1. What is Life Cycle Cost Analysis (LCCA)?

Life cycle cost analysis (LCCA or LCC for short) is an objective method for measuring
and managing the lifetime costs of any project or asset. In construction, it enables design options
to be compared from a lifetime perspective to reduce overall costs.
LCC provides a method of assessing the costs that occur throughout a building’s lifespan,
from construction, through use and maintenance, to end-of-life. In so doing, it provides a more
robust insight into long-term costs and savings, compared to ROI-based calculations.

2. What are the primary benefits of life cycle cost analysis? Give details.
1. Long-term value. An LCC ensures that your project has the highest possible value,
even if upfront costs are not significantly reduced. It provides a mechanism for identifying and
addressing issues with the original design. An LCC’s lifetime perspective results in better
durability, less maintenance, fewer risks, and lower operational spending and can even lead to an
increased building lifespan.
2. Green building certification credits. LCC credits are included in many green building
certification schemes and in some LCCs is a mandatory credit. For example, DGNB has
mandatory LCA and LCC credits, while BREEAM includes LCC credits split between sub-
credits. In the case of DGNB the LCC credit is called ECO 1.1. LIFE CYCLE COST, 9,6 %
(Gebäudebezogene Kosten im Lebenszyklus).
3. Reliable planning and reduced risk. LCC is an excellent planning tool that covers long
spans of time. With a properly conducted LCC, you can effectively avoid surprises, and reduce
financial risks.

3. Why is Life Cycle Cost Analysis (LCCA) important?

For over 30 years of a building’s life, the present value of maintenance, operations, and
utility costs are nearly as great as the initial project costs.
Funds raised or set aside for the construction of new campus buildings rarely cover
ongoing operational costs. Campuses are increasingly experiencing shortfalls in their annual
budgets for building operations. This results in postponed maintenance and, eventually, declining
building utility and performance.

4. What are the six (6) general categories to assess the value to the project to possible life
cycle cost? Give details.
Energy Systems
1. Central plant-connected vs. stand-alone systems (steam and chilled water)
2. Alternative energy systems (e.g., solar photovoltaics, solar thermal, fuel cells)
3. Equipment options for stand-alone systems (e.g., air-cooled chillers vs. refrigerant-
based direct-expansion [DX] units)

Mechanical Systems
 4. Air distribution systems (e.g., variable volume vs. constant volume, overhead vs.
underfloor)
5. Water distribution systems (e.g., various piping systems and pumping options)
Electrical Systems
6. Indoor lighting sources and controls
7. Outdoor lighting sources and controls
8. Distribution (e.g., transformers, buss ducts, cable trays)
Building Envelope
9. Skin and insulation options
10. Roofing systems (various materials and insulation methods)
11. Glazing, daylighting, and shading options
Siting/Massing
12. Orientation, floor-to-floor height, and overall building Height
13. Landscape, irrigation, and hardscape options
Structural Systems
14. Systems/materials selection (e.g., wood vs. steel vs. concrete, cast-in-place vs.
precast)

5. Arrange the following subsystem categories to the average life cycle from shortest to
longest years. Specify average life cycle.
- Interior Finishes 15 years
- HVAC – Equipment and Controls 20 years
- Elevators and Conveying Systems 25 years
- Electrical Equipment 30 years
- Plumbing Fixtures 30 years
- Fire Protection Systems 40 years
- Plumbing – Rough-In 50 years
- Roofing – Metal, Concrete 50 years
- Building Exteriors, Doors, and Windows (Hard) 80 years
- Roofing – Tile 80 years

6. Give and describe the basic formula for calculating life-cycle cost?
The formula for calculating life-cycle cost is:
LCC = I + Repl - Res + E + W + OM&R + O

LCC: Total life-cycle cost in present value (PV) dollars of a given alternative
I: Initial cost
Repl: PV capital replacement costs
Res: PV residual value (resale value, salvage value) less disposal costs
L: Desired useful life in years of the building or system
E: Total energy cost (PV)
 W: Total water costs (PV)
OM&R: Total operating, maintenance, and repair costs (PV)
O: Total other costs, if any—contract administration costs, financing costs, employee
salaries and benefits, and so forth (PV)

7. What is the information needed for a simple life cycle cost analysis?
Life-cycle cost comparisons for building components or equipment can be accomplished
relatively easily if there are no significant financing costs or differences in procurement costs
among the options.
The following information is needed for a simple life cycle cost analysis:
The initial cost of each system.
The expected life of each system (usually years).
The expected average yearly maintenance, operation, and repair costs of each system.
Maintenance and repair costs that occur only every several years, averaged over the time
between occurrences.
Operation, including fuel, electricity, and water use costs as well as ongoing costs such as
operator wages, regular cleaning or restocking, etc.
Any salvage or other residual value you will get out of the system when you have
finished using it in this application.

Assembling this information can be a challenge. If the information isn't available in the
manufacturer's literature or easily available records, you may need to call the manufacturer or
supplier or ask knowledgeable people what their experience has been. The reliability of the
results depends directly on the quality of the input. If you have enough experience with the
system, you may be able to get close enough using estimated operation and maintenance costs.