LIFE CYCLE COSTING (LCC) for GREEN BUILDING DESIGN

LIFE CYCLE COSTING (LCC)
for
GREEN BUILDING DESIGN
Based on ASTM and ISO
Building Economics Standards
d
Robert P. Charette, Concordia University
1

Objectives
• Present LCC analysis based on ASTM
and ISO Building Economics Standards
• Illustrate how LCC is used to evaluate
investments in buildings
• Present LCC application examples
2

Outline
1. The Notion of Life Cycle Costing
2. Data Requirements
3. Present Value Factors
4. Calculating Life Cycle Costs
5. Supplementary Evaluation Measures for
Building ud Investments
ets
6. Integrating LCC in the Design Process
7. LCC Application Examples
3

1. The Notion of
Life Cycle Costing
4

Life-Cycle Cost Analysis
(LCCA)
A method of economic analysis that sums
up, over a given study period, all relevant
costs of a building, building system, or
building component, in present value (PV)
dollars, today’s dollar.
5

Initial Cost – Office Building - $100 / SF
Uniformat Categories:
% of Total Building Cost
01 Foundation
3%
02 Substructure
3%
03 Superstructure
04 Exterior Closure
05 Roofing
1%
06 Interior Construc.
07 Conveying System
5%
08 Mechanical:
Plumbing
5%
HVAC
Fire Protection
3%
09 Electrical
11 Equipment
4%
12 Sitework 4%
5% 10% 15% 20%
12%
12%
15%
16%
17%
Source: Means Life Cycle Costing For Facilities
6

Life Cycle Cost – Office Building - $200 / SF
Initial Cost
Operational Cost
Uniformat Categories:
01 Foundation
02 Substructure
03 Superstructure
04 Exterior Closure
05 Roofing
06 Interior Construc.
07 Conveying System
08 Mechanical:
Plumbing
HVAC
Fire Protection
09 Electrical
11 Equipment
12 Sitework
Life Cycle Cost – Present Value $ / ft 2
$2 $4 $6 $8 $10 $12 $14 $16 $18 $20
Source: Means Life Cycle Costing For Facilities
7

Life Cycle Cost Approaches
$/SF
Total $200
$190
-5%
$175
-12.5%
100 $ 85 $
80 $
PV Operational
a
Costs
PV Investment
Costs
100 $ 105 $ 95 $
Conventional
Baseline
Design
Traditional
Options
Green/
Sustainable
Option
8

ASTM Standards
Present Value Factors (4) – E917
SPV
UPV
SPV*
UPV*
Evaluation Measures (4)
NS – E1074
SIR – E964
AIRR – E1057
DPB – E1121
9

2. Data Requirements for LCC
10

Data Requirements for LCC
A. Investment costs
B. OM&R costs
C. Cyclical renewal costs
D. Financial criteria
d – discount rate %
e – escalation rate %
n – study period years
11

3P 3.Present tValue Factors
12

Four Present Value Factors
From Financial Tables
1. SPV - Single Present Value (w/o escalation)
2. UPV - Uniform Present Value (w/o escalation)
3. SPV* - Modified Single Present Value
(with escalation)
4. UPV*- Modified Uniform Present Value Value
(with escalation))
13

Designation: E 917 - 05
Standard Practice for Measuring Life-Cycle
Costs of Buildings and Building Systems
Source: The American Society for Testing and Materials (ASTM)
14

