Exploring the Implementation, Challenges and Opportunities of Life Cycle Costing as a Financial Risk Mitigation Strategy in Nigeria Construction Industry

¹Nwafor Theophilus Onyebuchi, ²Nwagbara Augustine and ³Nnadi Ezekiel Ejiofor

¹Quantity Surveying Department, Enugu State University of Science & Technology, Agbani

²Architecture Department, Enugu State University of Science & Technology, Agbani

³ Civil Engineering Department, Kampala International University, Uganda

Corresponding author: nnadiezekiel@kiu.ac.ug

ABSTRACT

Life Cycle Costing is a vital tool for estimating building project costs, including construction, usage, maintenance, and end-of-life. It provides insights into long-term costs and savings, and allows for SWOT analysis. The construction industry, which contributes to Nigeria’s GDP, faces risks and uncertainties. Despite these challenges, construction contractors have been slow to implement proper management methods, leading to business failures and liabilities. Life Cycle Management (LCM) aims to minimize environmental impacts of products and services throughout their life cycle. This research evaluates the implementation of LCM in Abuja, Nigeria, focusing on external and internal risks such as design errors, material waste, poor time management, administrative lapses, and reckless expenditure. Effective communication and project risk management are crucial for achieving project performance, time, cost, quality, safety, and environmental sustainability objectives. The study explores the implementation of Life Cycle Costing (LCC) in Abuja, FCT, using field surveys, interviews, and questionnaires. It includes registered construction professionals with ten years of experience. Findings revealed that the level of awareness of LCC as a risk assessment method in building construction projects was found to be 35%, 24%, and 21%, indicating a level of awareness among construction stakeholders in Nigeria. However, the majority of respondents were dissatisfied with the implementation of LCC, attributed to factors such as poor knowledge and technical know-how. The study found that the implementation of LCC is significantly related to the successful management of building projects in Abuja, FCT. The barriers against LCC adoption did not have a significant influence on the financial risk management of the building projects in Abuja. The F-statistic results were statistically significant (0.05), rejecting the null hypothesis that all regression coefficients are zero. The model is accepted, indicating that barriers against LCC adoption significantly influence financial risk management in projects. The Nigerian construction industry should adopt life cycle costing (LCC) as a financial risk mitigation strategy, involving education, data management, capacity building, regulatory support, stakeholder collaboration, standardization, incentives, and continuous improvement.

Keywords: Building projects, LCC adoption, Life cycle, Risks, Mitigation strategies

Cite As: Nwafor Theophilus Onyebuchi, Nwagbara Augustine and Nnadi Ezekiel Ejiofor (2024). Exploring the Implementation, Challenges and Opportunities of Life Cycle Costing as a Financial Risk Mitigation Strategy in Nigeria Construction Industry. RESEARCH INVENTION JOURNAL OF ENGINEERING AND PHYSICAL SCIENCES 3(3):9-16.