Life cycle cost analysis plays a significant role as property owners and operators address the long-term use of building products, construction processes and infrastructure costs. Life cycle costs analysis calculates the cost of a system over its entire life span.

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Often known as "cradle-to-grave" analysis, life cycle costing is important for cost accounting purposes. It helps building owners and operators determine what costs need to be allocated to a building system so that they can recover their investment outlay over time.

Life cycle cost analysis has been described by the National Institute of Standards and Technology (NIST) as a method for assessing the total cost of facility ownership because it takes into account all costs of acquiring, owning and disposing of a building or building systems. It is an economic evaluation method that determines the effects of alternative designs of buildings and building systems and quantifies these effects in dollar amounts.⁽¹⁾

The Continental Automated Buildings Association (CABA) has been actively involved in developing life cycle costs analysis models for the industry.

In 2004, the organization undertook an industry-wide survey to aid in the development of a parametric model that would analyze the life-cycle costs of buildings. CABA develop the survey based upon a white paper that argued that by utilizing life cycle costing methodology, owners and operators could estimate the total cost benefit of deploying integrated and intelligent building technologies over the lifespan of an entire building. ⁽²⁾

Driven by CABA's Intelligent & Integrated Buildings Council, industry initiatives continued through 2005 to develop methods to evaluate intelligent and integrated building systems in order to actually monitor operating and maintenance costs and verify holistic cost reductions.

CABA contracted with Reed Construction Data/RSMeans to develop an in-depth assessment of best practices for buildings with full or partial building control integration. ⁽³⁾ The purpose of the study was to apply best practices information for new buildings to define life cycle costs. Office buildings were chosen as the primary building type for the assessment. The assessment found that owners were primarily concerned with first costs and building appearance as well as operating costs. The reality however is that over a 30-year period, initial building costs account for only two percent of total building costs, while operations and maintenance costs equal six percent and personnel costs equal 92 percent (4). CABA's study conclusively found that office buildings of 50,000 to 100,000 square feet demonstrated the best return-on-investment for integrated systems, but that there was a lack of tools to evaluate the overall life cycle costs of implementation. As a consequence, CABA undertook the development of a life cycle analysis tool.

[an error occurred while processing this directive] CABA's Life Cycle Analysis Tool is a set of online cost calculators that will be accessible on the CABA Web site, hosted and updated by Reed Construction Data/RSMeans. It will be designed to provide detailed cost models and associated life cycle costs for three building types: commercial offices, educational and governmental buildings. The life cycle analysis tool will address first-time and second-time costs of capital construction and maintenance respectively, as well as longer range operating and replacement costs.

The cost models will be determined through the proprietary RSMeans Construction Cost Index (CCI), which defines the cost models' specific geographic location factors for installed costs. It is expected that the tool will also draw upon standards determined by the American Society of Testing and Materials (ASTM) Subcommittee E06.81 on Building Economics for determining building life cycle costs.

CABA's Life Cycle Analysis Tool is expected to debut in the first quarter of 2007. Both Industry Canada and the U.S. Department of Energy have provided substantive financial assistance to the project. For more information about the tool, please go to: http://www.caba.org/lifecycle.

About the Author

Rawlson O'Neil King is CABA's Communications Director. CABA is a not-for-profit industry association that promotes advanced technologies for the automation of homes and buildings in North America. More information about CABA can be found at its Web site: http://www.caba.org.

References
(1) Fuller, S. (2006). Life-Cycle Cost Analysis (LCCA), Sieglinde Fuller,
National Institute of Standards and Technology (NIST). Whole Building Design Guide. Available at: http://www.wbdg.org/design/lcca.php
(2) Keel, T.M. (2004). Life Cycle Costing of Automation Controls for
Intelligent and Integrated Facilities: A White Paper for Task Force 3 of the Intelligent and Integrated Building Council of the Continental Automated Buildings Association. Available at:
http://www.caba.org/search/index.cfm?action=getfile&i=611&dc=IS
(3) Reed Construction Data/RSMeans. (2005). CABA Consultant Report on Life Cycle Costs.
(4) Fuller, S. and S.R. Petersen. (1995). Life-Cycle Costing Manual for the Federal Energy Management Program. NIST Handbook 135. National Institute of Standards and Technology.

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