project stages. Building and Environment, 106, 20-32. https://doi.org/10.1016/j.buildenv.2016.06.016
Olubodun, F., Kangwa, J., Oladapo, A., & Thompson, J. (2010). An appraisal of the level of application of life cycle costing within the construction industry in the UK. Structural Survey, 28(4), 254-265. https://doi.org/10.1108/02630801011070966
Opoku, A., & Ahmed, V. (2014). Embracing sustainability practices in UK construction organizations. Built Environment Project and Asset Management, 4(1), 90-107. https://doi.org/10.1108/BEPAM-02-2013-0001
Palm, J., & Reindl, K. (2016). Understanding energy efficiency in Swedish residential building renovation: a practice theory approach. Energy Research & Social Science, 11, 247-255. https://doi.org/10.1016/j.erss.2015.11.006
Park, S. H. (2009). Whole life performance assessment: critical success factors. Journal of Construction Engineering and Management, 135(11), 1146-1161. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000090
Reay, T., & Hinings, C. R. (2009). Managing the rivalry of competing institutional logics. Organization Studies, 30(6), 629-652. https://doi.org/10.1177/0170840609104803
Rex, E., & Baumann, H. (2008). Implications of an interpretive understanding of LCA practice. Busines Strategy and Environment, 17, 420-430. https://doi.org/10.1002/bse.633
Risholt, B., Time, B., & Hestnes, A. G. (2013). Sustainability assessment of nearly zero energy renovation of dwellings based on energy, economy and home quality indicators. Energy and Buildings, 60, 217-224. https://doi.org/10.1016/j.enbuild.2012.12.017
Robichaud, L. B., & Anantatmula, V. S. (2010). Greening project management practices for sustainable construction. Journal of Management in Engineering, 27(1), 48-57. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000030
Schaltegger, S., Müller, K., & Hindrichsen, H. (1996). Corporate environmental accounting. Chichester: Wiley.
Sharma, A., Saxena, A., Sethi, M., & Shree, V. (2011). Life cycle assessment of buildings: a review, Renewable and Sustainable Energy Reviews, 15(1), 871-875. https://doi.org/10.1016/j.rser.2010.09.008
Swarr, T. E., Hunkeler, D., Klöpffer, W., Pesonen, H.-L., Ciroth, A., Brent, A. C., & Pagan, R. (2011). Environmental life-cyclecosting: a code of practice. International Journal of Life Cycle Assessment, 16(5), 389-391. https://doi.org/10.1007/s11367-011-0287-5
Thuvander, L., Femenias, P., Mjörnell, K., & Meiling, P. (2012). Unveiling the process of sustainable renovation. Sustainability, 4(6), 1188-1213. https://doi.org/10.3390/su4061188" target="_blank
Wang, N., Chang, Y.-C., & Nunn, C. (2010). Lifecycle assessment for sustainable design options of a commercial building in Shanghai. Building and Environment, 45(6), 1415-1421. https://doi.org/10.1016/j.buildenv.2009.12.004
Wang, W., Zmeureanu, R., & Rivard, H. (2005). Applying multi-objective genetic algorithms in green building design optimization. Building and Environment, 40(11), 1512-1525. https://doi.org/10.1016/j.buildenv.2004.11.017
Woodward, D. G. (1997). Life cycle costing – theory, information acquisition and application. International Journal of Project Management, 15(6), 335-344. https://doi.org/10.1016/S0263-7863(96)00089-0
Zhang, X., Platten, A., & Shen, L. (2011). Green property development practice in China: costs and barriers. Building and Environment, 46(11), 2153-2160. https://doi.org/10.1016/j.buildenv.2011.04.031
Arja, M., Sauce, G., & Souyri, B. (2009). External uncertainty factors and LCC: a case study, Building Research and Information, 37(3), 325-334. https://doi.org/10.1080/09613210902863609
Ástmarsson, B., Jensen, P. A., & Maslesa, E. (2013). Sustainable renovation of residential buildings and the landlord/tenant dilemma, Energy Policy, 63, 355-362. https://doi.org/10.1016/j.enpol.2013.08.046
Brown, N. W., Malmqvist, T., Bai, W., & Molinari, M. (2013). Sustainability assessment of renovation packages for increased energy efficiency for multi-family buildings in Sweden. Building and Environment, 61, 140-148. https://doi.org/10.1016/j.buildenv.2012.11.019
Caccavelli, D., Krigsvol, G., Thamling, N., & Jaarto, P. (2005). LCC-REFURB guidebook: integrated planning for building refurbishment taking life-cycle costs into account. European Commission, Brussels.
