1.1 Why Use Life-Cycle Cost Analysis?
Life-cycle cost analysis (LCCA) is an economic method of project evaluation in which all costs arising from owning, operating, maintaining and ultimately disposing of a project considered to be potentially important to that decision. LCCA is particularly suitable for the evaluation of building design alternatives that satisfy a required level of building performance (including occupant comfort, safety, adherence to building codes and engineering standards, system reliability and even aesthetic considerations), but that may have different initial investment costs; different operating, maintenance and repair (OM&R) costs (including energy and water usage_; and possibly different lives. However LCCA can be applied to any capital investment decision in which higher initial costs are traded for reduced future cost obligations. LCCA provides a significantly better assessment of the long-term cost effectiveness of a project than alternative economic methods that focus only on the first costs or on operating-related costs in the short run.
Replaced/Superseded by document(s)
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|Life-Cycle Costing Manual for the Federal Energy Management Program .pdf||application/pdf||9.21 MB||English||DOWNLOAD!|
Handbook 135 is a guide to understanding the life-cycle cost (LCC) methodology and criteria established by the Federal Energy Management Program (FEMP) for the economic evaluation of energy and water conservation projects and renewable energy projects in all federal buildings. It expands on the life-cycle cost methods and criteria contained in the FEMP rules published in 10 CFR 436, Subpart A, which applies to all federal agencies. The purpose of this handbook is to facilitate the implementation of the FEMP rules by explaining the LCC method, defining the measures of economic performance used, describing the assumptions and procedures to follow in performing evaluations, giving examples, and noting NIST computer software available for computation and reporting purposes.