d= 8% d= 8%
UPV* - Modified Uniform Present Value Factors
Discount Rate d = 8%
Escalation Rates
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%
Year
Year
1 0,926 0,935 0,944 0,954 0,963 0,972 0,981 0,991 1,000 1,009 1,019 1,028 1,037 1
2 1,783 1,810 1,836 1,863 1,890 1,917 1,945 1,972 2,000 2,028 2,056 2,084 2,112 2
3 2,577 2,628 2,679 2,731 2,783 2,836 2,890 2,945 3,000 3,056 3,112 3,170 3,228 3
4 3,312 3,393 3,474 3,558 3,643 3,730 3,818 3,908 4,000 4,093 4,189 4,286 4,384 4
5 3,993 4,108 4,226 4,347 4,471 4,598 4,729 4,863 5,000 5,141 5,285 5,432 5,584 5
6 4,623 4,777 4,936 5,099 5,268 5443 5,443 5,623 5,809 6,000 6197 6,197 6,401 6,611611 6,828 6
7 5,206 5,402 5,606 5,817 6,036 6,264 6,500 6,745 7,000 7,264 7,538 7,823 8,118 7
8 5,747 5,987 6,239 6,501 6,776 7,062 7,361 7,674 8,000 8,341 8,696 9,068 9,455 8
9 6,247 6,534 6,837 7,154 7,488 7,838 8,207 8,593 9,000 9,427 9,876 10,35 10,84 9
10 6,710 7,046 7,401 7,777 8,173 8,593 9,036 9,505 10,00 10,52 11,08 11,66 12,28 10
11 7,139 7,525 7,935 8,370 8,834 9,326 9,850 10,41 11,00 11,63 12,30 13,01 13,77 11
12 7,536 7,972 8,438 8,937 9,469
10,04 10,65 11,30 12,00 12,75 13,55 14,40 15,32 12
13 7,904 8,391 8,914 9,476 10,08 10,73 11,43 12,19 13,00 13,87 14,82 15,83 16,92 13
14 8,244 8,782 9,363 9,991 10,67 11,41 12,20 13,07 14,00 15,01 16,11 17,30 18,59 14
15 8,559 9,148 9,787 10,48 11,24 12,06 12,96 13,94 15,00 16,16 17,43 18,81 20,31 15
15

4.Calculating Life Cycle Costs
16

Life Cycle Cost Convention
PV
Investment
Costs
+
PV
Operational
Costs
All costs in today’s $
17

A - Investment Costs
Today’s Dollar - PV
• Initial Cost – I 0
• Capital Replacement Costs - Rep
• Residual / Salvage Value ± Res
= [ I 0 + Repl ± Res ]
18

B - Operational Costs
Today’s Dollar - PV
• Energy Costs - E
•Operations,Maintenance, & Repair Costs
- OM&R
= [E+OM&R]
19

Example – LCC of Competing
Heating / Cooling Systems
• System A: Electric baseboard and
window air conditioner
• System B: Heat Pump
Financial Criteria:
Discount Rate d = 8% Energy Escalation e e = 6%
Maintenance Escalation e m = 5% Study Period n = 15 years
20

System A: Electric Baseboard
and
Window Air Conditioner
‣ Investment Related Costs
Initial Cost – I o $1,500
Replacement Cost Year 8 (Base Yr $) $400
Residual Value (Year 15 $) $150
‣ Operation Related Costs
Base Year Electric Energy Cost $1,200
Base Year OM&R Cost $50
21

LCC System A
PV
Investment
Costs
+
PV
Operational
Costs
= $1,772 + $16,156 = $17,927
22

System B: Heat Pump
‣ Investment Related Costs
Initial Cost – I o $3,000
Replacement Cost Year 8 (Base Yr $) $600
Residual Value (Year 15 $) $300
‣ Operation Related Costs
Base Year Electric Energy Cost $820
Base Year OM&R Cost $180
23

LCC System B
PV
Investment
Costs
+
PV
Operational
Costs
=$3,384 + $12,798 = $16,182
LCC System B $1,745 less or 10% less
24

5. Supplementary Evaluation Measures
25

Supplementary Evaluation Measures
1. Net Savings - (NS) E1074
2. Savings-to-Investment Ratio - (SIR) E964
3. Adjusted Internal Rate of Return - (AIRR) E1057
4. Discounted Payback - (DPB) E1121
26

Example - NS, SIR, AIRR, DPB
Attic Roof Insulation – R11 to R19
Additional Investment Cost – I $1500
Annual Energy Savings – A 0 $260
Financial Criteria:
d = 8% e e = 6% n = 30 yrs
27

Suplementary Evaluation Measures
Additional Investment of $1,500 for Insulation
1. Net Savings (NS) $4,420
2. Savings-to-Investment Ratio (SIR) 3.9
3. Adjusted Internal Rate of Return (AIRR) 13%
4. Discounted Payback (DPB) 6.2 years
28

6. Integrating LCC in the Design
Process
29

Integrating LCC into the Design
Process
30

Integrating g LCC in Design
The Problem
• Usually incomplete data at the Schematic Phase
– Design data, cost data, energy data
This data necessary for LCC calculations
Decisions are virtually irreversible later – no LCC possible
• A design management problem !!!!!
- Few if any directives issued requiring this data
at the Schematic Phase of design
31

Part of the Solution
An Integrated Design Process (IDP) with all stakeholders
that includes at the Schematic Phase:
----------------------------------------------------------------------------
• A Baseline Preliminary Project Description (PPD) in
accordance with CSI/CSC Practice FF/180
• An Elemental Cost Estimate With Analytic Parametrs
• An Energy Analysis Simulation Model
32

