Life Cycle Cost Analysis provides a method for comparing two or more functionally similar aspects of a building component. Each must have a specific first cost (capital) and a predictable second cost (operations). Calculations may be made for any period of time.
The FAI/CBP module provides several financial analyses. The LCC analysis
consists of a standard worksheet where certain variables are entered,
basically; Interest Rates, Inflation Rates for both operation and energy,
Capital Costs and Operating Costs. Depreciation and tax rates are
automatically factored for for-profit businesses.
All of the data is loaded automatically from
the Worksheet except for columns P, Q, R & S in the Spreadsheet. The Spreadsheet calculations
(shown below) are done
automatically (click here to
spreadsheet in new window). The objective of the Life Cycle Cost Analysis is to determine the total net expense. However, the net expense must be stated in present value in order to accommodate the time value of money. The total present value net expense is shown in column X for each option.