1. Life cycle cost analysis (LCC) in the United States green building industry. Dave Nornes

2. Impact of the built environment
40% of the world’s energy
25% of the timber harvested
16% of the fresh water used
50% ozone depleting CFC’s
30% of raw materials used
35% of CO2 emissions
40% of landfill waste

3. Green Building
“An integrated framework of design, construction, operations, and demolition practices that encompass the environmental, economic, and social impacts of buildings.”
“Building practices recognizing the interdependence of the natural and built environment and seek to minimize the use of energy, water, and other natural resources while providing a healthy and productive indoor environment.”

4. Green Building Sustainable Durable/Adaptable Building beyond the codes
Build for the occupant
Whole systems approach

5. Barriers to Green Codes Education Cost Products not available
Breaking tradition

6. Reasons to Build Green Mandated Market demands
Occupant comfort and health
Save $
Environmental responsibility

7. Reasons to build green
“Building to code means that if a building were designed any worse it would be against the law.” Randy Croxton, Architect

8. Life Cycle Costing
Economic assessment of alternatives that considers all of the significant costs of ownership over the useful life expressed in equivalent dollars.
initial costs
financing costs
operational costs

9. History of LCC 1933-- Comptroller of the U.S. Government 1940-- WW II
factored maintenance costs in bids for tractor acquisition
WW II
Shortage of materials and labor.
Lawrence D. Miles (General Electric Inc.) created value engineering model for substitute materials and procedures.

10. LCC applied to buildings
1970’s--U.S. General Accounting Office applied LCC to hospital facilities.
Operation and Maintenance costs equal initial investment costs in 1-3 years.
Focused primarily on energy costs.(Arab oil embargo)

11. Standardized LCC methods
American Society for Testing and Materials (ASTM)
1980--Set a series of standards for building economics.
LCC analysis
Benefit to Cost Ratio
Internal Rate of Return (IRR)
Net Benefits
Payback Period

12. LCC characteristics
LCC treats design decisions as investments in buildings and building components.
LCC compares the estimated costs of different options taking into account both initial capital costs as well as costs that may be incurred over the life cycle.

13. LCC objectives
To provide an analytical tool that can establish the interaction between planning and design decisions and long term costs.
To promote interdisciplinary communication and look at the building as a whole and not merely its component parts.

14. Recent LCC trends Infrastructure Federal/State Buildings
durability/ longevity
Federal/State Buildings
efficiency/ obsolescence
Green Buildings
LCC/ LCA studies

15. LCC Uncertainties Input data Parameters estimating assumptions
discount rate
useful life/ study period
future prices

16. Literature LCC importance to promote green features.
Little evidence exists about if, who, how, and where LCC is applied.

17. Statement of the Problem
Green building initiatives are predicated on the fact that benefits accrue over the life of the building.
Use of LCC is needed to increase adoption of green building practices.

18. Research Questions What are the goals of LCC?
Who are the drivers of the studies?
To which types of projects is LCC applied?
Which building components are analyzed?
What constraints are faced with LCC?

19. Methodology
Survey Research
Human Characteristics
thoughts
behaviors

20. Instrument Web-based questionnaire
18 scaled, nominal, and ordinal questions
Part 1- set framework for parameters of study
Part 2- specific use and application
3 open ended response questions
Part 3- LCC and Green building (opinions and perceptions)

21. Sample Sample Population LEED registered project contacts
1000 cover letters with hyperlink to questionnaire

22. Response rate 104 total responses (10.4 %) 45% Architects
84 questionnaires completed
45% Architects
17% Engineers
9% Consultants

23. Findings Current use of life cycle cost analysis
Projects utilizing LCC 10 20 30 40 50 60 70
0-25%
25-50%
50-75%
75-100%
Percentage of projects
Responses
LEED projects
All projects

24. Findings Types of projects utilizing LCC Project types using LCC 5 105 10 15 20 25 30 35 40 45 50
Public
Private
Commercial
Renovations
Residential
Institutional
Highway/Infrastructure
Responses

25. Findings Team member(s) initiating the interest of conducting LCC
Individual responsible for the analysis
LCC Driver and Analyst 10 20 30 40 50 60
Architect
Engineer
Owner
Facility manager
Consultant
Government
Project manager
Vendor
Group Decision
Other
Responses
Analyst
Driver

26. Goals of the project’s LCC
Findings
Goals of the LCC
Goals of the project’s LCC
Goal
Very important
Somewhat important
Not important
Response Avg.
Reduce operation/ maintenance costs 55 8
1.13
Extend useful life/durability 47 12 4
1.32
Increase occupant productivity/comfort 31 24
1.63
Conserve natural resources 27 29 7
1.68
Future facility alteration 17 37 9
1.87
Lower construction costs 16 36
1.89
Meet government mandates 15 25 21
2.1

27. Findings LCC application to building components
LCC application in predictive
analysis
Building component
Always
Sometimes
Seldom
Never
Weighted avg.
Positive pay-off
HVAC system 41 23 1
1.38
94%
Lighting/day-lighting 27 30 7
1.69
75%
Operations and maintenance 26 8 2
1.76
59%
Windows 29 9
1.84
50%
Insulation 21 31 10
1.86
45%
Water conservation 19 16
2.02
Exterior finishes/Roofing 22 15 4
34%
Size of building 11 14 20
2.67
22%
Interior finishes 17
2.61
17%
Renewable energy 25
2.1
13%
Disposal/deconstruction 5
2.84
11%
Foundation/structural elements 13
2.92 3%

28. Better than or equal to projected
Findings
Accuracy of LCC projections
Accuracy of LCC projections
Building component
Better than or equal to projected
Less than projected
No post
construction
follow-up
Weighted avg.
Lighting/day-lighting 26 7 20 19
HVAC system 29 12 13 17
Water conservation 21 8 23
Operations and maintenance
Windows 4 33 9
Exterior finishes/Roofing 2 38
Size of building 35 5
Insulation
Interior finishes 3 34
Foundation/structural elements 37 -1
Disposal/deconstruction 6 -2
Renewable energy 14 24 -7

29. Findings Constraints encountered in the LCC
Constraints encountered in LCC 5 10 15 20 25 30 35 40 45
Forecasting uncertainties/ complex tools
Added cost involved
Inaccurate input data
Added time involved
Lack of savings justified
Responses

30. Conclusions
Why do you suspect you are not using or under utilizing LCC on the LEED project you are associated with?
Shift costs/ budget
Lack of expertise/user friendly tools
Lack of time

31. Conclusions Where are improvements needed in the LCC process?
User friendly tools
Better input data
Owner education benefits

32. Conclusions
Do you think LCC is an effective tool to increase sustainable building practices?

33. Future Research How can the cost to perform an LCC be justified?
How can the time to perform an LCC be reduced?
What improvements are needed in LCC software?
How can the industry have better trained LCC practitioners?