Carifio, J., & Perla, R. J. (2007). Ten common misunderstandings, misconceptions, persistent myths and urban legends about likert scales and likert response formats and their antidotes. Journal of Social Sciences, 3(3), 106-116. https://doi.org/10.3844/jssp.2007.106.116
D’Incognito, M., Costantino, N., & Giovanni, C. M. (2015). Actors and barriers to the adoption of LCC and LCA techniques in the built environment. Built Environment Project and Asset Management, 5(2), 202-216. https://doi.org/10.1108/BEPAM-12-2013-0068
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319-340. https://doi.org/10.2307/249008
Dhillon, B. (2013). Life cycle costing: techniques, models and applications. Routledge.
Ding, G. K. (2008). Sustainable construction – the role of environmental assessment tools. Journal of Environmental Management, 86(3), 451-464. https://doi.org/10.1016/j.jenvman.2006.12.025
Farr, J. V. (2011). Systems life cycle costing: economic analysis, estimation, and management. CRC Press.
Flores-Colen, I., & De Brito, J. (2010). A systematic approach for maintenance budgeting of buildings façades based on predictive and preventive strategies. Construction and Building Materials, 24(9), 1718-1729. https://doi.org/10.1016/j.conbuildmat.2010.02.017
Gluch, P. (Ed.) (2014). Perspektiv på LCC – en bok om långsiktiga beslut och styrning vid hållbar och energieffektiv renovering av byggnader. Report 2014:3, Civil and Environmental Engineering. Chalmers.
Gluch, P., & Baumann, H. (2004). The life cycle costing (LCC) approach: a conceptual discussion of its usefulness for environmental decision-making. Building and Environment, 39(5), 571-580. https://doi.org/10.1016/j.buildenv.2003.10.008
Gluch, P., & Gustafsson, M. (2015, August). Acceptance and use of LCC as a decision support tool for renovation investments. Proceedings of the International Conference on Construction and Real Estate Management (ICCREM 2015) (pp. 821-828). Luleå, Sweden. https://doi.org/10.1061/9780784479377.095
Goh, B. H., & Sun, Y. (2016). The development of life-cycle costing for buildings. Building Research and Information, 44(3), 319-333. https://doi.org/10.1080/09613218.2014.993566
Häkkinen, T., & Belloni, K. (2011). Barriers and drivers for sustainable building. Building Research and Information, 39(3), 239-255. https://doi.org/10.1080/09613218.2011.561948
Higham, A., Fortune, C., & James, H. (2015). Life cycle costing: evaluating its use in UK practice. Structural Survey, 33(1), 73-87. https://doi.org/10.1108/SS-06-2014-0026
Hill, S., Lorenz, D., Dent, P., & Lützkendorf, T. (2013). Professionalism and ethics in a changing economy. Building Research and Information, 41(1), 8-27.
Junghans, L. (2013). Sequential equi-marginal optimization method for ranking strategies for thermal building renovation. Energy and Buildings, 65, 10-18. https://doi.org/10.1016/j.enbuild.2013.05.028
Kaklauskas, A., Zavadskas, E. K., & Raslanas, S. (2005). Multi-variant design and multiple criteria analysis of building refurbishments. Energy and Buildings, 37(4), 361-372. https://doi.org/10.1016/j.enbuild.2004.07.005
Kirkham, R. J. (2005). Re‐engineering the whole life cycle costing process. Construction Management and Economics, 23(1), 9-14. https://doi.org/10.1080/01446190410001678765
Korpi, E., & Ala-Risku, T. (2008). Life cycle costing: a review of published case studies. Managerial Auditing Journal, 23(3), 240-261. https://doi.org/10.1108/02686900810857703
Legris, P., Ingham, J., & Collerette, P. (2003). Why do people use information technology? A critical review of the technology acceptance model. Information and Management, 40(3), 191-204. https://doi.org/10.1016/S0378-7206(01)00143-4
Lindholm, A., & Suomala, P. (2007). Learning by costing: sharpening cost image through life cycle costing?. International Journal of Productivity and Performance Management, 56(8), 651-672. https://doi.org/10.1108/17410400710832985
Love, P., & Bullen, P. A. (2009). Toward the sustainable adaptation of existing facilities. Facilities, 27(9/10), 357-367. https://doi.org/10.1108/02632770910969603
Ludvig, K. (2013). Making sense of and managing energy targets in public construction-client organisations (Licentiate degree thesis). Chalmers Univerity of Technology.