© The Construction Specifications Institute
Manual of Practice FF/180
Chart 3.4 Preliminary Project Description (PPD)
33

Table 4.3 UNIFORMAT II Elemental Cost Summary for Buildings
Project
Example - 8 Story Office Building
LEVEL 2 GROUP ELEMENTS .
Level 3 Elements Quantity Unit Rate Cost
GFA = 54,000.00 SF
Cost per
Unit GFA %
A10 FOUNDATION - - - 69,726.50 1.29 1.60%
A1010 Standard Foundations 6,000.00 SF 7.67 46,025.50 0.85
A1020 Special Foundations - - -
A1030 Slab on Grade 6,000.00 SF 3.95 23,700.00 0.44
A20 BASEMENT CONSTRCUTION - - 75,467.20 1.40 1.70%
A2010 Basement Excavation 2,700.00 CY 5.91 15,960.00 0.30
A2020 Basement Walls 3,840.00 SF 15.50 1.10
B10 SUPERSTRUCTURE - - 688,569.96 12.75 15.80%
B1010 Floor Construction 48,000.00 SF 13.37 641,632.56 11.88
B1020 Roof Construction 6,000.00 SF 782 7.82 46,937.40 40 087 0.87
B20 EXTERIOR ENCLOSURE - - 794,141.00 14.71 18.20%
B2010 Exterior Walls 25,500.00 SF 18.43 469,900.00 8.70
B2020 Exterior Windows 6,600.00 SF 47.58 314,041.00 5.82
B2030 Exterior Doors 5.00 LVS 2,040.00 10,200.00 0.19
. . . . . . . .
34

UNIFORMAT II Links PPD and Design Estimates
Preliminary Project Description:
B
B10
SHELL
SUPERSTRUCTURE
B1010 FLOOR CONSTRUCTION
A. Floor System: Two-hour fire-rated, composite stell beam, steal deck, and
concrete slab system in 20-foot by 25 foot bay dimensions capable of
supporting 75 PSF live load.
B1020 ROOF CONSTRUCTION
A. Roof System: Two-hour fire-rated, composite stell beam, steal deck, and
concrete slab system in 20-foot by 25 foot bay dimensions capable of
supporting 30 PSF live load.
B20
EXTERIOR CLOSURE
B2010 EXTERIOR WALLS
A. Masonry Cavity Wall Construction:
a. Modular face brick installed in running bond with tooled concave
joints.
b. Extruded polystyrene board installed between horizontal masonry
reinforcing.
c. Bituminous dampproofing applied over concrete masonry units.
d. Load-bearing concrete masonry units with galvanized horizontal joint
reinforment
e. Concrete masonry unit lintel units over openings; concrete masonry
unit bond beams at top of wall.
Cost Estimate Summary:
Project
Example - 8 Story Office Building
LEVEL 2 GROUP ELEMENTS .
Level 3 Elements
Quantity
A10 FOUNDATION -
A1010 Standard d Foundations 6,000.00
A1020 Special Foundations -
A1030 Slab on Grade 6,000.00
A20 BASEMENT CONSTRCUTION -
A2010 Basement Excavation 2,700.00
A2020 Basement Walls 3,840.00
00
B10 SUPERSTRUCTURE -
B1010 Floor Construction 48,000.00
B1020 Roof Construction 6,000.00
B20 EXTERIOR ENCLOSURE -
B2010 Exterior Walls 25,500.00500 B2020 Exterior Windows 6,600.00
B2030 Exterior Doors 5.00
35

Baseline Energy Simulation
• kWh / SF vs targeted energy budget
• Identify energy drivers
• Identify alternatives to be evaluated
36

Additional Benefits of Schematic
Phase Elemental PPD and Estimates
Can introduce
• Cost risk analysis (Monte Carlo)
• Project risk analysis
• Preliminary construction schedules and
accurate cash flow projections
• Preliminary O&M budgets to optimize LCC
• Environmental Impact Simulation – Athena / Bees
37

7. LCC Green Building Examples
38

Mountain Equipment Co-op
op
39

Mountain Equipment Co-op
Green Building Features
40

Mountain Equipment Co-op, Montreal
Green Building Features
1. Geothermal Heat Pump System
2. Floor Radiant Heating
3. Natural Ventilation
4. Natural Lighting
5. Predictive Control System
6. Solar DHW Panels
7. Waterless Urinals
8. Rainwater Drainage Management
41

