1. PhD student, G. Mehedinţu, Prof. Univ. Dr. Ing. N. Postăvaru
Life-cycle cost of a building in the new Romanian legislation
PhD student, G. Mehedinţu, Prof. Univ. Dr. Ing. N. Postăvaru

2. Introduction
Values: European regulations on public procurement  new evaluation system: the life-cycle cost of the construction
Competitiveness
Transparency
Quality of received services
Harmonization in European legislation

3. Updating the European and national legal framework
To develop the international public procurement markets
To stimulate the trade
To encourage non-discriminatory practices
To promote qualitative public investments
Directive 2014/24/EU  Law 98/2016

4. Updating the European and national legal framework
New procurement criteria for awarding contracts:
Most advantageous tender
Lowest price
criterion used in most cases under the old legislation
Best price-quality ratio
determined on evaluation factors, as qualitative / environmental / social aspects regarding the public procurement contract
Lowest cost
determined by considering profitability, using as calculation factors such as the life-cycle cost

5. The concept of Life-Cycle
Source: own elaboration

6. Life-Cycle Cost Analysis
ISO/DIS 15686: „Buildings and constructed assets -- Service-life planning -- Part 5: Life-cycle costing”
Facility management costs
Source: own elaboration

7. Life-Cycle Cost Analysis
Acquisition costs: land acquisition, design and execution
General Estimate
Forecasting on parameters of BKI
Baukosteninformationszentrum deutscher Architektenkammern
(Buildings Cost Information Centre of the German Chamber of Architects)
BKI documentation / Cost groups:
Part 1: Buildings - 1. Level of group costs (e.g., Construction group costs Gross structure)
Part 2: Coarse elements: 2. Level of group costs (ex. Groups of costs exterior walls)
Part 3: 3. Levels of elements (ex. Groups of costs 331 – supporting elements)

8. Life-Cycle Cost Analysis
Steps in forecasting the investment costs of buildings:
Identification of the cost groups;
Classification of the building into three quality categories: "simple”, "medium”, "high”;
Inclusion into the quality standard: each type of activity is given a score based on the three levels of quality;
Summing up the score for each item into a result that also represents a standard assignment at a quality level;
Framing the whole project in one of the three quality categories;
Assignment of a cost value for each level of quality and detail, according to the information provided by the BKI table;
Identification of the price ranges, according to the tables provided by BKI.
 Efficient method: estimation is done quickly and easily in the project management phase, based on existent data & desired quality requirements

9. Life-Cycle Cost Analysis
No international structure
No precisely (based on estimations by different degrees of security)
Uncertainty from: time, trend of operating costs, inflation etc.
Romania:
2010 – cost standards for construction costs (not mandatory)  to reduce the State expenditure
GD. 363/2010 regarding investments objectives financed of public funds;
Order no. 2748/2010 regarding construction types subject to funding;
GD. 1394/2010 regarding the investments objectives financed from public funds from transport infrastructure field.
Use of life-cycle cost calculation – only individual practices in intermediate phases
Will be mandatory by the new law
It provides
Better investment and purchase decision
Gives insight into the entire life of the building

10. Life-Cycle Cost Analysis
Example: investment I vs. investment II & life of the building: 50 years
Old practice:
𝐿𝐶𝐶𝐵 𝐼 (2016) = 𝐶 𝐴 (𝐼)
𝐿𝐶𝐶𝐵 𝐼𝐼 (2016) = 𝐶 𝐴 (𝐼𝐼)
New practice: total costs for year 2066  NPV
𝑁𝑃𝑉= 𝑡=1 𝑇 𝐶 𝑡 (1+𝑟) 𝑡 NPV = net present value
Ct = total cost
r = discount rate
T = number of analyzed periods
𝐿𝐶𝐶𝐵 𝐼 (2066) = 𝐶 𝐴 (𝐼) + 𝐶 𝑂 (𝐼) + 𝐶 𝑀 (𝐼) + 𝐶 𝑅 (𝐼) + 𝐶 𝐷 (𝐼)
𝐿𝐶𝐶𝐵 𝐼𝐼 (2066) = 𝐶 𝐴 (𝐼𝐼) + 𝐶 𝑂 (𝐼𝐼) + 𝐶 𝑀 (𝐼𝐼) + 𝐶 𝑅 (𝐼𝐼) + 𝐶 𝐷 (𝐼𝐼)
𝑳𝑪𝑪𝑩= 𝑪 𝑨 + 𝑪 𝑶 + 𝑪 𝑴 + 𝑪 𝑹 + 𝑪 𝑫

11. Conclusions
Change in procurement legislation & regulations in construction industry
Improve quality of services
Develop competitiveness
Support economic development
Life-cycle cost analysis:
(+) takes into account both initial and later costs
(+) knowing them in early stages of the construction project
(-) information about surface, functional units, time, cost categories etc.
(-) are not accurate: there are based on assumptions of time and costs
(-) estimations related to inflation, operating costs etc. can’t be approximated correctly