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By Rasika Savkar
Several tools developed in the past decade have been proven to provide more accurate estimates of the building’s cost savings and its “true market value” with reference to current worth and overall lifespan. The ATHENA® Impact Estimator, BEES, BLLC, ECONPACK, etc. are some professionally recognized LCCA software.
LCCA is a technique for evaluating the final cost of owning a facility and takes into account the sum of a project’s or its system’s design, building, ownership, operating, maintaining, replacing, and disposing costs. Within the LCCA, the optimum cost-saving measure can be identified through a variety of methods:
Net benefits. A method that calculates the difference between the implementation costs and the return on investment to determine the savings.
Savings-to-investment ratio. A method that evaluates the applicability of a particular strategy with respect to its economic worth (including escalation of utility costs, maintenance costs, etc.) within the duration of the system’s anticipated lifespan.
Payback period. Which calculates the time that it takes to equate the investment cost to the return on investment over a time period.
Lowest life-cycle cost. A method that compares various energy- and cost-saving scenarios, and favors the measure that has the least implementation cost to the owner. The lowest life-cycle cost method is the most widely accepted by industry professionals.
How LCCAs Work
In terms of existing building retrofits, the LCCA focuses mainly on the energy, operational, maintenance, and replacement costs, followed by salvage values, net present financial value, and non-monetary benefits. The LCCA evaluates the significant costs among each category and only accounts for those that vary drastically in terms of net savings. All costs need to be entered with respect to the current year’s amount in today’s dollar value. Then, using accepted inflation figures, the LCCA formula estimates what the total cost would be to implement the retrofit or energy-efficiency measure at the end of its predicted lifespan. The engineer then converts the costs back to net present values.
One challenge of the LCCA is that it must be customized to each particular building. Although two buildings may be of the same type, size, and age, it’s not possible to translate one building’s expected performance to another due to differing occupancy trends, rigor of maintenance, training level of facility managers, and optimal design solutions suited with respect to micro-climatic conditions. With increasing market penetrability of LCCA as a building retrofit tool, however, confidence is increasing that engineers may be able to develop acceptable target ranges.
In new construction projects, it’s best to integrate LCCA into the project after conceptual design is complete. LCCA is not well suited to initial systems selection because it can restrict design options. Once the strategies that best achieve your goals have been identified, LCCA can help to refine scenarios to uncover the most fiscally and environmentally responsible systems that work within your design.
Building owners and facility managers are realizing the potential of LCCA as a robust tool for making sound investment choices. The growing evidence that LCCA can help you save a significant amount of money offers a compelling reason to evaluate your existing building systems to find the strategies and systems that work in favor of your building and budget over the long term.
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