Cost Cycle Handbook

Life
Cycle
Cost
Analysis
Handbook
State of Alaska - Department of Education & Early Development 1st Edition

Education Support Services / Facilities 1999
Contributors
Tim Mearig, AIA

Architect
Alaska Department of Education & Early Development
Juneau, Alaska
Nathan Coffee
Architect Assistant
Alaska Department of Education & Early Development
Juneau, Alaska
Michael Morgan, PMP

Anchorage, Alaska
Acknowledgements
Thanks also to the Bond Reimbursement and Grant Review Committee members who reviewed the
publication in its final form.
This publication may not be reproduced for sale by individuals or entities other than the:
State of Alaska
Department of Education & Early Development
Juneau, Alaska
State of Alaska - Department of Education & Early Development 1st Edition

Education Support Services / Facilities 1999
Table of Contents
Section Page
Introduction ......................................................................................................... 2
Terminology of Life Cycle Cost Analysis ............................................................ 4
Initial & Future Expenses
Residual Value
Study Period
Real Discount Rate (d)
Constant-Dollars
Present Value (PV)
Selection of Project Alternatives ......................................................................... 9
Completion of the Life Cycle Cost Analysis ........................................................ 10
Initial Investment Costs
Operations Costs
Maintenance & Repair Costs
Replacement Costs
Residual Value
Finalize LCCA
Summary .............................................................................................................. 15
Closing .................................................................................................................. 16
Samples ................................................................................................................ 17
LCCA Spreadsheet
LCCA Summary
Appendix .............................................................................................................. 23
Appendix A – Life Cycle Cost Categories
Appendix B – Quantity Abbreviations
Glossary ............................................................................................................... 27
Bibliography ........................................................................................................ 28
State of Alaska - Department of Education & Early Development

Alaska School Facilities
Life Cycle Cost Analysis Handbook – 1st Edition 1
Introduction
For years, the architecture and construction industries have focused on two primary concerns in the
creation of buildings. The first, of utmost importance to architects, is the design of a building. Is the
building enjoyable to view and occupy? Does the organization of spaces enhance the user’s
program? The client expects an architect to be able to design a building that satisfies their aesthetic
and functional goals.
The second concern, the primary focus of contractors, is the construction of a building. How will the
building be built? How much will the building cost? The client expects a contractor to be able to
construct a sound building for the estimated construction cost.
These are typically the primary concerns of a client when the idea of constructing a building is
addressed, so it is no surprise that architects and contractors focus their efforts to this end. Granted,
these are significant concerns, however they are not the only concerns that should be addressed when
planning for the future.
A third concern that is receiving more attention as building owners investigate the economics of
facility management, is the cost of building operations over the life of a building. The combination of
economic theory and computer technology allows for a more sophisticated approach to the design and
construction of a facility than ever before. Instead of merely looking at the facility in terms of cost to
design and build, owners can broaden their perspective to include operations, maintenance, repair,
replacement, and disposal costs. The sum of initial and future costs associated with the construction
and operation of a building over a period of time is called the life cycle cost of a facility.
The National Institute of Standards and Technology (NIST) Handbook 135, 1995 edition, defines
Life Cycle Cost (LCC) as “the total discounted dollar cost of owning, operating, maintaining, and
disposing of a building or a building system” over a period of time. Life Cycle Cost Analysis
(LCCA) is an economic evaluation technique that determines the total cost of owning and operating a
facility over period of time.
Life Cycle Cost Analysis can be performed on large and small buildings or on isolated building
systems. Many building owners apply the principles of life cycle cost analysis in decisions they make
regarding construction or improvements to a facility. From the homeowner who opts for vinyl siding
in lieu of wood to the federal highway commission that chooses concrete paving over asphalt, both
owners are taking into consideration the future maintenance and replacement costs in their selections.
While initial cost is a factor in their decisions, it is not the only factor.
The guidelines incorporated in this handbook have been developed to assist Alaskan school districts,
their consultants, and communities in evaluating the life cycle cost of school construction decisions.
The guidelines are based on AS 14.11.013, which directs the

Introduction
Department of Education and Early Development (EED) to review projects to ensure they are in the
best interest of the state, and AS 14.11.014, which stipulates the development of criteria intended to
achieve cost effective school construction.
In response to these legislative directives, the department evaluates all school construction and major
maintenance grant requests based on their initial and long term cost, i.e. their life cycle cost. This
handbook establishes the Life Cycle Cost Analysis technique and criteria by which educational
facility construction alternatives are to be evaluated. It is important to note that the usefulness of a
LCCA lies not in the determination of a total cost of a project alternative, but in the ability to
compare the cost of project alternatives and to determine which alternative provides the best value per
dollar spent.

