LCC Presentation Word

The slide 1:An economic evaluation technique that determines the total cost of owning and operating a
facility over period of time

Slide 2: Definition of LCC
Based on journal [6] Life Cycle Costs (LCC) are the sum of estimated costs over the entire life cycle from
initiation to completion, both equipment and projects.
Life Cycle Cost Analysis (LCCA) evaluating the sum of estimated costs over the entire life cycle from
initiation to completion, both equipment and projects.”
LCC components can be broadly classified into design and development costs, acquisition costs,
operating costs and disposal costs. Life Cycle Cost approach emphasizes the consideration of total cost
for the operation of the equipment from the initial cost.
Slide 3: The Purpose of LCC The graph to show the difference
 To estimate the overall costs of project alternatives and to select the design that ensures the
facility will provide the lowest overall cost of ownership consistent with its quality
and function.
 The LCCA should be performed early in the design process while there is still a chance to refine
the design to ensure a reduction in life-cycle costs (LCC).
 Economic evaluation method, is to determine the economic effects of alternative designs of
buildings and building systems and to quantify these effects and express them in dollar amounts.
Slide 4: How to conduct LCC
How to conduct a LCC
LCC in construction consists of several key elements:
 Conduct a structured cost analysis by conducting a structured cost analysis you can clearly
identify the major expenditure sources that most influence your overall costs.
 With major expenditure sources clear, it is possible to identify priority areas for improvement
in the baseline design.
 Comparison of the benefits and impacts of the design alternatives to find the best solution for
the project.
Slide 5: identify the costs associated with the Life cycle costing
 Initial Costs—Capital investment costs for land acquisition, construction, or renovation and for
the equipment needed to operate a facility.
 Fuel Costs - Operational expenses for energy, water, and other utilities current rates, and price
projections.
 Operation, Maintenance, and Repair Costs -Non-fuel operating costs, and maintenance and
repair costs.
 Replacement Costs- The number and timing of capital replacements of building systems depend
on the estimated life of the system.
 Residual Values—Residual values can be based on value in place, resale value, salvage value, or
scrap value, net of any selling, conversion, or disposal costs.
 Other Charges – Finance costs such as Loan Interest Payments and non-monetary benefits such
as costs of heating, ventilation and air conditioning. Increased productivity through increased
lighting.
Slide 6: Uncertainty Assessment in Life-Cycle Cost Analysis

There are techniques for estimating the cost of choosing the "wrong" project alternative.
 Sensitivity analysis
Identifying which of a number of uncertain input values has the greatest impact on a specific measure of
economic evaluation,
determining how variability in the input value affects the range of a measure of economic evaluation, and
testing different scenarios to answer "what if" questions.
 Break-even analysis
Decision-makers sometimes want to know the maximum cost of an input that will allow the project to still
break even, or conversely, what minimum benefit a project can produce and still cover the cost of the
investment.
To perform a break-even analysis, benefits and costs are set equal, all variables are specified, and the
break-even variable is solved algebraically.
Sensitivity analysis and break-even analysis, and a number of other approaches to risk and uncertainty
assessment.
Slide 7: Case studies and examples of using LCC

Life Cycle Cost Analysis in Construction of Green Building Concept, A Case Study.
The process of building a Green Building requires a relatively high cost when compared to conventional
buildings, but in its application that focuses on energy efficiency and resources will be an advantage that
affects operational costs, maintenance costs and replacement costs [3]. Therefore, Life Cycle Cost is a
tool to optimize buildings with a long-term perspective and to exploit sustainable economic principles [4]
and also see how much the total costs are removed from the construction stage up to the economic age of
the building and the optimal number of maintenance crews.
Life Cycle Cost is classified into several parts, there are Sustaining Cost and Acquisition Cost.
 Sustaining cost is the sum of annual energy or operational costs, annual maintenance costs, and
annual replacement costs and for
 The Acquisition Cost is the sum of annual initial costs including construction costs, initial costs
of green building features and administrative costs.
 In this method, the formula according to
𝐿𝐶𝐶=𝑆𝐶+𝐴𝐶 ……………………………………………………………… (2.1)
Where:
LCC: Life Cycle Cost
SC: Sustaining Cost
AC: Acquisition Cost
2.3. LCC Calculation Procedure
Steps in calculating life cycle cost based on [8], there are:
• Collecting data and categories of costs required

• Input the data of Energy Cost, Operational & Maintenance Cost and Replacement Cost in a year
• Calculate the total cost of replacement cost (multiplies the cost of each replacement unit and total unit)
• Calculate Sustaining Cost = Total Energy Cost + Total Operational & Maintenance Cost + Total
Replacement Cost
• Calculate annual cost of the sustaining cost (using single-payment present worth analysis)
• Single-payment present worth analysis (P= F(P/F,i,n)
• Input the data of Construction Cost, Initial Cost for Feature Green Building, Administrative Cost, and
Population Cost
• Calculate the total cost of construction cost
• Calculate the total cost of initial cost (multiplies the cost of each unit and total unit)
• Calculate the total cost of administrative cost (multiplies the construction cost and precentage)
• Calculate Acquisition Cost = Total Construction Cost + Total Initial Cost + Total Administrative Cost +
Population Cost
• Calculate annual costs from the acquisition cost category (using single-payment present worth analysis)
• Single-payment present worth analysis (P= F(P/F,i,n)
• Life Cycle Cost = Annual Sustaining Cost + Annual Acquisition Cost
The intensity of energy consumption in the green building concept is very efficient than
conventional buildings.
Slide: 8 How to get maximum value from your life cycle costing analysis
• Conduct the LCC early. The LCC is most effective when implemented in the early project
phases before major decisions have been made.
• Engage the whole team. Particularly when creating alternatives to ensure the full potential of the
project is captured.
• Repeat the LCC throughout the project. LCC should be regarded as an ongoing process and
calculations should be repeated several times as the project progresses through its stages and kept
up-to-date to ensure accuracy and high-quality analysis.
• Combine LCC with LCA to ensure that you are making the best cost-and carbon-saving
decisions for your project.
Slide 9:
 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.
 Green building certification credits. LCC credits are included in many green building
certification schemes and in some LCC is a mandatory credit.
For example, DGNB has mandatory LCA and LCC credits, while BREEAM includes LCC credits split
between sub-credits.
 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
Value engineering isn’t just about reducing the overall cost of the
project. Value engineering is about optimizing the value of the
project and making the most out of your money so you have a long-
term investment that will suit the financial goals of your business.

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The slide 1:An economic evaluation technique that determines the total cost of owning and operating a

facility over period of time

Slide 6: Uncertainty Assessment in Life-Cycle Cost Analysis

Slide 7: Case studies and examples of using LCC

Steps in calculating life cycle cost based on [8], there are:

• Collecting data and categories of costs required

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