Table 1-1
LCC Formulas
Type of Cost
Cost Examples
Present Value Relationships
Comments
Design Fees
Not Applicable
Costs are not included
Sunk
Funds irrevocably committed
in the Analysis
Investment Costs
PV = TV
For those investment costs
First
Construction Costs
that begin at the start of the
Purchase Price
analysis period
Scrap value of equipment
Present value equals the
Salvage Value
FV
at the end of its service life
PV =
future value at the end of
(1+d) n
the service life, discounted
where FV=TV(1+e) n
by n service years
One time investments
Discount the future value
Future Investment
(1+e) n
occurring after the start
PV = TV (1+d) n
(Today's Value escalated at
of the analysis period
rate e to year n) back to the
Non-Annual maintenance
Where FV is the time pro-
present.
or repair
rated amount that separates
Major alterations to
investment value to the end
initial investment work
of service life salvage value.
Residual Value
Equipment with a service life
Residual value equals the
FV
extending beyond the analysis
PV =
future value at the end of
(1+d) n
period
the analysis period, dis-
counted to the present.
Annually Recurring Fixed
Fixed payment service
Annually Recurring Cost,
contracts with inflation
PV = TV(UPW)
relating to today's value,
adjustments
where
which increase in price at
(1+d) n 1
Preventative maintenance
UPW =
the same rate as general
d(1+d) n
inflation. The UPWn
factors are within the
NIST BLCC program.
24 F A C I L I T I E S S T A N D A R D S
FOR THE
PUBLIC
BUILDINGS
SERVICE
1.8 Life Cycle Costing
Revised March 2005 PBS-P100
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