The development and application of a probabilistic model for risk analysis of life cycle cost predictions: For apartment buildings constructed by the Korea National Housing Corporation in Seoul, Korea

To deal with risks and uncertainties in life cycle costing explicitly and objectively, this thesis proposes a probabilistic model using simulation and applies the model to apartment buildings constructed by the KNHC in Korea. The proposed model was developed in a deductive way based on apartment management practice. The model incorporates capital costs, operation and minor maintenance costs, utility costs, major maintenance costs, and removal costs. Required data were collected by a survey using structured interview schedules. Each cost group was analysed, statistically modelled, and combined in the suggested simulation model. The model extends current models by introducing the concepts of replacement cycles and maintenance ratios in the form of probability distributions to predict major maintenance costs. It uses a regression model and its prediction intervals to estimate operation and minor maintenance costs. It is also possible to explore dynamically the risk implications by varying key parameters. The study also pioneered a data screening technique based on current building conditions to account for different levels of past and current maintenance. Through the application, it is demonstrated that the model can significantly improve the realism of life cycle costing, and that the model is highly suitable for analysing risks in life cycle costing. It can be used not only for risk analysis involved in life cycle costing of buildings but also for selecting design alternatives, decision making related to project feasibility, required sinking funds estimation, and maintenance planning. The expected life cycle cost for the KNHC's apartments is I, 787,827 Won/m2 with a standard deviation of 73 ,268 Wonlm2 in 1992 constant terms over 50 years. The proportion of each cost group to the life cycle cost is: major maintenance costs (31.8%), utility costs (27.4%), capital costs (25.4%), operation and minor maintenance costs (13 .5%), and removal costs (1.9%). Avoidable costs resulting from early replacements add up to 116,149 Wonlm2 (25.6% of the capital costs) in 1992 discounted terms. This cost can be significantly reduced by the extended use of structurally sound existing buildings, if more resources are allocated to maintenance.