There are many hurdles to overcome when completing a life cycle cost assessment. LCCAs have been praised by some and criticized or viewed with skepticism by others. Some AEC professionals like to use LCCAs to provide evidence that a certain design with a higher first cost attached to it actually achieves lower total cost of ownership over time.
Such an analysis, however, is only as good as the data that is used to complete it; in the end, you have to be able to justify and defend your results. When completing an LCCA, it is important to remain neutral and to use unbiased data.
Following are some words of advice regarding LCCAs, based on RMF Engineering’s experience on the Berkeley County School District HVAC study.
1. AVOID USING A “SIMPLE PAYBACK” METHODOLOGY. As the name implies, simple payback is a rudimentary methodology, and the results can be unsophisticated and even misleading. This method should not be used as an in-depth LCCA tool.
2. DON’T HIDE YOUR ASSUMPTIONS. The paucity of data on certain costs means that you will have to make assumptions, but these should not be allowed to affect the outcome of the analysis. It is important to thoroughly document all assumptions, costs, and calculations used in the analysis.
3. GET YOUR CONSTRUCTION DATA FROM THE BEST AVAILABLE SOURCES. Not many contractors and sales representatives are willing to divulge their actual cost for equipment, materials, and installation. Usually the best they will give you is the cost in dollars per square foot, which, unfortunately, is not sufficiently detailed to provide a proper analysis.
For HVAC life cycle cost analyses, manufacturers will often provide budget pricing for specific pieces of equipment, which can be useful. Resources such as RSMeans and published pricing guides for piping and other materials are also great resources for calculating cost and should be used instead of general cost.
4. MAKE THE EFFORT TO GET SOLID MAINTENANCE DATA. It is important to have a clear understanding of how an HVAC system will be maintained as well as how much it will cost the owner to maintain. Some owners prefer to do their own maintenance; others contract maintenance out. Some perform maintenance at regularly scheduled intervals; others wait until the equipment breaks down. Maintenance is probably the most poorly documented cost item in most LCCAs, but it can have a major impact on the accuracy and validity of the analysis. Make sure your maintenance data is up to date and specific to your project.
5. NAIL DOWN THE OWNER’S EXPERIENCE WITH EQUIPMENT LIFE. The life cycle of equipment varies by owner and can be drastically different than the manufacturer’s reported data. When comparing different types of systems, it’s important to discuss the owner’s experience with equipment life and how long they plan to use certain products. Any sharp differentiation from the norm could have a significant impact on the outcome of your analysis.
6. ANALYZE THE RESULTS CAREFULLY TO DETERMINE THE LEVEL OF CERTAINTY. For the BCSD project, the difference between the least expensive and next least expensive system was significant (13.1%), so we were comfortable in recommending it. Unfortunately, not every LCCA results in a clear winner. Each analysis will have a different level of uncertainty associated with it due to the assumptions, variables, and the analysis type. The more variables and assumptions there are, the higher the level of uncertainty. There are often intangibles that cannot be associated with a quantifiable cost, and one of these might end up becoming the deciding factor in your analysis.
7. LOOK FOR LCCA FUNDING FROM NON-CLIENT SOURCES. For the Berkeley County SD project the local utility cooperative, which happens to place a great deal of value on customer education, offered to partially fund the study in order to have access to the data. When proposing an LCCA to a client, check around to see who else could benefit from the analysis. There may be funding available to offset the cost to the owner or provide additional funding for a more in-depth study.
8. EXPECT THE UNEXPECTED. For our project, we originally modeled gas boilers for the water-source heat pump system to be similar to the four-pipe system. The energy models showed that there was virtually no requirement for heating of the condenser water loop due to our building type and climate. We suspected this might be the case because a nearby high school had been operating without a boiler and did not have heating problems. It was later decided that an electric boiler would be a better fit for the school district’s HVAC systems because its initial cost and associated annual maintenance costs would be far less than a gas boiler. It’s likely that you will face similar unanticipated results in future projects, so be prepared.
