MFA10103 (2012) - SCM - Lifecycle Assessment (Lect 10).ppt

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    LIFE CYCLE COST

    MA10103

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    Introduction

    For years, the architecture and construction industrieshave focused on two primary concerns in the creation ofbuildings.

    The first, of utmost importance to architects, is the designof a building.

    Is the building enjoyable to view and occupy?

    Does the organization of spaces enhance the usersprogram?

    The client expects an architect to be able to design abuilding that satisfies their aesthetic and functional goals

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    Introduction

    The second concern, the primary focusof contractors, is the construction of abuilding.

    How will the building be built?

    How much will the building cost?

    The client expects a contractor to beable to construct a sound building for theestimated construction cost.

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    Introduction

    These are typically the primary concernsof a client when the idea of constructinga building is addressed, so it is nosurprise that architects and contractorsfocus their efforts to this end.

    Granted, these are significant concerns,however they are not the only concernsthat should be addressed when planningfor the future.

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    Introduction

    A third concern that is receiving more

    attention as building owners investigate

    the economics of facility management, isthe cost of building operations over the

    life of a building.

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    Introduction

    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.

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    Introduction

    The sum of initial and future costs

    associated with the construction and

    operation of a building over a period oftime is called the life cycle cost of a

    facility.

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    Definition

    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.

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    Life Cycle Cost Analysis

    (LCCA) Life Cycle Cost Analysis (LCCA) is an

    economic evaluation technique that

    determines the total cost of owning andoperating a facility over period of time.

    Life cycle cost analysis is the evaluation

    of agency, user, and other relevant costs

    over the life of investment alternatives

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    The structure of LCC benchmark

    in

    Building Project

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    Life Cycle Cost Analysis (LCCA) in General

    Elements of Capital Cost

    Loan or Bond Fund Elements

    Energy Cost Elements

    Water Cost Elements

    Maintenance Cost Factors

    Design to Minimize MaintenanceNon-Uniform Maintenance Cost

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    Elements of Capital Cost

    * Construction cost

    Material

    Labor

    Special equipment and/or rigging

    Demolition

    Contractor overhead and profit Special consultants and/or design

    fees

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    Elements of Capital Cost

    Additional mechanical, structural, or

    electrical requirements associated with

    architectural alternative.

    Additional architectural, structural, or

    electrical requirements associated with

    mechanical alternatives.

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    Loan or Bond Fund Elements

    Percent of capital cost borrowed

    Interest rate

    Loan/Bond period

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    Energy Cost Elements

    Non-Thermal or "Base" Loads

    Lighting

    Domestic hot water heating

    Process loads are not included

    2. Thermal or "HVAC" Loads

    Heating/cooling energy to offset heat losses

    and gains

    Ventilation air heating and cooling

    HVAC fan/pump energy consumption

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    Water Cost Elements

    1. Indoor Water Consumption

    - Plumbing fixtures

    - HVAC- Water recovery/capture

    2. Outdoor Water Consumption- Landscape irrigation

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    Maintenance Cost Factors

    Owners resources and/or

    capabilitieslack of resources leads to

    deferred maintenance and reducedperformance life that increase

    maintenance costs!

    Quality of design

    Quality of construction

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    Design to Minimize Maintenance

    1.How can it be reached?

    2. How can it be cleaned?

    3. How long will it last?4. How can it be replaced?

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    Non-Uniform Maintenance

    CostMaintenance and repair costs that occur

    at regular, but multi-year

    intervalscaulking, painting, chillertesting, etc.

    Replacement cost required by elements

    having short economic lives.

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    ECONOMIC LIFE

    Time at which maintenance costs

    exceed replacement costs.

    Annual inflation factor

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    Component in a LCC Equation

    Cost

    Study Period

    Real Discount Rate Present Value

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    Initial & Future Expenses

    The first component in a LCC equation is cost.There are two major cost categories by whichprojects are to be evaluated in a LCCA.

    They are Initial Expenses and Future Expenses.

    Initial Expenses are all costs incurred prior tooccupation of the facility.

    Future Expenses are all costs incurred afteroccupation of the facility.

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    Study Period

    The second component of the LCC equation is time. Thestudy period is the period of time over which ownershipand operations expenses are to be evaluated.

    Typically, the study period can range from twenty to fortyyears, depending on owners preferences, the stability ofthe users program, and the intended overall life of thefacility.

    While the length of the study period is often a reflection ofthe intended life of a facility, the study period is usuallyshorter than the intended life of the facility.

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    Study Period

    The National Institute of Standards and Technology(NIST) breaks the study period into two phases:

    - the planning/construction period and

    - the service period.

    The planning/construction period is the time period fromthe start of the study to the date the building becomesoperational (the service date).

    The service period is the time period from date thebuilding becomes operational to the end of the study.

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    Real Discount Rate

    The third component in the LCC equation is thediscount rate.

    The discount rate, as defined by Life CycleCosting for Design Professionals, 2nd Edition,is the rate of interest reflecting the investorstime value of money.

    Basically, it is the interest rate that wouldmake an investor indifferent as to whether hereceived a payment now or a greater paymentat some time in the future.

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    Real Discount Rate

    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 realdiscountrate excludes the rate of inflation and

    the nominal discount rate includes the rate of

    inflation.

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    Present Value

    To accurately combine initial expenses

    with future expenses, the present value

    of all expenses must first be determined.