An Introduction into Life-cycle Cost Analysis

A life-cycle cost analysis (LCCA) is typically carried out in order to calculate the total cost of ownership of a facility. This assessment takes into consideration all costs involved in buying, maintaining and disposing of a building system or individual building.

This method is particularly useful when comparing project options which may increase initial cost but result in dramatically reduced operating and maintenance costs over the lifecycle of a project. Along with accounting for the initial capital expenditure LCCA includes operating costs such as fuel, maintenance, an appropriate discount factor and inflation, replacements costs and the residual value of the equipment or other option.

Decisions about building-related investments can involve an element of uncertainty about their costs and potential savings. Performing an LCCA greatly increases the likelihood of choosing project options which save money in the long run, is far more appropriate then simple payback, and gives a better understanding of the economics of design choices by relating it to Net Present Value (NPV) and Return on Investment (ROI).

At Varming Consulting Engineers, we have a large team of dedicated professionals in the primary construction fields, such as education, leisure, retail, Industry and tourism. We provide a culture of innovation and proactive participation and we try, through blogs like this one, to spread knowledge of the industry and burgeoning technologies.

If you have any question concerning your own projects, you should give us a call at our Dublin headquarters on 01 4872300 or visit our website www.varming.ie.

Our team of knowledgeable experts are always on hand with advice and guidance.