Terminology of Life Cycle Cost Analysis
Life Cycle Cost Analysis is an essential design process for controlling the initial and the future cost of
building ownership. LCCA can be implemented at any level of the design process and can also be an
effective tool for evaluation of existing building systems. LCCA can be used to evaluate the cost of a
full range of projects, from an entire site complex to a specific building system component. The
Department of Education and Early Development has been charged with the responsibility of
determining if a school capital project is in the best interest of the State of Alaska. The effective use
of LCCA is vital in demonstrating that a school district’s project request is not only the best solution
for the district themselves, but also for the State of Alaska.
As defined earlier, Life Cycle Cost is the total discounted dollar cost of owning, operating,
maintaining, and disposing of a building or a building system over a period of time. Keeping this
definition in mind, one can breakdown the LCC equation into the following three variables: the
pertinent costs of ownership, the period of time over which these costs are incurred, and the discount
rate that is applied to future costs to equate them with present day costs.
Initial & Future Expenses

The first component in a LCC equation is cost. There are two major cost categories by which
projects are to be evaluated in a LCCA. They are Initial Expenses and Future Expenses. Initial
Expenses are all costs incurred prior to occupation of the facility. Future Expenses are all costs
incurred after occupation of the facility. Appendix A outlines the individual costs that are to be
evaluated within the two major cost categories.
Defining the exact costs of each expense category can be somewhat difficult since, at the time of the
LCC study, nearly all costs are unknown. However, through the use of reasonable, consistent, and
well-documented assumptions, a credible LCCA can be prepared.
One should also note that not all of the cost categories are relevant to all projects. The preparer is
responsible for the inclusion of the pertinent cost categories that will produce a realistic LCC
comparison of project alternatives. If costs in a particular cost category are equal in all project
alternatives, they can be documented as such and removed from consideration in the LCC
comparison.

Residual Value
One future expense that warrants further explanation is that of residual value. Residual value is the
net worth of a building at the end of the LCCA study period. Unlike other future expenses, an
alternative’s residual value can be positive or negative, a cost or a value.
Since a LCC is a summation of costs, a negative residual value indicates that there is value associated
with the building at the end of the study period. Perhaps, the value is a roof that was recently
replaced or it is the building’s superstructure that could function for another thirty years. Whatever
the reason for the remaining value, it is a tangible asset of building ownership and should be included
in the LCCA.
A positive residual value indicates that there are disposal costs associated with the building at the end
of the study period. Perhaps, the costs are related to abatement of hazardous material or demolition
of the structure. Whatever the cause, these are costs of building ownership and should be included in
the LCCA.
Zero residual value indicates that there is no value or cost associated with the building at the end of
the study period. This rare instance occurs if the intended use of the building terminates concurrent
to the end of the study period, the owner is unable to sell the building, and the owner is able to
abandon the building at no expense.
Study Period
The second component of the LCC equation is time. The study period is the period of time over
which ownership and operations expenses are to be evaluated. Typically, the study period can range
from twenty to forty years, depending on owner’s preferences, the stability of the user’s program, and
the intended overall life of the facility. While the length of the study period is often a reflection of
the intended life of a facility, the study period is usually shorter than the intended life of the facility.
The NIST breaks the study period into two phases: the planning/construction period and the service
period. The planning/construction period is the time period from the start of the study to the date the
building becomes operational (the service date). The service period is the time period from date the
building becomes operational to the end of the study.
Due to the uncertainty of construction funding and the short construction season, the
planning/construction period can take several years to complete for an Alaskan school

project. To remove the uncertainty regarding the appropriate length of the planning/construction
period and to simplify the LCC calculation, the department approves of the assumption that all initial
costs will be incurred in the base year of the study. Thus, all initial costs will be entered into the
LCCA at their full value.
The EED recommended study period for LCCA is twenty years. This is due to population
fluctuations within communities, the ever-changing nature of educational programs, the relative life
span of individual building systems, and the reduced economic impact of costs incurred after twenty
years.
The department’s LCCA Spreadsheet is designed for a twenty year study period. It can be used to
evaluate project options for complete school facilities (new construction and renovation projects), as
well as evaluate project options related to individual building systems (roof replacement projects,
mechanical upgrade projects, etc.).
Real Discount Rate

