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Life Cycle Costing in Construction

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Life cycle cost analysis (LCCA or LCC for short) is an objective method for measuring and managing the lifetime costs of any project or asset. In construction, it enables design options to be compared from a lifetime perspective to reduce overall costs. 

LCC provides a method of assessing the costs that occur throughout a building’s lifespan, from construction, through use and maintenance, to end-of-life. In so doing, it provides a more robust insight into long-term costs and savings, compared to ROI-based calculations.

How to conduct an LCC

LCC in construction consists of several key elements:

  • Conduct a structured cost analysis that clearly identifies which cost sources most influence your overall costs.
  • With major expenditure sources clear, it is possible to identify priority areas for improvement in the baseline design.
  • Comparison of the benefits and impacts of the design alternatives to find the best solution for the project.

How to get maximum value from your life cycle costing analysis

  • Conduct the LCC early. The LCC is most effective when implemented in the early project phases before major decisions have been made.
  • Engage the whole team. Particularly when creating alternatives to ensure the full potential of the project is captured.
  • Repeat the LCC throughout the project. LCC should be regarded as an ongoing process and calculations should be repeated several times as the project progresses through its stages and kept up-to-date to ensure accuracy and high-quality analysis.
  • Combine LCC with LCA to ensure that you are making the best cost-and carbon-saving decisions for your project.

Primary benefits of life cycle cost analysis

1. Long-term value. An LCC ensures that your project has the highest possible value, even if upfront costs are not significantly reduced. It provides a mechanism for identifying and addressing issues with the original design. An LCC’s lifetime perspective results in better durability, less maintenance, fewer risks, and lower operational spending and can even lead to an increased building lifespan.

2. Green building certification credits. LCC credits are included in many green building certification schemes and in some LCC is a mandatory credit. For example, DGNB has mandatory LCA and LCC credits, while BREEAM includes LCC credits split between sub-credits. In the case of DGNB the LCC credit is called ECO 1.1. LIFE CYCLE COST, 9,6 % (Gebäudebezogene Kosten im Lebenszyklus).

3. Reliable planning and reduced risk. LCC is an excellent planning tool that covers long spans of time. With a properly conducted LCC, you can effectively avoid surprises, and reduce financial risks.

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LIFE CYCLE ASSESSMENT FOR BUILDINGS

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