Study On The Life Cycle Cost Of Real Estate Projects

In this era of rapidly-developing national economy, the industry of real estate has been gaining considerable concern. Meanwhile, regulation and controlling efforts by authorities have been greatly enhanced, which offers both opportunities and challenges to real estate development enterprises. However, due to increasingly fierce competition among real estate companies, the scarcity of land resources and uprising prices of construction materials, margin of profits has been narrowed and disadvantaged attributes such as long-term cycle of projects, large investment and other unpredictable factors have made it even more challenging to control costs of projects. Therefore, strengthening cost control of real estate projects is so urgent that it should be given priority to. Controlling costs of projects does not literally means simple control of construction costs, focus on primary investment or reduction of expenses at certain stage. Instead, it should be viewed from Life Cycle Cost(LCC) requiring comprehensive and in-depth analysis and study of project costs.To begin with, this paper sorts out current application situation of LCC both domestically and internationally after systematic review on relevant literature. Additionally, controlling system of LCC has been elaborated on, necessity and superiority of this method has been presented on the basis of fundamental theories before components of LCC are analyzed and model of cost calculation for real estate projects are built. Meanwhile, this paper researches key factors affecting LCC as well as its methods for analysis. What’s more, combined with the nature of real estate projects, stages of LCC have been divided in a scientific and reasonable way. The whole cycle involves stages of investment and decision-making, design, implementation, completion inspection and acceptance as well as operation maintenance, from which the author discusses key control points of each stage, suggests corresponding strategies and emphasizes the significant impact of design stage on LCC. Also, it is worth to note that cost control during maintenance should not be neglected and the premium combination scenario between primary investment and maintenance costs should be in quest of. Last but not least, this paper introduces the rationale of value engineering together with analysis on cases through function evaluation model and comparison on different project plans in order to achieve the lowest life cycle cost and active control on project cost under the condition that function value has been met.This paper could hopefully facilitate the application of life cycle on cost control of real estate project, so that level of cost management would be improved and economical profits for enterprises would be promoted.