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7/27/2019 MFA10103 (2012) - SCM - Lifecycle Assessment (Lect 10).ppt
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LIFE CYCLE COST
MA10103
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Introduction
For years, the architecture and construction industrieshave focused on two primary concerns in the creation of buildings.
The first, of utmost importance to architects, is the designof a building.
Is the building enjoyable to view and occupy?
Does the organization of spaces enhance the user’sprogram?
The client expects an architect to be able to design abuilding that satisfies their aesthetic and functional goals
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Introduction
The second concern, the primary focusof contractors, is the construction of abuilding.
How will the building be built?
How much will the building cost?
The client expects a contractor to beable to construct a sound building for theestimated construction cost.
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Introduction
These are typically the primary concernsof a client when the idea of constructinga building is addressed, so it is nosurprise that architects and contractorsfocus their efforts to this end.
Granted, these are significant concerns,however they are not the only concernsthat should be addressed when planningfor the future.
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Introduction
A third concern that is receiving more
attention as building owners investigate
the economics of facility management, isthe cost of building operations over the
life of a building.
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Introduction
The combination of economic theory and
computer technology allows for a more
sophisticated approach to the design and
construction of a facility than ever before.
Instead of merely looking at the facility in terms
of cost to design and build, owners can broaden
their perspective to include operations,maintenance, repair, replacement, and disposal
costs.
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Introduction
The sum of initial and future costs
associated with the construction and
operation of a building over a period of time is called the life cycle cost of a
facility.
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Definition
The National Institute of Standards and
Technology (NIST) Handbook 135, 1995
edition, defines Life Cycle Cost (LCC)as:
“The total discounted dollar cost of owning,
operating, maintaining, and disposing of
a building or a building system” over a
period of time”.
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Life Cycle Cost Analysis
(LCCA) Life Cycle Cost Analysis (LCCA) is an
economic evaluation technique that
determines the total cost of owning andoperating a facility over period of time.
Life cycle cost analysis is the evaluation
of agency, user, and other relevant costs
over the life of investment alternatives
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The structure of LCC benchmark
in
Building Project
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Life Cycle Cost Analysis (LCCA) in General
Elements of Capital Cost
Loan or Bond Fund Elements
Energy Cost Elements
Water Cost Elements
Maintenance Cost Factors
Design to Minimize MaintenanceNon-Uniform Maintenance Cost
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Elements of Capital Cost
* Construction cost
Material
Labor
Special equipment and/or rigging
Demolition
Contractor overhead and profit Special consultants and/or design
fees
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Elements of Capital Cost
Additional mechanical, structural, or
electrical requirements associated with
architectural alternative.
Additional architectural, structural, or
electrical requirements associated with
mechanical alternatives.
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Loan or Bond Fund Elements
Percent of capital cost borrowed
Interest rate
Loan/Bond period
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Energy Cost Elements
Non-Thermal or "Base" Loads
– Lighting
– Domestic hot water heating
– Process loads are not included
2. Thermal or "HVAC" Loads
– Heating/cooling energy to offset heat losses
and gains
– Ventilation air heating and cooling
– HVAC fan/pump energy consumption
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Water Cost Elements
1. Indoor Water Consumption
- Plumbing fixtures
- HVAC- Water recovery/capture
2. Outdoor Water Consumption- Landscape irrigation
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Maintenance Cost Factors
Owner’s resources and/or
capabilities…lack of resources leads to
deferred maintenance and reduced performance life that increase
maintenance costs!
Quality of design
Quality of construction
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Design to Minimize Maintenance
1.How can it be reached?
2. How can it be cleaned?
3. How long will it last?4. How can it be replaced?
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Non-Uniform Maintenance
CostMaintenance and repair costs that occur
at regular, but multi-year
intervals…caulking, painting, chiller testing, etc.
Replacement cost required by elements
having short economic lives.
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ECONOMIC LIFE
Time at which maintenance costs
exceed replacement costs.
