Article | 2010

Life Cycle Cost Analysis: Is it Worth the Effort?

By Kendra Tupper

Life cycle cost analysis (LCCA) is often considered important for both new and retrofit building construction projects but is rarely implemented, often because it is perceived to be “not worth the effort.” This paper addresses the question of whether an LCCA is worth the effort and shows that an LCCA leads to far different energy-efficiency recommendations than a simple-payback approach. This paper also addresses an overview of how to do an LCCA including establishing the baseline and bundling measures. Because the inclusion of additional cash flows or the impact on long-term operating costs can significantly alter the decision to include or exclude a particular measure, a simple-payback metric is not ideal. In sharp contrast, a comprehensive LCCA gives decision makers the full financial implications of various design decisions to make better decisions. The most time-intensive part of an LCCA is gathering the data inputs. This paper explains how this data can be collected in the most efficient way.