Life-Cycle Cost Assessment as a Tool for Retrofits

08/21/2009 | By Rasika Savkar

According to the Whole Building Design Guide’s Sustainable Building Technical Manual, over a typical building’s 30-year lifespan, initial construction accounts for about 2 percent of a company’s total costs while maintenance and operation costs account for nearly 6 percent. (Personnel is the company’s remaining cost.) These figures show that reducing a building’s operational costs over its lifespan is critically important. In order to ensure operational cost savings and increase system durability, building owners and facility managers need to evaluate and optimize building performance against industry standards. An effective tool for uncovering the best choices to improve your existing building stock is life-cycle cost assessment (LCCA).

LCCA can offer guidance on early key decisions that garner profitable payback and help you “prospect” a building’s or property’s true asset value throughout its lifespan. LCCA allows you to compare various retrofitting options that may have similar first costs, but varied long-term financial advantages, environmental benefits, and impacts on occupant well being. While it’s true that not all benefits can be quantified, a bottom line that shows net capital savings provides a strong incentive to investigate further.

Reasons to Retrofit
The economic recession spawned a large drop in new construction, and the focus of real estate shifted to building reuse and remodel. The U.S. Energy Information Administration estimates that, by 2030, more than 250 billion square feet of building stock within the United States will consist of renovated existing buildings. Optimized design strategies and proper system execution to ensure that the systems follow predicted performance can reduce a building’s energy costs by approximately 45 percent. Moreover, utilities and government organizations are establishing strong incentive programs that provide grants and discounts to building owners who repair or upgrade to more efficient systems that optimize operations to provide financial, energy, and environmental benefits.

Power of the Long-Term Perspective
Professionals are already relying on LCCA to justify the benefit of system retrofits. Thanks to heightened client interest in this reliable tool, green engineering commissioning agents are using LCCA methods to evaluate building system operations and maintenance during existing building ASHRAE audits and re-commissioning. Over the past 2 years, commissioning firms have seen a significant increase in client investment in LCCAs as part of a process to drive optimal building decisions. According to the Sustainable Building Technical Manual, the U.S. Environmental Protection Agency’s Green Lights program participants realized annual rates of return greater than 30 percent for lighting retrofits. A LCCA estimated that program-related improvements could save more than 65 million kilowatts of electricity among Green Light participants, which would lower the nation’s electric bill by $16 billion annually.

But, not all LCCAs result in recommendations to upgrade systems. Occasionally, LCCA analyses conclude that certain retrofit/replacement measures will not be financially beneficial compared to current operations. For example, a chiller in a 40-year-old building may not meet today’s energy-performance standards, but a newer, more efficient chiller may require a refrigerant recharge every 2 years, resulting in higher maintenance costs. While there are other factors to take into consideration – such as environmental impacts – the existing system may be more profitable from a purely economic standpoint.

Pages: 1  2  View All  

Related Coverage