Related Stories
| Nov 16, 2010
Architecture Billings Index: inquiries for new projects remain extremely high
The new projects inquiry index was 61.7, down slightly from a nearly three-year high mark of 62.3 in September, according to the Architecture Billings Index (ABI). However, the ABI dropped nearly two points in October; the October ABI score was 48.7, down from a reading of 50.4 the previous month. The ABI reflects the approximate nine to 12 month lag time between architecture billings and construction spending.
| Nov 16, 2010
Brazil Olympics spurring green construction
Brazil's green building industry will expand in the coming years, spurred by construction of low-impact venues being built for the 2016 Olympics. The International Olympic Committee requires arenas built for the 2016 games in Rio de Janeiro meet international standards for low-carbon emissions and energy efficiency. This has boosted local interest in developing real estate with lower environmental impact than existing buildings. The timing couldn’t be better: the Brazilian government is just beginning its long-term infrastructure expansion program.
| Nov 16, 2010
Green building market grows 50% in two years; Green Outlook 2011 report
The U.S. green building market is up 50% from 2008 to 2010—from $42 billion to $55 billion-$71 billion, according to McGraw-Hill Construction's Green Outlook 2011: Green Trends Driving Growth report. Today, a third of all new nonresidential construction is green; in five years, nonresidential green building activity is expected to triple, representing $120 billion to $145 billion in new construction.
| Nov 16, 2010
Calculating office building performance? Yep, there’s an app for that
123 Zero build is a free tool for calculating the performance of a market-ready carbon-neutral office building design. The app estimates the discounted payback for constructing a zero emissions office building in any U.S. location, including the investment needed for photovoltaics to offset annual carbon emissions, payback calculations, estimated first costs for a highly energy efficient building, photovoltaic costs, discount rates, and user-specified fuel escalation rates.
| Nov 16, 2010
CityCenter’s new Harmon Hotel targeted for demolition
MGM Resorts officials want to demolish the unopened 27-story Harmon Hotel—one of the main components of its brand new $8.5 billion CityCenter development in Las Vegas. In 2008, inspectors found structural work on the Harmon didn’t match building plans submitted to the county, with construction issues focused on improperly placed steel reinforcing bar. In January 2009, MGM scrapped the building’s 200 condo units on the upper floors and stopped the tower at 27 stories, focusing on the Harmon having just 400 hotel rooms. With the Lord Norman Foster-designed building mired in litigation, construction has since been halted on the interior, and the blue-glass tower is essentially a 27-story empty shell.
| Nov 16, 2010
Where can your firm beat the recession? Try any of these 10 places
Wondering where condos and rental apartments will be needed? Where companies are looking to rent office space? Where people will need hotel rooms, retail stores, and restaurants? Newsweek compiled a list of the 10 American cities best situated for economic recovery. The cities fall into three basic groups: Texas, the New Silicon Valleys, and the Heartland Honeys. Welcome to the recovery.
| Nov 16, 2010
Landscape architecture challenges Andrés Duany’s Congress for New Urbanism
Andrés Duany, founder of the Congress for the New Urbanism, adopted the ideas, vision, and values of the early 20th Century landscape architects/planners John Nolen and Frederick Law Olmsted, Jr., to launch a movement that led to more than 300 new towns, regional plans, and community revitalization project commissions for his firm. However, now that there’s a societal buyer’s remorse about New Urbanism, Duany is coming up against a movement that sees landscape architecture—not architecture—as the design medium more capable of organizing the city and enhancing the urban experience.
| Nov 16, 2010
Just for fun: Words that architects use
If you regularly use such words as juxtaposition, folly, truncated, and articulation, you may be an architect. Architects tend to use words rarely uttered during normal conversations. In fact, 62% of all the words that come out of an architects mouth could be replaced by a simpler and more widely known word, according to this “report.” Review this list of designer words, and once you manage to work them into daily conversation, you’re on your way to becoming a bonafide architect.
| Nov 16, 2010
NFRC approves technical procedures for attachment product ratings
The NFRC Board of Directors has approved technical procedures for the development of U-factor, solar heat gain coefficient (SHGC), and visible transmittance (VT) ratings for co-planar interior and exterior attachment products. The new procedures, approved by unanimous voice vote last week at NFRC’s Fall Membership Meeting in San Francisco, will add co-planar attachments such as blinds and shades to the group’s existing portfolio of windows, doors, skylights, curtain walls, and window film.
