Life Cycle Cost Analyses

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 view 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.

An example of one of the spreadsheets for the 3 options is shown above. The initial capital requirements are higher for Option 3 over Options 1 & 2. However, Option 3 results in approximately $200,000 in savings. 

Option 1: Replace the 40,000 SF roof with a 20-year roof. The insulation will be R-18. In year 20 apply a flood coat. Option 2: Maintain the existing roof for a few more years knowing the R value is low, and that maintenance costs will continue. In year 6, make repairs and apply a flood coat. In year 12 apply a new 20 year roof with R-18 insulation. Option 3: Replace the 40,000 SF roof with a new 20-year roof. Increase the insulation value to R-28. In year 20 apply a flood coat.

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