INTERNATIONAL ISO STANDARD 15686-5

Second edition 2017-07

Buildings and constructed assets — Service life planning — Part 5: Life-cycle costing

Bâtiments et biens immobiliers construits — Prévision de la durée de vie — Partie 5: Approche en coût global This is a free 6 page sample. Access the full version online.

Reference number ISO 15686-5:2017(E)

© ISO 2017 ISO 15686-5:2017(E)  This is a free 6 page sample. Access the full version online.

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www.iso.org [email protected] ii  © ISO 2017 – All rights reserved ISO 15686-5:2017(E) 

Contents Page

Foreword...... v Introduction...... vi 1 Scope...... 1 2 Normative references...... 1 3 Terms and definitions...... 1 3.1 Costs...... 1 ...... 3 3.3 Elements of calculation...... 4 3.23.4 Analysis/measuresOther terms...... 5 4 Principles of life-cycle costing...... 6 ...... 6 ...... 6 4.1 Purpose and scope of life-cycle costing ...... 6 4.2 Costs to include in LCC analysis...... 7 4.2.1 Defining scope of costs included in the analysis...... 9 4.2.2 Classification of costs ...... 10 4.3 Typical4.4.1 analysisScope based at different on client stages requirements of the life...... cycle 10 4.4 Analysis based on client requirements and the...... intended use of the results 11 4.4.3 Strategic level project planning — Evaluation of strategic alternatives...... 12 4.4.2 Decisions informed by LCC analysis appraisals...... 13 4.4.44.4.5 SystemService andlife planningdetailed decision— LCC plans level...... — Integrating life-cycle costing into 14 4.4.6 Major repairs, replacements and adaptations...... 14 4.4.7 End of life...... 15 ...... 15 4.5.1 General...... 15 4.5 Data for analysis at different stages...... of the project life cycle 15 ...... 15 4.6 Cost4.5.2 variablesBenchmark...... LCC analysis 16 4.5.3 Detailed LCC analysis ...... 16 4.8 Discounting costs to present values...... 17 4.74.9 CalculatingApproval and cost validation variables...... and the form of future costs analysis 17 ...... 17 5 Setting the scope for LCC analysis...... 17 4.10 Reporting LCC analysis ...... 17 This is a free 6 page sample. Access the full version online...... 18 5.1 Relevance and importance...... of setting parameters for the use of life-cycle costing 18 5.25.4 ServiceCost variables life, life...... cycle and design life 19 5.3 Period5.4.1 ofAcquisition analysis costs...... 19 5.4.2 Operation, maintenance and replacement costs...... 19 5.4.3 Costs at disposal...... 21 5.4.4 End-of-life residual valuations...... 21 5.4.5 Discount rate...... 22 ...... 22 5.4.7 Taxes and subsidies...... 22 5.4.65.4.8 InflationChanges in costs over time...... 23 ...... 23 6 WLC variables used in some investment appraisals...... 23 5.4.9 Energy and utilities costs 6.1 General...... 23 6.2 Externalities...... 23 6.3 Costs related to environmental impacts...... 24 ...... 24

6.4 Social costs and benefits ISO 2017 – All rights reserved  iii © ISO 15686-5:2017(E) 

....24 ...... 25 6.56.7 ContributionFuture income of streams the ...... works to and 25 6.66.8 IntangiblesFinancing costs — Impact...... on business reputation, functional efficiency, etc. 25 7 Decision variables — Basis of calculating costs...... 26 7.1 Real costs...... 26 7.2 Nominal costs...... 26 7.3 Discounted costs...... 26 7.4 Present value...... 27 7.4.1 General...... 27 7.4.2 Net present value (NPV) or net present cost (NPC)...... 27 8 Uncertainty and risks...... 28 8.1 General...... 28 ...... 28 ...... 29 8.2 Identification of the causes of uncertainty and risks ...... 29 8.3 Monte Carlo analysis and confidence modelling 9 Reporting...... 30 8.4 Sensitivity analysis and modelling the effects of changing key assumptions ...... 30 9.2 Reporting costs...... 31 9.19.3 LCCApprovals analysis and — audit Presenting trail...... the results and supporting information 31 Annex A (informative) Worked examples — Analysis techniques used in life-cycle costing...... 32 Annex B (informative) Measures of comparison in whole life costing/life-cycle costing...... 35 Annex C (informative) Demonstrating sensitivity analysis...... 37 Annex D (informative) Graphical representation of WLC/LCC analysis...... 39 Annex E (informative) Example of levels of LCC analysis...... 41 Bibliography...... 42 This is a free 6 page sample. Access the full version online.

