The contractor's use of life cycle costing on PFI projects

The purpose of this paper is to investigate attitudes and opinions of quantity surveyors working for design and construction contractors regarding the importance and use of life cycle costing within private finance initiative (PFI) projects, and the subsequent effects on the maintenance budgets of the facilities management contractor within the PFI consortium.

This research includes a literature review, a questionnaire survey, four semi‐structured interviews and a case study of a facilities management contractor that operated on a completed PFI project.

The research identified that contractors' quantity surveyors generally did consider life cycle costs when procuring new products/elements for PFI projects, but in certain circumstances, such as during exceptionally busy times or when working within tight construction budgets, life cycle costs were not considered and procurement decisions for some products/elements were made on the basis of lowest capital cost. The research found that the occasional failure of contractors' quantity surveyors to consider life cycle costs had significant financial risk implications for the facilities management contractors, as there were likely to be increased maintenance costs in the future, compared to the original budget for maintenance costs.

This research will be of interest to industry professionals working on PFI projects, particularly quantity surveyors and facilities management contractors. Academic researchers with an interest in life cycle costing will benefit from the information on the practicalities of managing costs on a PFI project.