Financial Performance Assessment of Flat Buildings Using Life Cycle Cost and Cost–Benefit Analysis
DOI:
https://doi.org/10.26877/asset.v7i1.1005Keywords:
Life Cycle Cost Analysis, Urban Residential Feasibility, Net Present Value, Benefit-Cost Ratio, Internal Rate of ReturnAbstract
Buildings resulting from construction projects are durable assets and decisions related to construction projects have enduring impacts. In many cases, building owners prioritize only the initial costs, such as building design, construction, and equipment costs, while neglecting the future operation and maintenance costs. This research studies life cycle costing (LCC) analysis to evaluate the financial feasibility of urban housing. The LCC calculates all the costs incurred and benefits during the building's operation. The cost is generated from construction, operational, and maintenance costs. At the same time, the benefit breaks down into flat rental costs, retail rental costs, and parking costs. The costs incurred are estimated over 25 years, and the parameters of feasibility are net Present Value (NPV), Benefit-Cost Ratio (BCR), and Internal Rate of Return (IRR). The study generates negative NPV, BCR < 1, and 0.61% of IRR. It indicates that the project is not feasible. This research gives alternatives to make the project feasible. This study employed a trial-and-error approach to ascertain the viability of investing in flat rentals by systematically adjusting rental rates. Incremental adjustments to rental rates are tested by a series of rate hikes of 50%, 100%, 150%, and 200% using a trial-and-error approach. The project will become feasible if the flat rate increases to 150-200% of the initial rental rate.
References
B. P. Statistik, “Jumlah Penduduk Menurut Kecamatan dan Jenis Kelamin di Kota Jakarta Selatan,” 2021.
P. Kaming, I. Himawan, and L. W. Alexander, “Adopsi Life Cycle Costing Untuk Bangunan Gedung Diklat Muara Enim,” vol. 2, no. 2, pp. 121–132, 2019.
R. S. Heralova, “Life Cycle Costing as an Important Contribution to Feasibility Study in Construction Projects,” Procedia Eng., vol. 196, no. June, pp. 565–570, 2017, doi: 10.1016/j.proeng.2017.08.031.
V. Dikareva and N. Voytolovskiy, “The Efficiency and Financial Feasibility of the Underground Infrastructure Construction Assessment Methods,” Procedia Eng., vol. 165, pp. 1197–1202, 2016, doi: 10.1016/j.proeng.2016.11.839.
R. Bochare, M. Dagliya, and M. Kadam, “Assessment of economic performance of an industrial building using life cycle cost & refined benefit-cost analysis – A case study,” J. Build. Eng., vol. 83, no. December 2023, 2024, doi: 10.1016/j.jobe.2023.108397.
C. Rivero-Camacho, J. J. Martín-del-Río, and M. Marrero-Meléndez, “Evolution of the life cycle of residential buildings in Andalusia: Economic and environmental evaluation of their direct and indirect impacts,” Sustain. Cities Soc., vol. 93, no. September 2022, 2023, doi: 10.1016/j.scs.2023.104507.
T. Vasishta, M. Hashem Mehany, and J. Killingsworth, “Comparative life cycle assesment (LCA) and life cycle cost analysis (LCCA) of precast and cast–in–place buildings in United States,” J. Build. Eng., vol. 67, no. October 2022, p. 105921, 2023, doi: 10.1016/j.jobe.2023.105921.
J. Liu et al., “Life cycle cost modelling and economic analysis of wind power: A state of art review,” Energy Convers. Manag., vol. 277, no. September 2022, p. 116628, 2023, doi: 10.1016/j.enconman.2022.116628.
D. B. Lee, “Fundamentals of life-cycle cost analysis,” Transp. Res. Rec., no. 1812, pp. 203–210, 2002, doi: 10.3141/1812-25.
A. B. Khoulenjani, E. K. Zadeh, and R. Lotfi, “Feasibility Study for Construction Projects in Uncertainty Environment with International Journal of Sustainable Applied Feasibility Study for Construction Projects in Uncertainty Environment with Optimization Approach,” Int. J. Sustain. Appl. Sci. Eng., vol. 1, no. June, p. 1, 2024, doi: 10.2139/ssrn.4878959.
R. Navon and S. Isaac, “Feasibility Study of an Automated Tool for Identifying the Implications of Changes in Construction Projects,” Build. a Sustain. Futur. - Proc. 2009 Constr. Res. Congr., no. February, pp. 1–10, 2009, doi: 10.1061/41020(339)1.
K. Hyari and A. Kandil, “Validity of Feasibility Studies for Infrastructure Construction Projects.pdf.” p. 1, 2009.
A. J. Marszal and P. Heiselberg, “Life cycle cost analysis of a multi-storey residential Net Zero Energy Building in Denmark,” Energy, vol. 36, no. 9, pp. 5600–5609, 2011, doi: 10.1016/j.energy.2011.07.010.
L. D. S. F. P. Bracarense, R. Brandão, Y. Yamashita, and J. J. G. De Aragão, “Feasibility Study for Waterway Infrastructure: International Overview and Methodological Recommendations,” Transp. Res. Procedia, vol. 18, no. June, pp. 305–311, 2016, doi: 10.1016/j.trpro.2016.12.040.
I. Standard, “Buildings and constructed assets ISO 15686-5 2017,” vol. 2017, 2017, [Online]. Available: www.iso.orgiTehSTANDARDPREVIEW
J. Kneifel and D. Webb, “Life cycle cost manual for the federal energy management program,” NIST Handb. 135, pp. 1–295, 2020, [Online]. Available: https://nvlpubs.nist.gov/nistpubs/hb/2020/NIST.HB.135-2020.pdf
Republic of Indonesia, “Law of the Republic of Indonesia Number 28 of 2009 concerning Regional Taxes and Regional Levies,” 2009.
Kementerian Pekerjaan Umum dan Perumahan Rakyat, “Minister of Public Works Regulation no. 24/PRT/M/2008 concerning Guidelines for the Maintenance of Buildings.” 2008. [Online]. Available: https://ulp.kendalkab.go.id/plugin/files/permen_24_2008.pdf
R. of I. Governor of DKI Jakarta Province, “Regulation of the Governor of DKI Jakarta Province Number 5 of 2018 concerning Adjustment of Housing Service Levy Rates.” 2018.
Governor of DKI Jakarta, “Regulation of the Governor of the Special Capital Region of Jakarta Province Number 31 of 2017 concerning Parking Service Tariffs, Fines for Transaction Violations and Fees for Towing/Moving Motor Vehicles,” 2017.
C. Araújo, M. Almeida, L. Bragança, and J. A. Barbosa, “Cost-benefit analysis method for building solutions,” Appl. Energy, vol. 173, pp. 124–133, 2016, doi: 10.1016/j.apenergy.2016.04.005.
B. A. Ellis, “Life Cycle Cost,” CIRP Encycl. Prod. Eng., no. January 2007, pp. 751–757, 2014, doi: 10.1007/978-3-642-20617-7_6608.
A. Rahman, A. Maryani, and A. Elmadhania, “Pengukuran Beban Kerja Petugas Keamanan Untuk Memenuhi Standard Minimal Tingkat Keamanan Lingkungan,” IPTEK J. Proc. Ser., vol. 0, no. 1, pp. 208–213, 2018, doi: 10.12962/j23546026.y2018i1.3383.
