Life cycle costing analysis

Life cycle cost analysis is the proper tool for evaluation of alternative systems (11,12). The total cost of a system, including energy cost, maintenance cost, interest, cash flow, equipment replacement and/or salvage value, taxes, inflation, and energy cost escalation, can be estimated over the useflE life of each alternative system. A Hst of life cycle cost items which may be considered for each system is presented in Tables 3 and 4. Reference 14 presents a cash flow analysis which also includes factors such as energy cost escalation. 

Life-cycle analysis (LCA) does not account for economic aspects, and such analysis should therefore be considered together with a life-cycle cost analysis (LCC), which takes into account the costs of investment, energy, maintenance, and dumping the final waste product throughout the lifetime of a plant. 

Life-cycle cost analysis. Energy-efficient buildings are typically designed to be cheaper, on a life-cycle basis, than wasteful buildings. 

Capital investment decisions are best made within the context of a life-cycle cost analysis. Life-cycle cost analysis focuses on the costs incurred over the life of the investment, assuming only candidate investments are considered that meet minimally acceptable performance standards in terms of the non-inonetary impacts of the investment. Using life-cycle analysis, the capital investment decision takes into account not just the initial acquisition or purchase cost, but maintenance, energy use, the expected life of the investment, and the opportunity cost of capital. When revenue considerations are prominent, an alternative method of analysis such as net benefit or net present value may be preferred. 

For the hybrid car, 429—(20,000 miles per year / 70 miles per gallon) x ( 1.50 per gallon)— will be spent each year on gasoline. A similar calculation to that for the conventional car reveals that LCC (hybrid) = 22,309. The life-cycle cost analysis indicates that from an economic point of view, the conventional car is the better purchase. 

Sensitivity of life-cycle cost analysis to gasoline prices. 

A life cycle cost analysis was done to evaluate the economic attractiveness of the various measure sets. Included in the analysis is the impact on equipment sizing, usually a saving. The sizing changes can result in a significant cost reduction for the measure sets. In order to realize the payback periods shown, equipment must be sized in accordance with load reductions. 

TABLE 2. Life cycle cost analysis equations... 

Performing life cycle cost analysis and calculate cost production of H2 The energy supplied by the PV array, EPV is given by ... 

A life-cycle costing analysis showed that the savings on electricity would give a 22 per cent after-tax return on the 2.7 million investment. This ROI exceeded the 15 per cent that top management had established as a criterion for capital investments that increased production, and was far above the company s average return on assets of 10 per cent. Nevertheless the company rejected the proposal, indicating that a 30 percent ROI was the policy for projects that do not increase production. This decision, not untypical, was unfortunate for both the proposing firm and the nation. 

A life-cycle cost analysis frequently is used to justify a larger initial cost to obtain the benefits of lower operating or maintenance cost. In the case of security enhancements, consideration of the system life cycle takes on increased importance because failure to commit to the ongoing costs of maintaining such systems will compromise their ability to perform as intended. 

Life-Cycle Cost Analysis Tool for Building Protection... 

NIST. 2006b. Life-Cycle Cost Analysis Tool for Chem/Bio Protection of Buildings. Accessed on March 15, 2007, at http //www2.bfrl.nist.gov/software/LCCchembio/index.htm. 

LBNL LCAT LIDAR LP Lawrence Berkeley National Laboratory Life-cycle Cost Analysis Tool Light-detection and ranging Level of protection... 

It was assumed that the power plant will be financed from revenue bonding. Therefore, reasonable estimates were made for interest on bonds, interest earned and expended during cor)struction, and bond discounts. Working capital and the debt reserve fund were assumed to be capitalized. By projecting all capital and operating costs with reasonable escalation factors, a life-cycle cost analysis was performed. Results of that analysis shown below indicate an estimate of required revenues to offset all costs. These projected costs are favorable when compared to alternative fossil fuel unit costs projected for the New England region. 

Cost-effectiveness [20] A mixture of quantitative and qualitative considerations. It includes the health priorities of the country or region at the macroassessment level and the community needs at the institution microassessment level. Product life cycle cost analysis (which, in turn, includes initial purchase price, shipping, renovations, installation, supplies, associated disposables, cost per use, and similar quantitative measures) is a critical analysis measure. Life cycle cost also takes into account staff training, ease of use, service, and many other cost factors. But experience and judgment about the relative importance of features and the ability to fulfill the intended purpose also contribute critical information to the cost-effectiveness equation. 

Sometimes, cost may be the only criterion in material selection. This is particularly true when it is known that the candidate materials are fairly evenly poised on all other criteria. This calls for a method that analyzes the costs associated with each candidate material. One such quantitative method is the Life-Cycle Cost Analysis (LCCA). LCCA helps ns get the overall picture of the costs associated with each material over its entire lifetime. It attempts to identify all CAPEX and OPEX heads involved in all stages enconntered over the lifetime of a particnlar asset or facility and therefore operates over a longer-term horizon. LCCA uses the discounted cash flow technique to reduce the future costs to present-day valnes. This makes LCCA an even fairer means to rationally compare the candidate materials. 

Life-cycle cost analysis has shown it to be cost effective for a wide range of structures and conditions. 

We have seen that the selection of a suitable rehabilitation can be based on technical considerations and cost (preferably whole life costing rather than just initial installation cost). The technically unacceptable can be excluded and a short list of suitable rehabilitations can be drawn up. Life cycle cost analysis techniques have been used to calculate the optimum time and the optimum repair on bridges but are based on a number of assumptions and estimates, including cost estimates for different repair strategies. A direct comparison of quotations for a given structure is probably the best present state of the art although it is important to accurately define the corrosion conditions so that accurate bills of quantities can be drawn up. 

No attempt was made to define an end of service Ufe as this was used as part of a life-cycle cost analysis study where repair or rehabilitation was conducted according to the minimum cost criterion. It was suggested that the condition index should never exceed 45%. 

Purvis, R.L., Babaei, K., Cleag K.C. and Markow, M.J. (1994). Life-Cycle Cost Analysis for Protection and Rehabilitation of Concrete Bridges Relative to Reinforcement Corrosion, Strategic Highway Research Program, National Research Council, SHRP-S-377. 

It is suggested that a proper life-cycle cost analysis be carried out before selecting a drying system for LRC. It is important to store dried coal carefully as coal can reabsorb moisture from ambient if it is to be transported long distances or must be stored in the open for long periods of time. A system that is recommended in one location may not necessarily be optimal for another location and for a different and significantly different capacity. 

Life cycle cost analysis Total cost of ownership Whole-life cost... 

It incorporates the concept of present worth for evaluating future expenditure and the procedure of life cycle cost analysis (LCCA). The basic factors required for LCCA are as follows (a) initial cost of pavement structure (b) cost of future overlays, major maintenance or reconstruction, or other interventions (c) time, in years, from initial construction up to each intervention (d) salvage value of the structure at the end of the analysis period (e) interest rate and (f) determination of the analysis period. 

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