Ludvig, K., Stenberg, A.-C., & Gluch, P. (2013). The value of communicative skills for developing an energy strategy. Building Research and Information, 41(6), 611-621. https://doi.org/10.1080/09613218.2013.800735
Mjörnell, K., Boss, A., Lindahl, M., & Molnar, S. (2014). A tool to evaluate different renovation alternatives with regard to sustainability. Sustainability, 6, 4227-4225. https://doi.org/10.3390/su6074227
Morrissey, J., Meyrick, B., Sivaraman, D., Horne, R., & Berry, M. (2012). Cost-benefit assessment of energy efficiency investments: accounting for future resources, savings and risks in the Australian residential sector. Energy Policy, 54, 148-159. https://doi.org/10.1016/j.enpol.2012.11.005
Oduyemi, O. I. (2015). Life cycle costing methodology for sustainable commercial office buildings (PhD degree thesis). University of Derby, UK.
Olsson, S., Malmqvist, T., & Glaumann, M. (2015). Managing sustainability aspects in renovation processes: interview study and outline of process model. Sustainability, 7(6), 6336-6352. https://doi.org/10.3390/su7066336
Olsson, S., Malmqvist, T., & Glaumann, M. (2016). An approach towards sustainable renovation: a tool for decision support in early project stages. Building and Environment, 106, 20-32. https://doi.org/10.1016/j.buildenv.2016.06.016
Olubodun, F., Kangwa, J., Oladapo, A., & Thompson, J. (2010). An appraisal of the level of application of life cycle costing within the construction industry in the UK. Structural Survey, 28(4), 254-265. https://doi.org/10.1108/02630801011070966
Opoku, A., & Ahmed, V. (2014). Embracing sustainability practices in UK construction organizations. Built Environment Project and Asset Management, 4(1), 90-107. https://doi.org/10.1108/BEPAM-02-2013-0001
Palm, J., & Reindl, K. (2016). Understanding energy efficiency in Swedish residential building renovation: a practice theory approach. Energy Research & Social Science, 11, 247-255. https://doi.org/10.1016/j.erss.2015.11.006
Park, S. H. (2009). Whole life performance assessment: critical success factors. Journal of Construction Engineering and Management, 135(11), 1146-1161. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000090
Reay, T., & Hinings, C. R. (2009). Managing the rivalry of competing institutional logics. Organization Studies, 30(6), 629-652. https://doi.org/10.1177/0170840609104803
Rex, E., & Baumann, H. (2008). Implications of an interpretive understanding of LCA practice. Busines Strategy and Environment, 17, 420-430. https://doi.org/10.1002/bse.633
Risholt, B., Time, B., & Hestnes, A. G. (2013). Sustainability assessment of nearly zero energy renovation of dwellings based on energy, economy and home quality indicators. Energy and Buildings, 60, 217-224. https://doi.org/10.1016/j.enbuild.2012.12.017
Robichaud, L. B., & Anantatmula, V. S. (2010). Greening project management practices for sustainable construction. Journal of Management in Engineering, 27(1), 48-57. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000030
Schaltegger, S., Müller, K., & Hindrichsen, H. (1996). Corporate environmental accounting. Chichester: Wiley.
Sharma, A., Saxena, A., Sethi, M., & Shree, V. (2011). Life cycle assessment of buildings: a review, Renewable and Sustainable Energy Reviews, 15(1), 871-875. https://doi.org/10.1016/j.rser.2010.09.008
Swarr, T. E., Hunkeler, D., Klöpffer, W., Pesonen, H.-L., Ciroth, A., Brent, A. C., & Pagan, R. (2011). Environmental life-cyclecosting: a code of practice. International Journal of Life Cycle Assessment, 16(5), 389-391. https://doi.org/10.1007/s11367-011-0287-5
Thuvander, L., Femenias, P., Mjörnell, K., & Meiling, P. (2012). Unveiling the process of sustainable renovation. Sustainability, 4(6), 1188-1213. https://doi.org/10.3390/su4061188" target="_blank
Wang, N., Chang, Y.-C., & Nunn, C. (2010). Lifecycle assessment for sustainable design options of a commercial building in Shanghai. Building and Environment, 45(6), 1415-1421. https://doi.org/10.1016/j.buildenv.2009.12.004
Wang, W., Zmeureanu, R., & Rivard, H. (2005). Applying multi-objective genetic algorithms in green building design optimization. Building and Environment, 40(11), 1512-1525. https://doi.org/10.1016/j.buildenv.2004.11.017
Woodward, D. G. (1997). Life cycle costing – theory, information acquisition and application. International Journal of Project Management, 15(6), 335-344. https://doi.org/10.1016/S0263-7863(96)00089-0
Zhang, X., Platten, A., & Shen, L. (2011). Green property development practice in China: costs and barriers. Building and Environment, 46(11), 2153-2160. https://doi.org/10.1016/j.buildenv.2011.04.031