The third component in the LCC equation is the discount rate. The discount rate, as defined by Life
Cycle Costing for Design Professionals, 2nd Edition, is “the rate of interest reflecting the investor’s
time value of money.” Basically, it is the interest rate that would make an investor indifferent as to
whether he received a payment now or a greater payment at some time in the future.
The NIST takes the definition of discount rates a step further by separating them into two types: real
discount rates and nominal discount rates. The difference between the two is that the real discount
rate excludes the rate of inflation and the nominal discount rate includes the rate of inflation. This
is not to say that real discount rates ignore inflation, their use simply eliminates the complexity of
accounting for inflation within the present value equation. The use of either discount rate in its
corresponding present value calculation derives the same result. For simplicity, this handbook will
focus on the use of real discount rates in the calculation of LCC for project alternatives.
Obviously, as the economics of the world around us change, so to does the discount rate. To establish
a standard discount rate to be used in LCCA, the department has adopted the US Department of
Energy’s real discount rate. This rate is updated and published annually in the Energy Price Indices
and Discount Factors for Life-Cycle Cost Analysis – Annual Supplement to NIST Handbook 135.
The rate will also be updated annually in the department’s LCC spreadsheet tool, available on the
department’s web site.

Constant-Dollars
Just as discount rates can be defined as either real or nominal, so too can costs. The NIST Handbook
135, 1995 edition, defines constant-dollars as “dollars of uniform purchasing power tied to a
reference year and exclusive of general price inflation or deflation.” The NIST defines current-
dollars as “dollars of nonuniform purchasing power, including general price inflation or deflation, in
which actual prices are stated.”
When using the real discount rate in present value calculations, costs must be expressed in constant-
dollars. Likewise, when using the nominal discount rate in present value calculations, costs must be
expressed in current-dollars. In the rare case that the inflation rate is zero, constant-dollars are equal
to current-dollars and the real discount rate is equal to the nominal discount rate.
In practice, the use of constant-dollars simplifies LCCA. For example, suppose one wants to evaluate
roofing products over a 30-year period. However, one roofing product must be replaced after 20
years. How much will the replacement of the roof cost in 20 years? By using constant dollars, the
guesswork of estimating the escalation of labor and material costs is eliminated. The future constant
dollar cost (excluding demolition) to install a new roof in 20 years is the same as the initial cost to
install the roof. Any change in the value of money over time will be accounted for by the real
discount rate.
Present Value
To accurately combine initial expenses with future expenses, the present value of all expenses must
first be determined. The NIST Handbook 135, 1995 edition, defines present value as “the time-
equivalent value of past, present or future cash flows as of the beginning of the base year.”
The present value calculation uses the discount rate and the time a cost was or will be incurred to
establish the present value of the cost in the base year of the study period. Since most initial expenses
occur at about the same time, initial expenses are considered to occur during the base year of the
study period. Thus, there is no need to calculate the present value of these initial expenses because
their present value is equal to their actual cost.
The determination of the present value of future costs is time dependent. The time period is the
difference between the time of initial costs and the time of future costs. Initial costs are incurred at
the beginning of the study period at Year 0, the base year. Future costs can be

incurred anytime between Year 1 and Year 20. The present value calculation is the equalizer that
allows the summation of initial and future costs.
Along with time, the discount rate also dictates the present value of future costs. Because the current
discount rate is a positive value, future expenses will have a present value less than their cost at the
time they are incurred.
Future costs can be broken down into two categories: one-time costs and recurring costs. Recurring
costs are costs that occur ever year over the span of the study period. Most operating and
maintenance costs are recurring costs. One-time costs are costs that do not occur ever year over the
span of the study period. Most replacement costs are one-time costs.
To simplify the LCCA, all recurring costs are expressed as annual expenses incurred at the end of
each year and one-time costs are incurred at the end of the year in which they occur. To determine
the present value of future one-time costs the following formula is used:
PV = A t x 1
(1 + d)t
Where:
PV = Present Value
At = Amount of one-time cost at a time t
d = Real Discount Rate
t = Time (expressed as number of years)
To determine the present value of future recurring costs the following formula is used:
PV = A0 x (1 + d)t - 1
d x (1 + d)t
Where:
PV = Present Value
A0 = Amount of recurring cost
d = Real Discount Rate
t = Time (expressed as number of years)

