Predicting Time for Corrosion Initiation in Reinforced concrete
Life cycle cost analysis
1. Life Cycle Cost
Analysis
Ankur Bansal 09010408
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2. Life Cycle Cost (LCC)
Life-cycle cost analysis is a
process for evaluating the total
economic worth of a usable
project segment by analysing
initial costs and discounted
future costs.
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3. Why Use LCC?
Project Maintenance
Engineering Engineering
Shareholders Production
Reliability
Accounting
Engineering
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4. Key Parameters used in calculating Life
Cycle Cost
• Time Value of Money
1. Rate of Return
2. Inflation
• Opportunity Cost
• Discount Rate
• Analysis
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5. Steps to determine life cycle costs:
• Establish alternative design
strategies.
• Determine activity timing.
• Estimate agency costs.
• Estimate user costs.
• Determine life-cycle cost.
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8. Calculation of Life Cycle
Cost
Deterministic
• An Exact Cost is Determined
Probabilistic
• A range of Values is determined with a specific
probability distribution.
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9. Steps Involved
• Step 1-Identify what has to be analysed and the time
period for the project life study along with the
appropriate financial criteria.
• Step 2-Focus on the technical features by way of the
economic consequences to look for alternative
solutions.
• Step 3-Develop the cost details by year
• Step 4-Select the appropriate cost model, simple
discrete, simple with some variability for repairs and
replacements, complex with random variations, etc.
required by project complexity.
• Step 5-Cost details are acquired.
• Step 6-Yearly cost profiles are found.
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10. Deterministic Approach
• Fixed discrete values are assigned to
various parameters and any type of
uncertainties are ignored
• LCC calculated is fixed value
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11. Probabilistic Approach
• Cost parameters are assigned with
some appropriate probability
distribution.
• Random numbers are generated
• These random numbers are used
to calculate the LCC
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12. Sensitivity Analysis
• A sensitivity analysis is performed to
understand what variables make the
largest difference in the final result.
• We can identify the model variables
that have a significant influence on
model results and/or determine break-
even points that alter the ranking of
considered options.
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13. Risk Analysis
• Risk analysis helps to estimate the levels of risk and
uncertainty within final economic decision
measures such as BCR and NPV, from uncertainty in
the key input variables feeding into the project
evaluation process. By estimating the 'riskiness'
aspect of these summary measures, a more realistic
comparison of project returns can be obtained
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Editor's Notes
1. Project Engineering wants to minimize capital costs as the only criteria,2. Maintenance Engineering wants to minimize repair hours as the only criteria,3. Production wants to maximize uptime hours as the only criteria,4. Reliability Engineering wants to avoid failures as the only criteria,5. Accounting wants to maximize project net present value as the only criteria, and6. Shareholders want to increase stockholder wealth as the only criteria. LCC can be used as a decision tool for harmonizing the never ending conflicts by focusing on facts, money and time.
A discount rate must represent the cost of capital and a reasonable opportunity cost.
Future Investments: 1. One time investments occurring after the start of the analysis period.2. Non-Annual maintenance or repair.3. Major alterations to initial investment work
Indirect costs can be quantified by using appropriate standards, as in India IRC: SP:30-2009 provides guidelines to estimate the indirect costs.
In deterministic methods, all the input values are given a discrete fixed value and any type ofuncertainty is ignored in determining the Life Cycle Cost.
the probabilistic distribution assigned to each variable provides aclearer and more descriptive picture of associated outcomes.Here, Monte Carlo simulation is used
