Transcript Life Cycle Cost Analysis and its use in the US Green
Life cycle cost analysis (LCC) in the United States green building industry.
Dave Nornes
Impact of the built environment
• 40% of the world’s energy • 25% of the timber harvested • 16% of the fresh water used • 50% ozone depleting CFC’s • 30% of raw materials used • 35% of CO 2 emissions • 40% of landfill waste
Green Building
“An integrated framework of design, construction, operations, and demolition practices that encompass the environmental, economic, and social impacts of buildings.” “Building practices recognizing the interdependence of the natural and built environment and seek to minimize the use of energy, water, and other natural resources while providing a healthy and productive indoor environment.”
Green Building
• Sustainable • Durable/Adaptable • Building beyond the codes • Build for the occupant • Whole systems approach
Barriers to Green
• Codes • Education • Cost • Products not available • Breaking tradition
Reasons to Build Green
• Mandated • Market demands • Occupant comfort and health • Save $ • Environmental responsibility
Reasons to build green
“Building to code means that if a building were designed any worse it would be against the law.” Randy Croxton, Architect
Life Cycle Costing
Economic assessment of alternatives that considers all of the significant costs of ownership over the useful life expressed in equivalent dollars.
• initial costs • financing costs • operational costs
History of LCC
1933-- Comptroller of the U.S. Government • factored maintenance costs in bids for tractor acquisition 1940-- WW II • Shortage of materials and labor .
• Lawrence D. Miles (General Electric Inc.) created value engineering model for substitute materials and procedures.
LCC applied to buildings
1970’s--U.S. General Accounting Office applied LCC to hospital facilities.
• Operation and Maintenance costs equal initial investment costs in 1-3 years.
• Focused primarily on energy costs.(Arab oil embargo)
Standardized LCC methods
American Society for Testing and Materials (ASTM) 1980--Set a series of standards for building economics.
• LCC analysis • Benefit to Cost Ratio • Internal Rate of Return (IRR) • Net Benefits • Payback Period
LCC characteristics
LCC treats design decisions as investments in buildings and building components.
LCC compares the estimated costs of different options taking into account both initial capital costs as well as costs that may be incurred over the life cycle.
LCC objectives
To provide an analytical tool that can establish the interaction between planning and design decisions and long term costs.
To promote interdisciplinary communication and look at the building as a whole and not merely its component parts.
Recent LCC trends
• Infrastructure – durability/ longevity • Federal/State Buildings – efficiency/ obsolescence • Green Buildings – LCC/ LCA studies
LCC Uncertainties
• Input data – estimating – assumptions • Parameters – discount rate – useful life/ study period – future prices
Literature
LCC importance to promote green features.
Little evidence exists about if, who, how, and where LCC is applied.
Statement of the Problem
Green building initiatives are predicated on the fact that benefits accrue over the life of the building.
Use of LCC is needed to increase adoption of green building practices.
Research Questions
1. What are the goals of LCC?
2. Who are the drivers of the studies?
3. To which types of projects is LCC applied?
4. Which building components are analyzed?
5. What constraints are faced with LCC?
Methodology
Survey Research Human Characteristics • thoughts • behaviors
Instrument
Web-based questionnaire – 18 scaled, nominal, and ordinal questions • Part 1- set framework for parameters of study • Part 2- specific use and application – 3 open ended response questions • Part 3- LCC and Green building (opinions and perceptions)
Sample
Sample Population LEED registered project contacts • 1000 cover letters with hyperlink to questionnaire
Response rate
104 total responses (10.4 %) – 84 questionnaires completed
Figure 1. Occupation of respondents
45% Architects 17% Engineers 9% Consultants Facility manager Developer Other Consultant Project manager Engineer Architect
Findings
Current use of life cycle cost analysis
Projects utilizing LCC
70 60 50 40 30 20 10 0 0-25% 25-50% 50-75%
Percentage of projects
75-100% LEED projects All projects
Findings
Types of projects utilizing LCC
Project types using LCC
Highway/Infrastructure Institutional Residential Renovations Commercial Private Public 0 5 10 15 20 25
Responses
30 35 40 45 50
Findings
Team member(s) initiating the interest of conducting LCC Individual responsible for the analysis
LCC Driver and Analyst
60 50 40 30 20 10 0 Analyst Driver
Findings
Goals of the LCC
Goals of the project’s LCC
Goal
Reduce operation/ maintenance costs Extend useful life/durability Increase occupant productivity/comfort Conserve natural resources Future facility alteration Lower construction costs Meet government mandates
Very important
55 47 31 27 17 16 15
Somewhat important
8 12 24 29 37 36 25
Not important
9 9 0 4 8 7 21
Response Avg.
1.13
1.32
1.63
1.68
1.87
1.89
2.1
Findings
LCC application to building components
LCC application in predictive analysis
Building component
HVAC system Lighting/day-lighting Operations and maintenance Windows Insulation Water conservation Exterior finishes/Roofing Size of building Interior finishes Renewable energy Disposal/deconstruction Foundation/structural elements
Always
41
27
27
23
21 19
23 11
10
17
5
4 Sometimes
23
30
26
29
31 27
22 14
21
25
20
13 Seldom
1
7
8
9
10 16
15 20
17
19
19
30 Never
0
2
1
0
2 2
4 16
16
2
20
16 Weighted avg.
1.38
1.69
1.76
1.84
1.86
2.02
2 2.67
2.61
2.1
2.84
2.92
Positive pay off
94%
75%
59%
50%
45% 45%
34% 22%
17%
13%
11%
3%
Findings
Accuracy of LCC projections
Accuracy of LCC projections
Building component Lighting/day-lighting HVAC system Water conservation Operations and maintenance Windows Exterior finishes/Roofing Size of building Insulation Interior finishes Foundation/structural elements Disposal/deconstruction Renewable energy Better than or equal to projected 26 29 21
20
13
9
9
13
7
3
4
7
Less than projected 7 12
2
4 8
8
4
9
3
4
6
14
No post construction follow-up 20 13 23
20
33
38
35
29
34
37
33
24
Weighted avg.
19 17 13
12
9
7
5
4
4
-1
-2
-7
Findings
Constraints encountered in the LCC
Constraints encountered in LCC
Lack of savings justified Added time involved Inaccurate input data Added cost involved Forecasting uncertainties/ complex tools 0 5 10 15 20 25
Responses
30 35 40 45
Conclusions
Why do you suspect you are not using or under utilizing LCC on the LEED project you are associated with?
• • • Shift costs/ budget Lack of expertise/user friendly tools Lack of time
• • •
Conclusions
Where are improvements needed in the LCC process?
User friendly tools Better input data Owner education benefits
Conclusions
Do you think LCC is an effective tool to increase sustainable building practices?
No 11% Yes 89%
Future Research
How can the cost to perform an LCC be justified?
How can the time to perform an LCC be reduced?
What improvements are needed in LCC software?
How can the industry have better trained LCC practitioners?