Selection of Project Alternatives
Prior to beginning a LCCA, project alternatives need to be established. These alternatives should be
distinctly different and viable solutions to the facility issue being addressed. The chosen alternative
is to be the most reasonable and cost-effective solution to the project problem. A minimum of three
different project alternatives should be incorporated into the LCCA. A brief description of each
project alternative and why it was chosen should be included in the LCCA.
Listed below are some possible project options that should be considered while selecting the most
viable, reasonable, and cost-effective alternatives. These options are based on statutory language
found in AS 14.11 and are included in the instructions to the annual CIP grant applications.
• Renovation and addition to the existing school facility
• Rental and remodel of an existing local facility
• Purchase and remodel of an existing local facility
• Alteration of the attendance area boundary
• Demolition of existing school and construction of a new school on the same site
• The use of double shifting or year round school
• Sale of existing school and construction of a new school on a new site
Renovation and addition to the existing facility must be considered as at least one of the project
alternatives for replacement school projects. A “No Action” alternative is not an acceptable project
alternative.
A LCCA for each of the selected project alternatives is to be generated using the Department of
Education & Early Development’s LCC spreadsheet or other software. The department’s spreadsheet
is available online at the department’s web site.

Completion of the Life Cycle Cost Analysis
A LCCA can be performed a variety of ways without compromising the results if the assumptions
that shape the LCCA employ reasonable and consistent judgement. Given the various methods used
to perform a LCCA, the Department of Education & Early Development has outlined the basic steps
for preparation of a LCCA below.
This is not intended to be the only way a LCCA should be prepared, but it is meant to clarify the
department’s expectations. This outline should also enable school districts to judge for themselves
the quality of services provided by their consultants.
The LCCA need only address cost categories that are pertinent to the scope of the project. However
to insure accurate comparison of alternatives, all LCCA evaluations of the project alternatives must
incorporate the same cost categories. The LCCA of each project alternative should include:
• A brief description of the project alternative
• A brief explanation as to why the project alternative was selected
• A brief explanation of the assumptions made during the LCCA
• Conceptual or schematic documentation indicating design intent of the alternative
• A site plan showing the integration of the proposed facility on the site and necessary site
improvements (for projects involving additions or new construction)
• A detailed LCCA of the project alternative
• A summary table that compares the total life cycle costs of Initial Investment, Operations,
Maintenance & Repair, Replacement, Residual Value of all the project alternatives
Initial Investment Costs

The first step in the completion of the LCCA of a project alternative is to define all the initial
investment costs of the alternative. Initial investment costs are costs that will be incurred prior to
the occupation of the facility. All initial costs are to be added to the LCCA total at their full value.
Appendix A lists the minimum initial investment cost categories that are to be addressed.

The level of detail of these costs should be commensurate with the level of project detail.
Construction costs can be derived by using the Department of Education & Early Development’s
Cost Model spreadsheet, construction cost literature, contractor quotes, or professional cost
consultants.
Operation Costs
The second step in the completion of the LCCA of a project alternative is to define all the future
operation costs of the alternative. The operation costs are annual costs, excluding maintenance and
repair costs, involved in the operation of the facility. Most of these costs are related to building
utilities and custodial services. All operation costs are to be discounted to their present value prior to
addition to the LCCA total. Appendix A lists the minimum operation cost categories that are to be
addressed in the LCCA.
Operation costs that are not directly related to the building should usually be excluded from the
LCCA. An example of a cost that should be excluded is the cost of office materials. While it is an
annual operating expense, it has nothing to do with the operation of the building but is rather, a
function of the building user.
However, should project alternatives generate different requirements of the user, it is appropriate to
include these costs. An example of such a situation is the comparison of a year round school
alternative with an alternative that uses the traditional nine month school season. It is quite possible
that the two alternatives would have different staffing requirements. While staffing is hardly a
building operation cost, it should be included in the LCCA to provide an accurate comparison of the
alternatives.
Maintenance & Repair Costs
The third step in the completion of the LCCA of a project alternative is to define all the future
maintenance and repair costs of the alternative. For simplicity, maintenance and repair costs have
been combined in the department’s LCCA spreadsheet. It should be noted that there is a distinct
difference between the two costs.
Maintenance costs are scheduled costs associated with the upkeep of the facility. An example of a
maintenance cost is the cost of an annual roof inspection and caulking of the

