1
Introductionto
LIFE CYCLE COSTING (LCC)
Based on ASTM Building Economics Standards
May 24, 2006
Presented by: Robert Charette
Hosted by: Harvard Green Campus Initiative
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Outline
1. The Notion of Life Cycle Costing
2. Data Requirements
3. Present Value Factors
4. Calculating Life Cycle Costs - Examples
5. Supplementary Evaluation Measures - Examples
6. Integrating LCC in the Design Process
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Life-Cycle Cost Analysis (LCCA)
A method of economic analysis that sums up, over a given study period, all relevant costs of a building, building system, or building component, in present value (PV) dollars, today’s dollar.
5Source: Means Life Cycle Costing For Facilities
Initial Cost – Office Building - $100 / SF
Uniformat Categories:
01 Foundation02 Substructure03 Superstructure04 Exterior Closure05 Roofing06 Interior Construc.07 Conveying System08 Mechanical: Plumbing HVAC Fire Protection09 Electrical11 Equipment12 Sitework 4%
16%3%
12%4%
1%15%
5%
5%
3%3%
17%12%
5% 10% 15% 20%
% of Total Building Cost
6Source: Means Life Cycle Costing For Facilities
Uniformat Categories:
01 Foundation02 Substructure03 Superstructure04 Exterior Closure05 Roofing06 Interior Construc.07 Conveying System08 Mechanical: Plumbing HVAC Fire Protection09 Electrical11 Equipment12 Sitework
$10$8$4$2 $12 $14 $16 $18 $20$6
Life Cycle Cost – Office Building - $200 / SF
Life Cycle Cost – Present Value $ / ft2
Initial Cost Operational Cost
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ASTM Standards
Present Value Factors (4) – E917
SPV SPV*UPV UPV*
Evaluation Measures (4)
NS – E1074 AIRR – E1057SIR – E964 DPB – E1121
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Data Requirements for LCC
A. Investment costs
B. OM&R costs
C. Cyclical renewal costs
D. Financial criteria d – discount rate % e – escalation rate % n – study period years
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Four Present Value FactorsFrom Financial Tables
1. SPV - Single Present Value (w/o escalation)
2. UPV - Uniform Present Value (w/o escalation)
3. SPV* - Modified Single Present Value (with escalation)
4. UPV*- Modified Uniform Present Value Value (with escalation))
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Example – LCC of Competing
Heating / Cooling Systems• System A: Electric baseboard and
window air conditioner
• System B: Heat Pump
Financial Criteria:
Discount Rate d = 8% Energy Escalation ee = 6%
Maintenance Escalation em = 5% Study Period N = 15 years
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Investment Related Costs
Initial Cost – Io $1,500
Replacement Cost Year 8 (Base Yr $) $400
Residual Value (Year 15 $) $150
Operation Related Costs
Base Year Electric Energy Cost $1,200
Base Year OM&R Cost$50
System A: Electric Baseboard and Window Air Conditioner
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LCC System B
PVInvestment
Costs
PVOperational
Costs
+
=$3,384 + $12,798 = $16,182
LCC System B $1,745 less or 10% less
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Four Supplementary Evaluation Measures From Financial
Tables
1. Net Savings - (NS) E1074
2. Savings-to-Investment Ratio - (SIR) E964
3. Adjusted Internal Rate of Return - (AIRR) E1057
4. Discounted Payback - (DPB) E1121
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Example - NS, SIR, AIRR, DPB
Attic Roof Insulation – R11 to R19
Additional Investment Cost – I $1500
Annual Energy Savings – A0 $260
Financial Criteria: d = 8% ee = 6% N = 30 yrs
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Suplementary Evaluation MeasuresSuplementary Evaluation MeasuresAdditional Investment of $1,500 for InsulationAdditional Investment of $1,500 for Insulation
1. Net Savings (NS) $4,420
2. Savings-to-Investment Ratio (SIR) 3.9
3. Adjusted Internal Rate of Return (AIRR) 13%
4. Discounted Payback (DPB) 6.2 years
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Part of the Solution
An Integrated Design Process with all stakeholders that includes at the Schematic Phase:----------------------------------------------------------------------------
• A Baseline Preliminary Project Description (PPD) in accordance with CSI/CSC Practice FF/180
• An Elemental Cost Estimate With Analytic Parametrs
• An Energy Analysis Simulation Model
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© The Construction Specifications Institute Manual of Practice FF/180
Chart 3.4 Preliminary Project Description (PPD)
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Table 4.3 UNIFORMAT II Elemental Cost Summary for Buildings
Project Example - 8 Story Office BuildingLEVEL 2 GROUP ELEMENTS . Level 3 Elements Quantity Unit Rate Cost
Cost per Unit GFA %
A10 FOUNDATION - - - 69,726.50 1.29 1.60%A1010 Standard Foundations 6,000.00 SF 7.67 46,025.50 0.85A1020 Special Foundations - - -A1030 Slab on Grade 6,000.00 SF 3.95 23,700.00 0.44A20 BASEMENT CONSTRCUTION - - 75,467.20 1.40 1.70%A2010 Basement Excavation 2,700.00 CY 5.91 15,960.00 0.30A2020 Basement Walls 3,840.00 SF 15.50 1.10B10 SUPERSTRUCTURE - - 688,569.96 12.75 15.80%B1010 Floor Construction 48,000.00 SF 13.37 641,632.56 11.88B1020 Roof Construction 6,000.00 SF 7.82 46,937.40 0.87B20 EXTERIOR ENCLOSURE - - 794,141.00 14.71 18.20%B2010 Exterior Walls 25,500.00 SF 18.43 469,900.00 8.70B2020 Exterior Windows 6,600.00 SF 47.58 314,041.00 5.82B2030 Exterior Doors 5.00 LVS 2,040.00 10,200.00 0.19. . . . . . . .. . . . . . . .. . . . . . . .
GFA = 54,000.00 SF
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• kWh / SF vs targeted energy budget
• Identify energy drivers
• Identify alternatives to be evaluated
Baseline Energy Simulation
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Summary
1. The Notion of Life Cycle Costing
2. Data Requirements
3. Present Value Factors
4. Calculating Life Cycle Costs - Examples
5. Supplementary Evaluation Measures - Examples
6. Integrating LCC in the Design Process
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EndRobert Charette, PE, [email protected]
514-739-3522
Harvard Green Campus Initiative
www.greencampus.harvard.edu617-496-1278