COST MANAGEMENT OF THE LIFE CYCLE OF REAL ESTATE OBJECTS: EXPERIENCE, PROBLEMS AND SOLUTIONS

Abstract

The authors of the article address the international experience of implementation and use of the concept of evaluation and cost management of Life Cycle Costing (LCC) and Whole Life Appraisal (WLA) of real estate objects. The author’s interpretation of the issues and ways of introduction of this concept in developing countries, in particular in Ukraine, is presented. The article describes the tools and forms of public-private partnership for implementing this concept in the practice of effective functioning of socio-economic systems. Specifics of the managing life cycle costing of real estate objects basing on such approaches/ methods as development, maintenance, surveying, and concession are determined. The paper emphasizes the practical significance for all interested parties in the real estate development market of using methods of a comprehensive and systematic approach to the integrated evaluation of assets in the process of their design, construction, operation, and maintenance. The authors focus on the need for comprehensive accounting of the costs of the whole life cycle of a product (both construction products in the form of buildings and structures, and any high-tech products with a long life cycle from its design to disposal). Notable cost management methods (Kaizen Costing, Standard Costing, and Target costing) are considered, as a significant component of the LCC/WLA concept the development. The authors analyse the role of corporate investment funds, joint investment institutions, professional associations, and asset management companies in the implementation of the LCC/WLA concept in the field of real estate development. The respective statistical data (from Ukrainian practical experience) that can be used to prognosticate the impact of inflation in the construction industry are cited. The significance of database digitalization and BIM technologies in the introduction of the regarded concepts in the practice of construction and development activities is stressed.

Keywords

• development of real estate
• surveying
• concession
• life cycle of real estate objects
• value
• expense