Annual inflation factor
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Component in a LCC Equation
Cost
Study Period
Real Discount Rate Present Value
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Initial & Future Expenses
The first component in a LCC equation is cost.There are two major cost categories by whichprojects are to be evaluated in a LCCA.
They are Initial Expenses and Future Expenses.
Initial Expenses are all costs incurred prior tooccupation of the facility.
Future Expenses are all costs incurred after occupation of the facility.
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Study Period
The second component of the LCC equation is time. Thestudy period is the period of time over which ownershipand operations expenses are to be evaluated.
Typically, the study period can range from twenty to fortyyears, depending on owner’s preferences, the stability of the user’s program, and the intended overall life of thefacility.
While the length of the study period is often a reflection of the intended life of a facility, the study period is usuallyshorter than the intended life of the facility.
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Study Period
The National Institute of Standards and Technology(NIST) breaks the study period into two phases:
- the planning/construction period and
- the service period.
The planning/construction period is the time period fromthe start of the study to the date the building becomesoperational (the service date).
The service period is the time period from date thebuilding becomes operational to the end of the study.
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Real Discount Rate
The third component in the LCC equation is thediscount rate.
The discount rate, as defined by Life CycleCosting for Design Professionals, 2nd Edition,is “the rate of interest reflecting the investor’stime value of money.
” Basically, it is the interest rate that wouldmake an investor indifferent as to whether hereceived a payment now or a greater paymentat some time in the future.
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Real Discount Rate
The NIST takes the definition of discount rates
a step further by separating them into two
types:
- real discount rates and
- nominal discount rates.
The difference between the two is that the realdiscountrate excludes the rate of inflation and
the nominal discount rate includes the rate of
inflation.
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Present Value
To accurately combine initial expenses
with future expenses, the present value
of all expenses must first be determined.
The NIST Handbook 135, 1995 edition,
defines present value as “the time
equivalent value of past, present or future cash flows as of the beginning of
the base year.
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Present Value
The determination of the present value of future
costs is time dependent.
The time period is the difference between the
time of initial costs and the time of future costs.
Initial costs are incurred at the beginning of the
study period at Year 0, the base year.
Future costs can be incurred anytime between
Year 1 and Year 20.
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Present Value
Future costs can be broken down into twocategories:
- one-time costs and
- recurring costs.
Recurring costs are costs that occur ever year over the span of the study period. Most
operating and maintenance costs are recurringcosts.
One-time costs are costs that do not occur ever year over the span of the study period.
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Present Value
To simplify the LCCA, all recurring costs
are expressed as annual expenses
incurred at the end of each year andone-time costs are incurred at the end of
the year in which they occur.
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Present Value
To determine the present value of future one-time costs the
following formula is used:
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Present Value
• To determine the present value of future recurring costs the
following formula is used:
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Selection of Project
Alternatives Prior to beginning a LCCA, project alternatives
need to be established. These alternatives
should be distinctly different and viable
solutions to the facility issue being addressed.The chosen alternative is to be the most
reasonable and cost-effective solution to the
project problem.
A minimum of three different project alternatives
should be incorporated into the LCCA.
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Example: some possible project options
Listed below are some possible project options that shouldbe considered while selecting the most viable,reasonable, and cost-effective alternatives
Renovation and addition to the existing school facility Rental and remodel of an existing local facility
Purchase and remodel of an existing local facility
Alteration of the attendance area boundary
Demolition of existing school and construction of a newschool on the same site
The use of double shifting or year round school
Sale of existing school and construction of a new schoolon a new site
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Steps in the completion of the
LCCA of a project alternative
Initial investment costs
Operation Costs
Maintenance & Repair CostsReplacement Costs
Residual Value
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Initial investment costs
The first step in the completion of theLCCA of a project alternative is to defineall the initial investment costs of the
alternative.
Initial investment costs are costs thatwill be incurred prior to the occupation of the facility. All initial costs are to beadded to the LCCA total at their fullvalue.
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Operation Costs
The second step in the completion of the LCCA
of a project alternative is to define all the future
operation costs of the alternative.
