form part of the baseline alternate, the analysis must not
only include intended project work, but also the additional
costs necessary to achieve code compliance and reliable
operation over the analysis period.
The analysis period should be chosen to fully represent
all costs. When optimizing the design of a single system,
all compared alternatives must be considered over the
same analysis period. Where possible, the analysis period
should be the smallest whole multiple of the service lives
for the major systems involved in the analysis. Service
lives of HVAC equipment can be found in the ASHRAE
Applications manual. In any case, the analysis period
should not be over 25 years unless otherwise directed
Costs that have already been incurred or must be
incurred, regardless of the chosen alternative, can be
deemed "sunk" and excluded from the analysis. Costs
that must be incurred during the period from design
Charles Evans Whittaker U.S. Courthouse, Kansas City, MO
decisions to construction award should be deemed sunk.
Baseline and alternative first costs are typically those
estimated for the construction award date. The life cycle
All LCC effort should be completed in the Design
cost analysis can assume that the award date can be
Development Phase of the project.
considered the zero point in time for the analysis period,
with all other event times referenced to the construction
The following practices are typically required when
award date. For greater simplicity, the year of design
conducting LCC analyses for building design. They are
decision can also be considered as the zero point in time,
listed here to address common concerns and frequently
and it can be assumed that the construction award will
occur in that year.
When defining alternatives for life cycle costing, an
Salvage values for alternatives are typically zero.
acceptable level of overall building services must
However, in those cases where scrap values could
be assured throughout the analysis period.
impact decisions, the present value is calculated as
Design alternatives must be compared against a baseline
its future value (scrap value) discounted back to the
reference alternate that is the lowest first cost of the
present from the year of occurrence. The formula for this
alternatives being considered. The baseline
is shown in the LCC Formulas Table 1-1.
alternate must offer a viable system, employing state-of-
the-art design features, and be in compliance with all
project requirements. Where existing conditions
Life Cycle Costing
Revised March 2005 PBS-P100