Building optimisation with life cycle costs – the influence of calculation methods

Abstract

Purpose -The purpose of this paper is to demonstrate that the result of an optimisation via life cycle costs (LCC) depends on the assumptions made throughout the process of calculating LCC. Design/methodology/approach -A framework is used to structure the assumptions made in the process of calculating LCC. These include the following three pairs: technical versus economic life-span, static versus dynamic calculation method or costs only versus income minus costs. In a broader sense, these LCC are referred to as the life cycle economy (LCE). Two case studies form the basis for the LCC calculations. Using different assumptions, the LCC of virtual design variations of these buildings are compared to each other. Findings -The rankings drawn from the calculations differ according to the chosen calculation method, i.e. the chosen variation for the optimisation of a building is not consistent. Research limitations/implications -This is essentially an exploratory study and the prognosis of future cash flow in relation to certain design variations requires further research. Practical implications -The credibility of life cycle costing should improve with a greater transparency of assumptions in the context of the outlined framework. Originality/value -All players in facilities management who support their decisions with LCC will benefit from this quantification of the impact of different calculation methods. The extension of LCC to LCE will help planners, investors and owners of real estate in evaluating building options with respect to quality, image, flexibility or comfort.

Cost-Effective Options for the Renovation of an Existing Education Building toward the Nearly Net-Zero Energy Goal—Life-Cycle Cost Analysis

“…It conducts economic analyses by evaluating the relative cost-effectiveness of alternative buildings or building-related systems and components. It is particularly suitable for evaluating the costs and benefits of energy conservation and renewable energy projects [11][12][13][14][15].…”

Engineering a Predictive Energy Consumption Model for University Properties

“…At the end those aspects are integrated into a lifecycle TCO decision tool to estimate each method's and combination's effect. Facts on the basic concept of lifecycle costs and their usage are available in [6] and [7].…”

Simulation-based costing for early phase life cycle cost analysis: Example application to an environmental remediation project

“…Additionally, it compares the cost-effectiveness of alternative investments or business decisions from the perspective of an economic decision maker such as a manufacturing firm or a consumer (Norris 2001) and aids in identifying the least cost alternatives (U.S. General Services Administration 2014). Furthermore, LCC combines both the initial as well as the consequential costs associated with a project and is, therefore, a good instrument for cost optimization with a long-term perspective along with exploiting the economic principles of sustainability (Pelzeter 2007).…”