The operation costs are annual costs,
excluding maintenance and repair costs,
involved in the operation of the facility.
Most of these costs are related to building
utilities and custodial services.
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Maintenance & Repair Costs
The third step in the completion of the
LCCA of a project alternative is to define
all the future maintenance and repair costs of the alternative
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Maintenance & Repair Costs
Maintenance costs are scheduled costsassociated with the upkeep of the facility.
An example of a maintenance cost is the
cost of an annual roof inspection andcaulking of the building’s roof penetrations.
This task is a scheduled event that isintended to keep the building in goodcondition.
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Maintenance & Repair Costs
Repair costs are unanticipatedexpenditures that are required to prolongthe life of a building system without
replacing the system. An example is therepair of a broken window.
This is an unscheduled event that doesnot entail replacement of the entirewindow unit, merely the replacement of the broken pane.
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Replacement Costs
The fourth step in the completion of the
LCCA of a project alternative is to define
all the future replacement costs of thealternative.
Replacement costs are anticipated
expenditures to major building systemcomponents that are required to
maintain the operation of a facility.
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Residual Value
The fifth step in the completion of the
LCCA of a project alternative is to define
the residual value of the alternative.
Residual value, as defined earlier, is the
net worth of a building or building system
at the end of the LCCA study period.
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Residual Value
The residual value of a facility or building
system is especially important when
evaluating project alternatives that havedifferent life expectancies.
An example is the evaluation of two
roofing alternatives, a metal roof and acomposition shingle roof.
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Residual Value
The shingle roof has a life span of 20years where as the metal roof isexpected to last 40 years.
In a LCCA over a 30-year study periodthe shingle roof will have to be replaced,thus incurring replacement costs. Themetal roof will not require replacement;thus no replacement costs will beincurred.
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Residual Value
The metal roof has a residual value of onequarter its initial cost because at the end of thestudy period three-quarters of its intended lifewill have been consumed.
The shingle roof has a residual value of half itsinitial cost because a replacement roof wasinstalled ten years prior.
Thus, at the end of the study period, half of thecurrent shingle roof’s intended life will havebeen consumed.
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Life Cycle Cost Categories
*Maintenance and Repair
Interior Specialties
Conveyance Systems
Plumbing Piping
Plumbing Fixtures Fire Protection Systems
HVAC Distribution
HVAC Equipment
HVAC Controls
Electrical Service/Generation Electrical Distribution
Electrical Lighting
Special Electrical Systems
Equipment & Furnishings
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Life Cycle Cost Categories*Replacement Cost (scheduled replacement of building systems or
components)
Site Improvements
Site Utilities
Foundation/Substructure
Superstructure Exterior Wall Systems
Exterior Windows
Exterior Doors
Roof Systems
Interior Partitions
Interior Doors
Interior Floor Finishes
Interior Wall Finishes
Interior Ceiling Finishes
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Life Cycle Cost Categories
*Replacement Cost (cont.)
Interior Specialties
Conveyance Systems
Plumbing Piping
Plumbing Fixtures
Fire Protection Systems
HVAC Distribution
HVAC Equipment
HVAC Controls
Electrical Service/Generation Electrical Distribution
Electrical Lighting
Special Electrical Systems
Equipment & Furnishings
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Life Cycle Cost Categories
*Residual Value (value of facility at end of study period)
Site Improvements
Site Utilities
Foundation/Substructure Superstructure
Exterior Wall Systems
Exterior Windows
Exterior Doors
Roof Systems
Interior Partitions Interior Doors
Interior Floor Finishes
Interior Wall Finishes
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Life Cycle Cost Categories
* Residual Value (value of facility at end of study period)
Interior Ceiling Finishes
Interior Specialties
Conveyance Systems Plumbing Piping
Plumbing Fixtures
Fire Protection Systems
HVAC Distribution
HVAC Equipment
HVAC Controls Electrical Service/Generation
Electrical Distribution
Electrical Lighting
Special Electrical Systems
Equipment & Furnishings
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