Life cycle cost reliability assessment for strategic real estate decision-making

Abstract

Many real estate projects prioritize minimizing initial development costs while often overlooking the long-term financial implications of their decisions. This short-term focus frequently leads to increased operational, maintenance, and renewal expenses, ultimately reducing overall profitability. Life Cycle Costing (LCC) provides a comprehensive approach to evaluating total project costs over time; however, its adoption remains limited due to challenges such as data constraints, uncertainty about future cost savings, and the lack of standardized performance measurement tools. To tackle these issues, this paper proposes a structured LCC reliability assessment model designed for real estate decision-makers. The model systematically identifies and analyzes key cost factors across all project phases, including construction, operation, renewal, maintenance, and end-of-life, while integrating technical, economic, environmental, and social dimensions. A structured survey was employed to quantify and prioritize these cost factors, facilitating the development of category-specific LCC models and a standardized evaluation framework. Additionally, a benchmarking scale was created to measure the reliability of input factors. Although this study emphasizes the reliability dimension, it establishes a foundation for the future integration of an optimization module to enhance decision-making and maximize life cycle cost efficiency. The proposed model has been automated to improve usability and accessibility, allowing stakeholders to make informed investment decisions that promote long-term financial sustainability in real estate development.