10 life cycle bugbears and how to tackle them

Life cycle model-based construction is both responsible and sustainable – but why is the model not used more in construction? We asked our life cycle expert Mika Kukkonen how to tackle the prejudices related to life cycle models.

As a rule, the life cycle model is an implementation model for new construction projects in the public sector as well as related services, where a private sector operator assumes responsibility for the project’s implementation and maintenance over the long term. In the agreement model, the design, construction and maintenance of the building are acquired as one package.

1. There are no real benefits associated with life cycle projects

A life cycle project is at its most beneficial when one operator is responsible for the package, starting from the design stage. If the project is divided into smaller packages by using competitive tendering to reduce costs, both the benefits and responsibilities may become hazy. Although continuous competitive tendering may be the most inexpensive option in the short run, the big-picture benefits become evident in the overall financial result. Acting as a service provider in a project for a couple of years and the ability to shoulder the overall responsibility for up to 20 years are two entirely different things. For properties maintained on the basis of the life cycle model, the handover condition requirement is at the end of the agreement period when maintenance backlog no longer occurs.

2. Complications of bidding process for competitive tendering of a life cycle project

Complications often arise from life cycle construction being a new project model. Competitive tendering becomes more straightforward once it has been tried. Ready-made concepts and tips are available through consultants specialising in competitive tendering, other cities and municipalities as well as RT contract templates. Generally speaking, two to three life cycle tenders are enough to ensure that a project is competitive enough.

Drawing up design solutions in accordance with the invitations for tenders requires a whole lot of design and expert work at the tender stage.

3. Tender stage is a laborious and time-consuming process

The tender stage is very labour-intensive, and you should allocate enough time for it. The clients and tenderers involved in life cycle projects should more openly discuss the time and resources that need to be allocated to the tender process. Clients especially should put effort into specifying the functional and technological objectives and requirements. It is often the most painstaking stage of the tender process, but the old adage “well begun is half done” is very apt here. There are also existing contract templates, terms and conditions to facilitate the issues related to legal contracts. Typically, an efficient procurement process takes approximately 8–10 months to complete.

4. In life cycle projects, you have to make decisions on how the building is used years in advance

Whatever the project model, it is a good idea to consider the building’s life cycle and maintenance as early as at the project design stage. When it comes to life cycle projects, this cannot be delayed as both parties are committing to liabilities in accordance with the agreement that may extend up to 20 years, such as the implementation of the investment stage and the service level at the maintenance stage.

5. Outsourced service production is expensive compared to municipal services

The service level should always be taken into account in comparisons. Life cycle projects often cover a lot of bases, such as security and caretaker services, but also maintenance and long-term plans. The client determines the required service level. If there is a price difference, it is not usually due to the price of work as such but the fact that the contents of a life cycle project are broader or the required service level is higher. What’s more, pursuant to the agreement, the service provider has to meet the agreed condition of delivery, i.e. the building is transferred to the client in good technical condition after the service period. Also, the energy objectives have been specified at the agreement stage, and the service provider is liable for any potential overshoot.

6. Owner has no control over maintenance of the property

There is no loss of control because service agreements set an obligation to carry out the tasks in accordance with the service description precisely as agreed. Instead of property maintenance, the client can concentrate on producing municipal services. The user groups specified in the agreements meet on a regular basis and make the views of the users of the premises known to the relevant parties. In accordance with the agreement, user satisfaction is measured annually and the operations are developed accordingly. Users get the opportunity to have a say on the way the property is managed with regard to their operations.

In addition, the service provider provides the owner with the agreed reporting on the maintenance and service activities performed. The service provider also provides the owner with the service and maintenance plans in advance.

7. Maintenance jobs are disappearing

Whoever the service provider, there is always use for good workers. In the main, YIT utilises skilled local resources for service production. The jobs are going nowhere, even though the employer may change. That said, if the required skill set is highly specific, it may not always be possible to find the right people in smaller localities, in which case it may be necessary to bring in specialists from further afield.

8. Private businesses are not suitable for local service production

Partners should demonstrate long-term experience in life cycle projects and cooperation with cities, towns and municipalities. It is essential to have the ability to identify the pain spots of municipal properties, which are often specifically related to issues such as indoor air or the usability of premises. In life cycle projects, potential risks like these can already be tackled at the design stage of the premises. This helps avoid typical issues at the maintenance stage.

A life cycle project partner should possess extensive competence from different sectors plus a network of professionals as a wide range of expertise comes handy in life cycle projects. For instance, cleaning and property management are not quite as simple as people perhaps sometimes imagine. New properties contain a high level of technical building systems, and security is more important than ever. Another crucial factor is close cooperation and the continuous development of operations together with the client as well as the users of premises. The success of life cycle contracts depends on an open partnership between the different parties.

9. If your demands change, you are stuck with the old service agreement

The agreement needs to be flexible, and you have to be able to amend it, if necessary. In terms of life cycle projects, the agreement service content as well as the technical solutions or scope of buildings can be adjusted in the spirit of the agreement through mutual negotiations.

10. There is only a few life cycle constructors

It is true that there could be more construction companies using the life cycle model, but the model requires perseverance from service providers as well as responsibility. Not all constructors have the organisation to support the required life cycle project expertise and thereby the ability or will to commit to such long-term contracts.

These questions were answered by our Area Manager Mika Kukkonen, who has more than 20 years of experience in property maintenance. He has been managing life cycle projects for 12 years. Currently, Mika is responsible for the operations of YIT Property Management’s units outside Greater Helsinki. His qualifications include an RTA certificate (building health expert) as well as a property management certificate (KJs).

Read more about YIT’s life cycle models and expertise

Project model guide