Life-Cycle Cost Analysis (LCCA)

Life-Cycle Cost Analysis (LCCA) 1

Life-cycle cost evaluation (LCCA) is a method for assessing the full total cost of service ownership. It takes into account all costs of acquiring, owning, and losing a building or building system. LCCA pays to when project alternatives that match the same performance requirements especially, but differ regarding initial costs and working costs, have to be compared to be able to select the one that maximizes net savings.

For example, LCCA shall help determine whether the incorporation of a high-performance HVAC or glazing system, which may increase initial cost but result in reduced operating and maintenance costs dramatically, is cost-effective or not. LCCA is not helpful for budget allocation. Lowest life-cycle cost (LCC) is the most simple and easy-to-interpret measure of economic evaluation. Some other commonly used steps are Net Savings (or Net Benefits), Savings-to-Investment Ratio (or Savings Benefit-to-Cost Ratio), Internal Rate of Return, and Payback Period. They are consistent with the cheapest LCC way of measuring evaluation if they use the same guidelines and amount of research period.

Building economists, qualified value specialists, cost engineers, architects, quantity surveyors, operations experts, as well as others might use any or several of these techniques to assess a project. The approach to making cost-effective choices for building-related projects can be quite similar whether it’s called cost estimating, value engineering, or economic analysis. The goal of an LCCA is to calculate the entire costs of project alternatives and to select the design that ensures the service will provide the lowest overall cost of possession consistent using its quality and function.

The LCCA should be performed early in the look process since there is still a chance to refine the design to ensure a decrease in life-cycle costs (LCC). The first and most challenging task of an LCCA, or any economic evaluation method, is to look for the economic effects of substitute designs of structures and building systems and also to quantify these results and express them in dollar amounts. You’ll find so many costs associated with acquiring, working, maintaining, and losing a building or building system.

Only those costs within each category that are highly relevant to your choice and significant in amount are needed to make a valid investment decision. Costs are relevant when they will vary for one substitute compared with another; costs are significant when they may be large enough to make a credible difference in the LCC of the project option. All costs are got into as base-year quantities in the current dollars; the LCCA method escalates all quantities with their future 12 months of incident and special discounts them back to the base time to convert them to present values.

Initial costs may include capital investment charges for land acquisition, structure, or renovation and for the equipment had a need to operate a service. Land acquisition costs have to be contained in the initial cost estimation if they differ among design alternatives. This would be the situation, for example, when comparing the expense of renovating an existing facility with new structure on purchased land.

Construction costs: Detailed quotes of structure costs are not necessary for preliminary economic analyses of substitute building designs or systems. Such quotes are not often available until the design is quite advanced and the chance for cost-reducing design changes has been skipped. LCCA can be repeated throughout the design process if more detailed cost information becomes available. Initially, building costs are approximated by reference to historical data from similar facilities.

Alternately, they could be determined from authorities or private-sector cost estimating directories and manuals. Detailed cost estimates are prepared at the submittal stages of design (typically at 30%, 60%, and 90%) based on quantity take-off calculations. These estimates rely on cost directories such as the Commercial Unit Price Book (C-UPB) or the R. S. Means Building Construction Cost Database.

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Testing organizations such as ASTM International and trade organizations have guide data for materials and products they test or symbolize. Operational expenditures for energy, water, and other utilities are based on intake, current rates, and price projections. Because energy, and to some extent water consumption, and building configuration and building envelope are interdependent, energy and drinking water costs are usually assessed for the building all together rather than for specific building systems or components.

Energy utilization: Energy costs tend to be difficult to forecast accurately in the design phase of a project. Assumptions must be produced about use information, occupancy rates, and schedules, all of which impact energy intake. At the initial design stage, data on the amount of energy usage for a building can come from engineering analysis or from some type of computer program such as eQuest. EnergyPlus (DOE) and DOE-2 require more detailed input not usually available until later in the look process. Other software programs, like the proprietary programs TRACE (Trane), ESPRE (EPRI), and HAP (Carrier) have been developed to aid in mechanised equipment selection and sizing and are often distributed by manufacturers.