building’s roof penetrations. This task is a scheduled event that is intended to keep the building in
good condition.
Repair costs are unanticipated expenditures that are required to prolong the life of a building system
without replacing the system. An example is the repair of a broken window. This is an unscheduled
event that does not entail replacement of the entire window unit, merely the replacement of the
broken pane.
Some maintenance costs are incurred annually and others less frequently. Repair costs are by
definition unforeseen so it is impossible to predict when they will occur. For simplicity, maintenance
and repair costs should be treated as annual costs. All maintenance and repair costs are to be
discounted to their present value prior to addition to the LCCA total. Appendix A lists the minimum
maintenance and repair cost categories that are to be addressed in the LCCA.
It is important to note that all options are not created equal. At first glance, maintenance and repair
costs could be judged to be equal for all alternatives. However, the department urges districts to
delve deeper and ask “Is it possible that an alternative is more susceptible to damage than others?”
Facility location, age of building systems, and variations in exterior envelope area are just a few
factors that should be considered when estimating maintenance and repair costs for project
alternatives. Credible explanation of the district’s evaluation assumptions should be included in the
LCCA.
Due to the variation in the Alaskan climate and building conditions, the department recommends
using actual historical data and the district’s preventative maintenance plan to generate maintenance
and repair costs. Since maintenance and repair costs are typically part of the school’s operating
budget, historical costs for this work should be available. When actual maintenance costs are
unavailable, costs can be derived from use of available literature or cost consultants.
Replacement Costs
The fourth step in the completion of the LCCA of a project alternative is to define all the future
replacement costs of the alternative. Replacement costs are anticipated expenditures to major
building system components that are required to maintain the operation of a facility. All replacement
costs are to be discounted to their present value prior to addition to the LCCA total. Appendix A lists
the minimum replacement cost categories that are to be addressed in the LCCA.

Replacement costs are typically generated by replacement of a building system or component that has
reached the end of its useful life. An example of a replacement cost is the replacement of a boiler. A
boiler has a life expectancy that is shorter than that of the facility it serves. At some point it will fail
and require replacement to keep the facility operational.
Since we are using the constant-dollar approach to LCCA, the cost to replace a building component in
the future will be the same as the current cost of the building component plus demolition costs.
Replacement costs can be derived from use of the Department of Education & Early Development’s
Cost Model spreadsheet, construction cost literature, contractor quotes, historical data, or cost
consultants.
Residual Value
The fifth step in the completion of the LCCA of a project alternative is to define the residual value of
the alternative. Residual value, as defined earlier, is the net worth of a building or building system at
the end of the LCCA study period. This is the only cost category in a LCCA where a negative value,
one that reduces cost, is acceptable.
The residual value of a facility or building system is especially important when evaluating project
alternatives that have different life expectancies. An example is the evaluation of two roofing
alternatives, a metal roof and a composition shingle roof.
The shingle roof has a life span of 20 years where as the metal roof is expected to last 40 years. In a
LCCA over a 30-year study period the shingle roof will have to be replaced, thus incurring
replacement costs. The metal roof will not require replacement; thus no replacement costs will be
incurred. The residual value of each option is to be calculated as follows:
Metal Roof Residual Value = (Initial Cost) x (Age of Metal Roof/Metal Roof Life - 1)
Shingle Roof Residual Value = (Initial Cost) x (Age of Shingle Roof/Shingle Roof Life - 1)
The metal roof has a residual value of one quarter its initial cost because at the end of the study
period three-quarters of its intended life will have been consumed. The shingle roof has a residual
value of half its initial cost because a replacement roof was installed ten years prior. Thus, at the end
of the study period, half of the current shingle roof’s intended life will have been consumed.
The residual value of a project alternative can be established several different ways depending on
level of detail available. However, project solutions that opt for a new replacement facility in lieu of
renovation and addition to the existing facility should establish residual value on a building systems
basis.

Finalize LCCA
Once all pertinent costs have been established and discounted to their present value, the costs can be
summed to generate the total life cycle cost of the project alternative. After this has been done for all
the viable project alternatives, a summary of the results should be prepared. The summary of project
alternatives should compare the total life cycle costs of Initial Investment, Operations, Maintenance
& Repair, Replacement, Residual Value of all the project alternatives.
It is anticipated that the project alternative with the lowest overall life cycle cost will be the project
alternative presented in the school district’s Capital Improvement Project (CIP) request.

