This document presents an overview of life-cycle cost analysis (LCCA) for buildings. LCCA is defined as a process that evaluates the total economic value of a building project over its entire lifespan by analyzing initial and future costs. The presentation outlines the LCCA process, which involves 5 steps: 1) establishing design alternatives, 2) determining the timing of activities, 3) estimating agency and user costs, 4) computing life-cycle costs, and 5) analyzing results. Key parameters for LCCA include time value of money, inflation, opportunity cost, and discount rate. LCCA provides a cost comparison of design alternatives and can help optimize decisions around construction, maintenance, and rehabilitation over the long term.

1. 1
Presentation: CIA3
SUB: LCCA
Program: M.Tech. (Valuation L&B)
Topic : Life-Cycle Cost Analysis of
buildings
PRN: 210101221014
Name Of Student: Dahiphale Adinath
Under the Guidance of
Prof: ARUN DWIVEDI
School of Engineering and Technology

2. 2
• Life Cycle Cost Analysis Definition
• Application/why use LCCA
• LCCA Five Steps Process
• Cost Involved
• Approach to LCCA
Presentation Outline

3. 3
 LCCA is a process of evaluating the economic
performance of a building over its entire life
 A process for evaluating the total economic
worth of a usable project segment by
analyzing initial costs and discounted future
costs, such as maintenance, operation,
reconstruction, rehabilitation, restoring, and
resurfacing costs, over the life of the project
segment.
Life-Cycle Cost Analysis Definition

4. 4
An analytical tool to provide a cost
comparison between two or more
competing design alternatives
producing equivalent benefits for
the project being analyzed.
LCCA Overview

5. 5
Why Use LCC?
Industry/project analyzed by following
parameters
• Project Engineering
• Maintenance Engineering
• Shareholders
• Production
• Reliability Engineering
• Accounting

6. 6
Key Parameters used in
calculating Life Cycle Cost
• Time Value of Money
1. Rate of Return
2. Inflation
• Opportunity Cost
• Discount Rate
• Analysis

7. 7
 Step 1: Establish alternatives
 Step 2: Determine timing of required activities
 Step 3: Estimate agency and user costs
 Step 4: Compute life-cycle costs
 Step 5: Analyze the results
The LCCA Process

8. 8
 Activities to ensure performance
 Initial construction or rehabilitation activity
 Future rehabilitation and preservation activities
Step 1: Establish Alternatives

9. 9
Terminal Serviceability Index
Serviceability
Initial
Activity
Activity One Activity Two
Time
When will the future preservation and
countermeasure costs be incurred?
Service
Life Analysis Period
Step 2: Determine Activity Timing
Long enough to capture differences between alternatives

10. 10
 Include cost elements that are different
between alternatives
 Exclude cost elements that are the same
between alternatives
Agency overhead costs
Real estate acquisitions
Normal operations user costs
Step 3: Estimate Agency and
User Costs

11. 11
 Approach fundamentals
Compare demand and capacity under
normal operations and work zone
conditions
Determine how traffic is impacted
Convert traffic impacts into costs
Step 3: Estimate Agency and
User Costs

12. 12
Cash Flow Diagram
User
Costs
Rehab 1
Work Zone
Initial Activity
Work Zone
Preservation
Work Zones
Preservation
Activities
Rehab 1
Initial
Activity
Agency
Costs
$
$
Time
Time
Salvage or
Remaining
Value

13. 13
Step 4: Calculate NPV of
Life-cycle Costs
Net Present Value =
of Costs
N
k = 0
Σ
1
(1 + d)
nk
(Costk) x
Costk = cost of activity
N = length of analysis period
d = discount rate
nk = year of expenditure
Present Value
Factor

14. 14
 How do agency costs compare?
 How do user costs compare?
 Can trade-offs be made?
Step 5: Analyze the Results

15. • Deterministic •
An Exact Cost is Determined
• Probabilistic •
A range of Values is determined with a specific
probability distribution
Calculation of Life Cycle Cost

16. Deterministic Approach
• Fixed discrete values are
assigned to various parameters
and any type of uncertainties are
ignored
• LCC calculated is fixed value

17. Probabilistic Approach
Cost parameters are assigned with
some appropriate probability
distribution.
• Random numbers are generated
• These random numbers are used to
calculate the LCC

18. 18
Thank You