Symmetry Builders, Inc. is involved in the design process of nearly every project. Despite most design conversations focusing on low-cost solutions many developers want to explore the complete costs of their project throughout its lifespan. This effort is most often referred to as Life Cycle Cost Analysis (LCCA) which refers to the total cost of facility ownership specific to individual building systems. This blog intends to describe that process and its intricacies.
Throughout the design process, critical decisions are made relative to construction types, system types, and individual product selections. These conversations include initial cost, aesthetics, constructability, durability/functionality, maintenance requirements/costs, utility costs (i.e. operating costs), non-monetary benefits and life span.
The life cycle cost analysis process focuses on the overall costs of ownership which includes the initial costs, maintenance costs, utility costs, and life span. These costs and durations are unique to each project and require both experience with each product and costing to make educated decisions.
During pre-construction the design team will identify a few design variables they are considering as well as ask for contractor opinions of options to consider. These components are then integrated into a comparison tool (typically Excel or similar) to view side by side comparisons of each variable. This could look something like this:
|BUILDING SYSTEMS||INITIAL COST||OPERATING COST (PER YEAR)||MAINTENACE COSTS (PER YEAR)||LIFE SPAN (YEARS)||10-YR COST OF OWNERSHIP||15-YEAR COST OF OWNERSHIP||20-YEAR COST OF OWNERSHIP||25-YEAR COST OF OWNERSHIP||30-YEAR COST OF OWNERSHIP|
|SYSTEM 1||$125,000.00||$15,000.00||$1,000.00||20||$285,000.00||$365,000.00||$445,000.00||Repl. Req’d||n/a|
|SYSTEM 2||$200,000.00||$9,000.00||$1,250.00||15||$302,500.00||$353,750.00||Repl. Req’d||Repl. Req’d||n/a|
|SYSTEM 3||$250,000.00||$5,000.00||$800.00||25||$308,000.00||$337,000.00||$366,000.00||$395,000.00||Repl. Req’d|
This is an intuitive tool to identify the pros and cons of evaluating these varying systems and whether they’re an appropriate solution for a project. These variables need to be considered by the development team and incorporated into their development of pro forma’s to identify the correct path.
Exploring These Factors
It’s important to understand how these costs and factors are identified such that expectations are clearly managed. This information is conceptual in nature and includes are Rough Order of Magnitude (ROM) pricing, budgetary annual costs, and typical life spans. Let’s review how these are developed and quantified.
Early in the design process as a building is beginning to take shape (i.e. pre-schematic design) the design team and/or general contractor begin to conceptualize building systems/components. It’s common that two to three options are considered and need to be evaluated. The team will develop some high-level preliminary design criteria to evaluate initial costs.
These are ‘rule of thumb’ methods of sizing building systems such as square foot (sf) per ton, btu/h per sf, pounds per sf, %, etc. By applying these unitary measurements to the overall building program, the team can identify relative initial costs for different systems. Overall construction duration is also considered during this effort as that can affect the overall project budget.
OPERATING & MAINTENANCE COSTS:
O&M Costs include the cost to operation (i.e. energy/utility costs) as well as costs associated to keep the system in good working order, i.e. maintenance costs. Maintenance costs can also include replacement parts (i.e. filters, touch-up, cleaning), preventative replacement parts, routine technician visits, etc. Developing these projected maintenance costs requires working with local representatives of each proposed system/component to understand their required upkeep.
This is the expected lifespan of the systems/building component. This information is typically available from manufacturer representatives and also engineering team members. Proper budgeting for O&M Costs can and will increase the life span substantially.
COST OF OWNERSHIP:
This is a total of Initial Costs plus O&M Costs over the Life Span of the product. It’s important to recognize the total cost of ownership does not include replacement costs down the road. The substantial cost of ownership differences can be witnessed between lower initial cost solutions with higher O&M costs and smaller life spans and higher upfront cost solutions that minimize O&M costs and last significantly longer.
As mentioned previously, there are extensive considerations beyond LCCA such as aesthetic, constructability, functionality, and non-monetary implications (such as environmental comfort, desirability, availability, etc.). These factors are specific to the development team and also local code requirements. The development team should consider these factors in addition to the LCCA factors.
Identifying the Right Solution Using Life Cycle Cost Analysis
Every building is unique and the decision-making process for building systems/components will vary between each effort. A few typical questions a development team must ask itself are:
- Which element of LCCA is most important to you: Initial Cost, O&M Costs, Life Span, or Total Cost of Ownership?
- Does my jurisdiction specify energy efficiency requirements?
- Does my team have the maintenance staff/capabilities to maintain these systems throughout its lifespan?
- Will this system/component accomplish my goals for the building?
The Life Cycle Cost Analysis process is critical in identifying the ideal approach for a project. It does, however, require an educated and experienced team to provide accurate information. Symmetry Builders, Inc. is not only capable but encourages these conversations and efforts on every project. Please reach out to the Symmetry team and we’ll happily help you with your project needs.