Summary
This handbook was created to assist school districts and consultants in the Life Cycle Cost Analysis
of proposed educational facility construction projects. The Department of Education and Early
Development is responsible for ensuring that funded projects are in the best interest of the State of
Alaska and are cost-effective solutions. The submittal of realistic LCCA assists in such a
determination.
Unfortunately, not all grant applications have convinced the department that the proposed project was
the best and most cost-effective solution. Problems encountered with LCCAs have ranged from
faulty methodology to the use of “straw man” alternatives. To assist school districts in avoiding the
problems that have surfaced in previous LCCAs, the following list of suggestions is provided:
• Evaluate all project alternatives by the same cost categories, over the same study period, using
the same discount rate.
• Include only cost categories that are pertinent to the project scope. If one project alternative
incurs costs in a specific cost category, that cost category must be included in all other project
alternatives even if no costs are incurred.
• Use the constant-dollar approach to LCCA. This is especially important when defining
Replacement Costs.
• Include demolition costs of a building component or system when calculating its Replacement
Cost.
• Project alternatives that surplus buildings to the State of Alaska are required to include the
cost of demolition in their LCCA.
• Project alternatives that surplus buildings to the local community are required to include the
cost of hazardous material abatement in their LCCA.
• Define at least three viable project alternatives for further study. The selected alternatives
should be distinctly different to cover the spectrum of possible options. A “No Action”
alternative is not considered a viable project alternative.
• All project alternatives must be viable options (i.e. no “straw man” alternatives).
• Address why a project alternative is in the best interest of the State of Alaska.

Closing
The guidelines incorporated in this handbook are intended to assist Alaska school districts with the
evaluation of various educational facility project alternatives using LCCA. The process of
performing a LCCA will heighten understanding of the proposed project among designers and district
representatives. Often, cost saving ideas are generated that can be applied to more than one
alternative. These ideas can direct the final design of a project toward cost-effective construction and
enhance the overall value of a project.
The use of LCCA enables projects to be evaluated by their long-term costs rather than just their initial
construction cost. This requires facility owners to consider the long-term operations and maintenance
costs of a facility design. The emphasis on future facility costs directly benefits school districts. A
building design that minimizes future operations and maintenance expenses leaves more money in the
school district’s operating budget, thus making more funds available for the education of the students.
The Department of Education & Early Development believes the implementation of proper LCCA
techniques will promote cost-effective design and construction practices. The long-term savings
generated by these efforts will benefit students, teachers, school districts, as well as the State of
Alaska.

Samples
Life Cycle Cost Analysis – Alternate #1

Samples
District: District Name

School: School Name
Project: Project Name
Project #: Project Number
GSF: 1 GSF
Quantity Unit Unit Cost Total Cost Years Present Value
Initial Expenses
Initial Investment Cost (one time start-up costs)
Construction Management 1 LPSM $0 $0 0 $0
Land Acquisition 1 LPSM $0 $0 0 $0
Site Investigation 1 LPSM $0 $0 0 $0
Design Services 1 LPSM $0 $0 0 $0
Construction 1 LPSM $0 $0 0 $0
Equipment 1 LPSM $0 $0 0 $0
Technology 1 LPSM $0 $0 0 $0
Indirect/Administration 1 LPSM $0 $0 0 $0
Art 1 LPSM $0 $0 0 $0
Contingency 1 LPSM $0 $0 0 $0
Future Expenses
Operations Cost (annual costs)
Heating Fuel 1 GALS $0.00 $0 20 $0
Electricity 1 KWH $0.00 $0 20 $0
Water and Sewer 1 LPSM $0 $0 20 $0
Garbage Disposal 1 LPSM $0 $0 20 $0
Custodial 1 LPSM $0 $0 20 $0
Grounds 1 LPSM $0 $0 20 $0
Lease 1 LPSM $0 $0 20 $0
Insurance 1 LPSM $0 $0 20 $0
Other 1 LPSM $0 $0 20 $0
Maintenance & Repair Cost (upkeep costs… estimate on annual basis)

Site Improvements 1 LPSM $0 $0 20 $0
Site Utilities 1 LPSM $0 $0 20 $0
Foundation/Substructure 1 GSF $0.00 $0 20 $0
Superstructure 1 GSF $0.00 $0 20 $0
Exterior Wall Systems 1 EWSF $0.00 $0 20 $0
Exterior Windows 1 GLSF $0.00 $0 20 $0
Exterior Doors 1 LEAF $0.00 $0 20 $0
Roof Systems 1 RFSF $0.00 $0 20 $0
Interior Partitions 1 PTSF $0.00 $0 20 $0
Interior Doors 1 LEAF $0.00 $0 20 $0
Interior Floor Finishes 1 FFSF $0.00 $0 20 $0
Interior Wall Finishes 1 WFSF $0.00 $0 20 $0
Interior Ceiling Finishes 1 CFSF $0.00 $0 20 $0
Interior Specialities 1 GSF $0.00 $0 20 $0
Conveying Systems 1 LPSM $0 $0 20 $0
Plumbing Piping 1 GSF $0.00 $0 20 $0

