1.8 Life Cycle Costing
Purpose
Life Cycle Costing (LCC) is an important economic analysis used in the selection of alternatives that impact both pending and future costs. It compares initial investment options and identifies the least cost alternatives for a twenty year period. As applied to building design energy conservation measures, the process is mandated by law and is defined in the Code of Federal Regulations
(CFR), Title 10, Part 436, Subpart A: Program Rules of the Federal Energy Management Program.
The A/E shall contact local utility companies to determine available demand-side management programs and nocost assistance provided by these companies to designers and owners.
Applications
Basic applications of LCC are
Where existing conditions form part of the baseline alternate, the analysis must not only include intended project work, but also the additional costs necessary to achieve code compliance and reliable operation over the analysis period. The analysis period should be chosen to fully represent all costs.
Charles Evans Whittaker U.S. Courthouse,
When optimizing the design of a single system, all compared
Kansas City, MO alternatives must be considered over the same analysis period.
Where possible, the analysis period should be the smallest whole multiple of the service lives for the major systems involved in the analysis. Service lives of HVAC equipment can be found in the ASHRAE Applications manual. In any case, the analysis period should not be over 25 years unless otherwise directed by GSA.
Costs that have already been incurred or must be incurred, regardless of the chosen alternative, can be deemed
“sunk” and excluded from the analysis. Costs that must be incurred during the period from design decisions to construction award should be deemed sunk.
Baseline and alternative first costs are typically those estimated for the construction award date. The life cycle cost analysis can assume that the award date can be considered the zero point in time for the analysis period, with all other event times referenced to the construction award date. For