Mountain Equipment Co-Op
Area
4,260 M2
Additional Cost $ 475,400
Less Incentives $ 66,300
Net Additional Cost $ 409,100
Annual Savings $104,900
Financial Criteria:
d = 5% e e = 4% n = 30 years r = 5%
42

Mountain Equipment Co-op
op
Additional Investment $ 409,100
DPB
4.0 Years
Net Savings (NS) $2,313,050
SIR 6.65
AIRR 11.8%
43

Centrifugal Chiller VFD
Toronto Area Commercial Office Building
44

LCC Centrifugal Chiller VFD
Commercial Office Building
Chiller Capacity
300TR
Operating Period
May-October
Additional Capital Cost $ 30,000
Base Year Energy Saving
($7.50/kWd $0.05/kWh)
$ 5,000
Base Year Additional Maintenance $ 300
Financial Criteria:
d=7% e e =6% e m = 5% n=30 years r = 7%
45

LCC Centrifugal Chiller VFD
Commercial Office Building
A. PV Additional Capital Cost $ 30,000000
B. PV Energy Savings
(A o xUPV* = $ 5,000 x 26.02)
$ 130,100
C. PV Additional Maintenance Cost
($ 6,807)
(A o x UPV* = 300 x 22.69)
D. 30 Year PV Savings (B-C) $ 123,293
E. Net Savings – NS (D-A) $ 93,293
F. SIR (D/A) 4.1
G. AIRR 12.2%
46

FAN MOTOR VFD
HVAC System
47

LCC – FAN MOTOR VFD
HVAC System
20 HP
100 HP
Annual Operating Hours
3,640
3,640
Additional Capital Cost $ 3,695 $ 10,035
Base Year Energy Savings $ 2,028 $ 7,502
($0.09/kWh)
Additional Annual Maintenance $200 $200
Financial Criteria:
d = 7% e e = 6% e m = 5% n = 30 years r = 7%
48

LCC – FAN MOTOR VFD
HVAC System
30 HP 100 HP
A. PV Additional Capital Cost $ 3,695 $ 10,035
B. PV Energy Savings $ 52,769 $ 195,202
C. PV Additional Maintenance ($ 4,538) ($ 4,538)
D. 30 Year PV Savings (B-C) $ 48,230 $ 190,664
E. Net Savings - NS (D-A) $ 44,536 $ 180,629
F. SIR (D/A) 13.1 19.0
G. AIRR 16.5% 18%
49

The Cost and Financial Benefits of Green Buildings
Greg Kats Report For The State of California
50

The Cost and Financial Benefits of Green Buildings
Greg Kats Report For The State of California
1. Additional Investment $ 4.00/SF
2. Annual Financial Benefits $2.93/SF
Energy
Emissions
Water
OM&R
Productivity/Health (1% increase)
$ 0.32/SF
$ 0.07/SF
$ 0.03/SF
$ 0.47/SF
$ 2.04/SF
Financial Criteria:
D = 7% e = 5% n = 20 years UPV* = 18.13
51

20 YEAR PV Benefits of
Green Buildings - $/SF
PV Energy $ 5.80 10.9
PV Emissions $127 1.27 24 2.4
PV Water $ 0.54 0.9
PV OM&R $852 8.52 16.0
PV Productivity/Health $ 36.99 70.0
Financial Criteria:
%
$5312 53.12 100%
D = 7% e = 5% n = 20 years UPV* = 18.13
52

The Cost and Financial Benefits of Green Buildings
Greg Kats Report For The State of California
A. Additional Investment Cost $ 4.00/SF
B. Annual Benefits $ 2.93/SF
C. PV of Benefits A o xUPV*+2.93 x 18.13 = $ 53.12/SF
D. Simple Payback – Years 137 1.37
E. DPB – Years 1.60
F. Net Savings - NS (C - A) $ 48.12/SF
G. SIR (C÷A) 13.0
H. AIRR (r = 7%) 21.5 %
I. IRR (Conventional) 81.5 %
53

Summary
1. The Notion of Life Cycle Costing
2. Data Requirements
3. Present Value Factors
4. Calculating Life Cycle Costs
5. Supplementary Evaluation Measures for
Building ud Investments
ets
6. Integrating LCC in the Design Process
7. LCC Application Examples
54

END
Robert Charette, PE, CVS
robert_charette@sympatico.ca
www.lifecyclecosting.org
org
514-739-3522
55