Samples

School: School Name
GSF: 1 GSF
Plumbing Fixtures 1 FIXT $0.00 $0 20 $0

Fire Protection Systems 1 GSF $0.00 $0 20 $0
HVAC Distribution 1 GSF $0.00 $0 20 $0
HVAC Equipment 1 LPSM $0 $0 20 $0
HVAC Controls 1 GSF $0.00 $0 20 $0
Electrical Service/Generation 1 LPSM $0 $0 20 $0
Electrical Distribution 1 GSF $0.00 $0 20 $0
Electrical Lighting 1 GSF $0.00 $0 20 $0
Special Electrical Systems 1 GSF $0.00 $0 20 $0
Equipment & Furnishings 1 LPSM $0 $0 20 $0
Other 1 LPSM $0 $0 20 $0
Replacement Cost (scheduled replacement of building system or component)

Other 1 LPSM $0 $0 1 $0
Residual Value (value of facility at end of study period)


Samples

School: School Name
GSF: 1 GSF

Other 1 LPSM $0 $0 1 $0
Total Life Cycle of Alternate #1 $0

Samples
Life Cycle Cost Analysis – Summary

Samples

School: School Name
Study Period: 20
Discount Rate: 3.10%
Life Cycle Costs of Project Alternatives

Alternate #1 Alternate #2 Alternate #3
Initial Investment Cost $0 $0 $0
Operations Cost $0 $0 $0
Maintenance & Repair Cost $0 $0 $0
Replacement Cost $0 $0 $0
Residual Value $0 $0 $0
Total Life Cycle Cost $0 $0 $0
GSF of Project 1 GSF 1 GSF 1 GSF

Initial Cost/ GSF $0.00 $0.00 $0.00
LCC/ GSF $0.00 $0.00 $0.00

APPENDIX A – Life Cycle Cost Categories
Initial Expenses
Initial Investment Cost (one time start-up costs)
Construction Management
Land Acquisition
Site Investigation
Design Services
Construction
Equipment
Technology
Indirect/Administration
Art
Contingency
Future Expenses
Operation Cost (annual costs)
Heating Fuel
Electricity
Water and Sewer
Garbage Disposal
Custodial
Grounds
Lease
Insurance
Maintenance and Repair Cost (scheduled & unscheduled upkeep costs)

Site Improvements
Site Utilities
Foundation/Substructure
Superstructure
Exterior Wall Systems
Exterior Windows
Exterior Doors
Roof Systems
Interior Partitions
Interior Doors
Interior Floor Finishes
Interior Wall Finishes
Interior Ceiling Finishes

Maintenance and Repair Cost (cont.)

Interior Specialties
Conveyance Systems
Plumbing Piping
Plumbing Fixtures
Fire Protection Systems
HVAC Distribution
HVAC Equipment
HVAC Controls
Electrical Service/Generation
Electrical Distribution
Electrical Lighting
Special Electrical Systems
Equipment & Furnishings
Replacement Cost (scheduled replacement of building systems or components)

Site Improvements
Site Utilities
Superstructure
Exterior Windows
Exterior Doors
Roof Systems
Interior Partitions
Interior Doors
Conveyance Systems
Plumbing Piping
Plumbing Fixtures
HVAC Distribution
HVAC Equipment
HVAC Controls
Electrical Lighting

Replacement Cost (cont.)

Residual Value (value of facility at end of study period)

Site Improvements
Site Utilities
Superstructure
Exterior Windows
Exterior Doors
Roof Systems
Interior Partitions
Interior Doors
Conveyance Systems
Plumbing Piping
Plumbing Fixtures
HVAC Distribution
HVAC Equipment
HVAC Controls
Electrical Lighting

APPENDIX B – Quantity Abbreviations
CFSF – Ceiling Finish Square Feet: sum of all interior areas that receive a ceiling finish.
EWSF – Exterior Wall Square Feet: sum of all exterior wall surfaces excluding windows and doors
but including exterior soffits.
FIXT – Plumbing Fixtures: sum of all plumbing fixtures that are connected to both supply and waste
piping.
FFSF – Floor Finish Square Feet: sum of all interior areas that receive a floor finish.
GALS – Gallons: sum of annual fuel consumed for heating and electrical generation.
GLSF – Glazing Square Feet: square feet of exterior windows.
GSF – Gross Square Feet: sum of the building’s interior spaces including wall area and mechanical
mezzanines.
KWH – Kilowatt Hour: sum of annual electricity usage.
LPSM – Lump Sum: estimated financial allowance for a work item.
LEAF – Door Leafs: sum of the number of door leafs. Double doors count as two leafs where as
single doors count as one leaf.
PTSF – Partition Square Feet: square feet of interior partitions. Exclude all exterior walls and count
only one face of the partition.
RFSF – Roof Square Feet: square feet of roof surface.
WFSF – Wall Finish Square Feet: sum of all interior areas that receive a wall finish, including
interior face of exterior walls.

