Life cycle cost analysis is a method that is used in assessing the total cost of facility ownership. In its assessment, it takes into account all expenditures of purchasing, possessing, planning, design, construction and acquisition, operations, repairs, restoration and rehabilitation, devaluation and the cost of finance and replacement or disposing of a building or building system. It is an important economic tool of analysis in selection of alternatives that impact current and future costs.it compares the initial cost and the least alternative in a twenty year duration.it is also referred to as “cradle to grave” or “womb to tomb” cost and it includes easy to measure financial assessment as well as difficult to measure social assessments (United States 2007).
The purpose of LCCA is to estimate the overall cost of an alternative project and therefore it should be carried at a very early stage of design to help chose the less costly design depending on the size of the building. The factors are to be considered are largely related to scale, complexity and the number of alternatives available. These factors are discussed below.
Tunnels and Bridges; the analysis deliberates the cost of linking versus staff travel time on alternate circulation routes. The travel time should be based on actual contact information between agencies or an assumption by the planning side. However there are other factors that cannot be calculated and they should be put into consideration when making the selection. They include; security, climatic condition and construction challenges. These analyses are mostly considered on small buildings and it is not necessary for buildings with high security or large ones (American Institute of Architects 1977).
Exterior Wall Construction and Finishes; this analysis assesses the construction cost, maintenance and replacement costs and thermal resistance effects of heat gain/loss. In addition, other factors such as appearance, resistance to moisture, freezing and URV light, wind, ability to match the intended finishes and other construction requirements should be considered though they cannot be calculated in monetary value.
Sun Control Devices; This analysis considers the construction cost of; heating, ventilation and air conditioning (HVAC) systems first coast, operation, maintenance and repairs, solar gain reduction, and the utility cost of not providing sun control devices. Sun control also includes the maximum use of the natural daylight into the building. These would be done through the use of transparent roof and maximum windows (Joseph, & Ontario 1992).
Exterior Windows; Here, the analysis considers the construction cost, HVAC system initial cost, solar conduction, and heat gain and insulation features. There are other factors that cannot be measured in monetary value but should be considered and they are; color effects on exterior environment, exterior view into the building and security. Finally, the analysis is important for medium and large buildings and should have three or more alternatives.
Alternative Roof Systems; this analysis is not required in a typical project. However, when a new technology is proposed, that has a higher initial cost and a probable long term cost savings, then the analysis need to be conducted as part of decision to utilize the new technology. On a long-term economic perspective, these would save on the maintenance, operation and repair costs (Logistics Engineering and Management2012).
Conveyance Systems; These include the selection and sizing of elevators and escalator system. The elevators and escalators cost of installation and maintenance, repair and capacity should be considered. We may also consider assessing any proposals on the availability of new conveyor system that have a less initial and operational cost. Other factors that are not monetary calculable include; appearances, size occupied, safety and security. Such analysis is necessary for all types of buildings.
Interior Wall Systems: The analysis must include the installation cost of interior systems such as floors, power and communication-cabling systems, special ceiling repairs, refinishes and materials that can be reused during remodels. However, there are factors that cannot be estimated monetary but need consideration. They include appearances, safety, and disruption during movements and security. These analyses are suitable for very large buildings and should consider one alternative (Joseph, & Ontario 1992).
Interior Protective Finishes: The analysis must consider the installation cost, cleaning and upkeep costs, replacement and refinishing costs increase in illuminating levels due to reflectivity characteristics and remedial acoustical work. However, safety, disruption during remodeling, ability of material to be patched, appearances and release of vapor are factors that cannot be calculated. This analysis should be performed on finishes covering large areas or high traffic areas.
When conducting LCC analysis the following practices are required for a building design:
- An assured defined alternative to life cycle costing analysis throughout the period.
- The design alternative must provide the lowest cost baseline and offer viable system, employ state of the art design features and be compliant with the project requirements.
- The analysis period should fully include all costs. The entire alternative should be considered over the same period (Joseph, & Ontario 1992).
- Incurred cost should be included in all alternatives and deemed used and therefore excluded from all analysis.
Therefore, an LCC analysis is important because economically it provides alternatives to compare and decide on the most viable and less expensive design.
Importance of Life Cycle Cost Analysis; Life Cycle Cost (LCC) is an economic tool that combines both engineering art and science to make a logical business decision. The analysis delivers important inputs in the decision making process in the development, product design and use. By using life cycle cost, in evaluating various operating and maintenance cost strategies of product suppliers is made to be paramount and being enhanced to assist product users. LCC provides critical information to the overall decision-making process; however this is not the final answer (Logistics Engineering and Management2012).
LCC also determine the most cost effective choice among different competing alternatives to do a project, when each is equally suitable to be applied on technical grounds. LCCA takes into account the entire user costs for instance they try to reduce capacity at work zones. Why one should use LCCA? Typically conflict is most common in many companies. Therefore, many managers is advisable to consult LCCA on management decision making which help to synchronize the divisional conflicts by focusing on facts, time and money.
Actually LCC help customers to evaluate and compare alternative products, customers are able to assess economic viability of their products. These are the reasons one should go for LCCA. Life Cycle Cost provides critical information to the overall decision making processes in most companies. The product supplier provides the life cycle depending on design calculation and experience. LCC in product supplier, by using LCC, product suppliers can enhance their design by evaluation of substitutes and by performing trade-off studies this aid their customers in supplying of their products.
References
United States (2007). Life - cycle cost analysis: The Georgia experience. Washington, DC: U.S. Dept. of Transportation, Federal Highway Administration, Office of Asset Management
American Institute of Architects (1977). Life cycle cost analysis: A guide for architects. Washington: AIA.
Joseph, P. E., & Ontario (1992). Crack sealing in flexible pavements: A life cycle cost analysis. Downsview, Ont: Research and Development Branch, Ontario Ministry of Transportation.
Logistics Engineering and Management (2012); sixth Edition by Benjamin S. Blanchard