iv  © ISO 2017 – All rights reserved ISO 15686-5:2017(E) 

Foreword

ISO (the International Organization for Standardization) is a worldwide federation of national standards

bodiescommittee (ISO hasmember been bodies).established The haswork the of rightpreparing to be International represented Standardson that committee. is normally International carried out throughorganizations, ISO technical governmental committees. and non-governmental, Each member body in interestedliaison with in ISO, a subject also take for whichpart in a the technical work.

electrotechnical standardization. ISO collaborates closely with the International Electrotechnical Commission (IEC) on all matters of The procedures used to develop this document and those intended for its further maintenance are

described in the ISO/IEC Directives, Part 1. In particularwww ​.isothe ​.different​directives approval). criteria needed for the different types of ISO documents should be noted. This document was drafted in accordance with the editorial rules of the ISO/IEC Directives, Part 2 (see org/ Attention is drawn to the possibility that some of the elements of this document may be the subject of patenton the ISOrights. list ISOof patent shall declarationsnot be held responsible received (see for www identifying​.iso​. any​patents or all). such patent rights. Details of any patent rights identified during the development of the document will be in the Introduction and/or org/ constitute an endorsement. Any trade name used in this document is information given for the convenience of users and does not

ForWorld an Trade explanation Organization on the (WTO) voluntary principles nature in the of standards, Technical Barriers the meaning to Trade of ISO(TBT) specific see the terms following and expressionsURL: www.iso​ related​. ​iso to ​foreword conformity​. assessment,. as well as information about ISO’s adherence to the

org/ / Buildings and civil engineering works, Subcommittee SC 14, Design life. This document was prepared by Technical Committee ISO/TC 59,

This second edition cancels and replaces the first edition (ISO 15686-5:2008), which has been technicallyThe main changes revised. compared to the previous edition are as follows:

and guidance text; — several clauses have been technically revised to clarify the distinction between normative content — Annexes C and D

have been technically revised to make them clearer; This is a free 6 page sample. Access the full version online. —A list the of bibliographyall parts in the has ISO been 15686 updated. series can be found on the ISO website.

ISO 2017 – All rights reserved  v © ISO 15686-5:2017(E) 

Introduction

Objectives

The key objectives of this document are to: — establish clear terminology and a common methodology for life-cycle costing (LCC); — enable the practical use of LCC so that it becomes widely used in the construction industry; — enable the application of LCC techniques and methodology for a wide range of procurement methods; — help to improve decision making and evaluation processes at relevant stages of any project; — address concerns over uncertainties and risks and improve the confidence in LCC forecasting; — make the LCC and the underlying assumptions more transparent and robust; — setprovide out the the guiding framework principles, for instructionsconsistent LCC and definitionspredictions for and different performance forms of assessment, LCC and reporting; which

— facilitatesprovide a morecommon robust basis levels for ofsetting comparative LCC targets analysis during and costdesign benchmarking; and construction, against which actual cost performance can be tracked and assessed over the asset life span; — provide guidance on when to undertake LCC, to what level and what cost headings are appropriate for consideration;

— help unlock the real value of effectively doing LCC in construction by using service life planning; — clarify the differences between life-cycle costing and whole-life costing (WLC); or international cost codes and data-structure conventions; — provide a generic menu of costs for LCC/WLC compatible with and customizable for specific national — provide cross-references to guidance on associated activities within the other parts of ISO 15686.

Life-cycle costing, service life planning and other performance requirements

Life-cycle costing is a valuable technique that is used for predicting and assessing the cost performance of constructed assets. Life-cycle costing is one form of analysis for determiningFigure whether 1). It is apossible project tomeets use This is a free 6 page sample. Access the full version online. thethis client’s document performance without extensive requirements. reference Analyses to others, can necessitate although athe number use of otherof the parts terms of and ISO techniques15686 and currentdescribed economic are covered data infrom more clients detail and in the the construction other parts. industryWhere applicable, (see this is referenced in the

ISO 15686-3. text. The other parts of ISO 15686 that are most relevant for life-cycle costing are ISO 15686-1 and

vi  © ISO 2017 – All rights reserved

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This is a free 6 page sample. Access the full version online.