Glossary
Constant-Dollars: dollars that have uniform purchasing power over time and that are not affected by
general price inflation or deflation.
Current-Dollars: dollars that do not have uniform purchasing power over time and that are affected
by general price inflation or deflation.
Discount Rate: the rate of interest that balances an investor’s time value of money.
Initial Investment Cost: any cost of creation of a facility prior to its occupation.
Life Cycle Cost: a sum of all costs of creation and operation of a facility over a period of time.
Life Cycle Cost Analysis: a technique used to evaluate the economic consequences over a period of
time of mutually exclusive project alternatives.
Maintenance Cost: any cost of scheduled upkeep of building, building system, or building
component.
Nominal Discount Rate: a discount rate that includes the rate of inflation.
Operating Cost: any cost of the daily function of a facility.
Present Value: the current value of a past or future sum of money as a function of an investor’s time
value of money
Real Discount Rate: a discount rate that excludes the rate of inflation.
Repair Cost: any cost of unscheduled upkeep of a building system that does not require replacement
of the entire system
Replacement Cost: any cost of scheduled replacement of a building system or component that has
reached the end of its design life.
Residual Value: the value of a building or building system at the end of the study period.
Study Period: the time period over which a Life Cycle Cost Analysis is performed.

Bibliography
Sieglinde K. Fuller and Stephen R. Petersen, NIST Handbook 135: Life Cycle Costing Manual for the
Federal Energy Management Program, Washington: U.S. Government Printing Office, 1996.
Alphonse Dell’Isola, Value Engineering: Practical Applications for Design, Construction,

Maintenance & Operations, Kingston MA: R.S. Means Company, Inc., 1997.
Stephen J. Kirk and Alphonse J. Dell’Isola, Life Cycle Costing for Design Professionals, McGraw-
Hill, Inc., 1995.
Wolter J. Fabrycky and Benjamin S. Blanchard, Life-Cycle Cost and Economic Analysis, Englewood
Cliffs, NJ: Prentice Hall, 1991.
American Society for Testing and Materials, Standard Practice for Measuring Life-Cycle Costs of
Buildings and Building Systems, Philadelphia: ASTM, 1994.


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State of Alaska - Department of Education & Early Development 1st Edition

Tim Mearig, AIA

Michael Morgan, PMP

State of Alaska - Department of Education & Early Development 1st Edition

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

Initial & Future Expenses

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

Real Discount Rate

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

• Renovation and addition to the existing school facility

• Rental and remodel of an existing local facility

• Purchase and remodel of an existing local facility

• Alteration of the attendance area boundary

• The use of double shifting or year round school

• Sale of existing school and construction of a new school on a new site

State of Alaska - Department of Education & Early Development

• A brief description of the project alternative

• A brief explanation as to why the project alternative was selected

• A brief explanation of the assumptions made during the LCCA

• Conceptual or schematic documentation indicating design intent of the alternative

• A detailed LCCA of the project alternative

Initial Investment Costs

State of Alaska - Department of Education & Early Development

Maintenance & Repair Costs

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

State of Alaska - Department of Education & Early Development

Life Cycle Cost Analysis – Alternate #1

State of Alaska - Department of Education & Early Development

District: District Name

Quantity Unit Unit Cost Total Cost Years Present Value

Maintenance & Repair Cost (upkeep costs… estimate on annual basis)

State of Alaska - Department of Education & Early Development

District: District Name

Quantity Unit Unit Cost Total Cost Years Present Value

Plumbing Fixtures 1 FIXT $0.00 $0 20 $0

Replacement Cost (scheduled replacement of building system or component)

Residual Value (value of facility at end of study period)

State of Alaska - Department of Education & Early Development

District: District Name

Quantity Unit Unit Cost Total Cost Years Present Value

Exterior Wall Systems 1 EWSF $0.00 $0 1 $0

Total Life Cycle of Alternate #1 $0

State of Alaska - Department of Education & Early Development

Life Cycle Cost Analysis – Summary

State of Alaska - Department of Education & Early Development

District: District Name

Life Cycle Costs of Project Alternatives

Total Life Cycle Cost $0 $0 $0

GSF of Project 1 GSF 1 GSF 1 GSF