Design Cost Control
Design Cost Control ARCH 4411
Popular in Course
Popular in Architecture
This 11 page Class Notes was uploaded by Camron Brakus on Tuesday October 20, 2015. The Class Notes belongs to ARCH 4411 at Southern Polytechnic State University taught by Gary Parker in Fall. Since its upload, it has received 10 views. For similar materials see /class/225451/arch-4411-southern-polytechnic-state-university in Architecture at Southern Polytechnic State University.
Reviews for Design Cost Control
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 10/20/15
W39BDG foesCycle CostAnalysxs LCCA Page 1 of 11 7 7T 1 K Vlmu m mc Dmm l LifeCycle Cost Analysis LCCA 1 1e 11hue u11er 12151121 metiue 1r standards and Techrm aqv men INTRODUCTION weeeyde eust aha1ys1s LCCA 1s a methnd fur assessmg the tuta1 eust Offemhty uwnersh1p It takes 1htu autumn 1311 eusts Ofauqu1r1nguwmng aha mspusmg Ufa hu11d1hg Or hu11u1hg system LCCA 1s EspemaHy usetu1 tn when pruject a1terhat1ves that Tumu the same per rm ahue r2qu1r2m2nt but Mer w1th respecttu1h1t1a1eusts aha uperatmg msts have tu be eum ared 1h Order tu se1e1t the uhe that maxvmzes het s Exam p1e LCCA W111he1p deterrmne whethert e avmgs Fur mmrpmatmn Ufa h1ghegerturmahee HVAC urgtszmg system wh1eh may mvease 1h1t1a1 cast but resu1t 1h dramatmaHy reduced uperatmg a mamtenanue eusts 1s eusteerteetwe Or hut LCCA 1s hut usetu1 fur budget aHOcaUOn Sawhgsetuexhuestm eht Rat1u Or Savmgs aehe tetuemst Rana 1hterha1 Rate OfREtum aha Paybadlt Permd They are mhs1steht w1th the LOWest LCC measure uteva1uat1uh1tthey use the hr 1 11 severa1 1 The appmadw fur u 11 111 ehg1heer1hg Or Ecnnnmu aha1ys1s DESCRIPTION A Lifeecvele oust Analysis LCCA Melhud se1eet the rh 1 a chance tu re ne the d251gn tu ehsure a reuuetmh 1h hfetyde msts LCC a t Ofan LCCA 1 r quarmfy these Effel s and Express them 1h dnHar amnunts V12w2d Over a 3D veer perm http www wbdg orgdesxgnlcca php7pnn 11112006 W39BDG foesCycle CostAnalysxs LC A Page 2 of 11 30 Year Cost of a Building 1n1t1a1 buumnu eusts accnuntfur aDDermatE v Just 2 er the tdta wnue uperatmns and rna1ntenanee eusts euua1 5 and persunne1 eusts euua1 92 a 111 M1 ng Pusmn Si lnts Teenn1ea1Manua1 new In Mlvnmunm Cpuslmulm seats a Casts r r n n r uunumu v 1n1t1a1 Custsipumhase Acqmsmun Cunstructmn Casts rue1tusts OperatmnMa1nt2nan2 and RepanCDsts Remauernentmsts Res1uua1 Va uesiResa e ur Sshage Va1ues ur D1spusa1tusts nnanue Chargesi uan 1nterest Payments NuneMunetary Bene ts ur Casts On a n r ar n u u t 1 t n t tu rna e future year Ufnccurrence and a1ues 1n tnday s uuHars tne LCCA rnetnuu esea1ates aH arn uunts tu tne1r mseuunts tnern back tu tne base date tu eunvert tnern tu present v Initial cost r r m rennvatmn and fur tne Eqmpment neeueu tu uperate a fauhty n m1 rarn nu d251gn a1ternatwes Th1 wuum be tne ease fur Exam p1e Wnen mmparwg tne Dust nfrennvatmg an Emstmg fauhty w1tn new Dunstructmn un purunaseu 1anu 11112006 http www wbdg orgdesxgnlcca php7pnn W39BDG foesCycle CostAnalysxs LC A Page 3 of 11 LIFE CYCLE OF amLDme PRODUCTS Construenon casts Detanee estnnates Dfmnstmmmn eests are net neeessary ter prehmmary r aya11ap1e unm h h V r 11 data trern snnnar fam mes A1ternate1y geyernrn ent Dr pnyateeseeter The Trtserytees Param etne Esnmanng System WES cuntamed 1n DfBqumg Setenees mas Cunstructmn cntena aase cca eeyempee rneee1s DdeErEnt fauhty types py determmmg the entma1 Dust pararn eters 1 e Hum per Df DDrSr area and yemrn e penrneter 1ength and re1at1ng these yames threugh a1geprate furmma h r n h1 The W usmg SumessEsUm ater a settware padltage aya11ap1e trern u 5 Cast em and we Dr rh 5th r rnatena1s and preeums they tester represent Energy and Water cm n 1g water and n v r rates n n h 1n r t tn At anuar avuuau assessed fur th h M 113111 1 mp n n Energy usage Energy eests are n en mf cu t te premetaemrate1y1n the des1gn phase Ufa 39 h t m Dccupancy t n h n1 11 r Dunsum ptmn ter a punmng ean eerne fmm Engmeenng ana1ys1s Dr trern cumputer pmgrams seen a 4n r n e 1t n m r 11112006 http www wbdg orgdesxgnlcca php7pnn W39BDG foesCycle CostAnalysxs LCCA Page 4 of 11 ntii iater other h rh brabrietary bragrarns TRACE Thane ESPRE EPRI and HAP Carrier haye been aeyeiabea ta guibrn n ii ii i rhi hauriy energy eansurn btian gures and whether the bragrarn aaeguateiy Tacks sayings in energy i r a u A hfescvde east anaiysis at the henrietta hause UKi genianstratea that different traniing systenis haye iitue ar na bearing an the buiiaing s energy use ar col eniissians 1t aisa genianstratea that uberauanai rather than enibaaiea energy is duminant CDurtEsy at Carus Canstruetian Centre Energy prices t th rate tybe th t t n aw in hi abtain an estirnate as eiase as bassibie ta the aetuai energy east Train when estirnating Tuture energy easts Energy bribe braieetians can be abtainea either Train the subbiier ar Train energy bribe esbaiatian rates bubiishea annuaiiy an Abrii 1 by DOE in Discoum Water Costs Wat i There ai u uaii b ufwater msts Water usage casts and Water disbasai msts DOE aaes nat bubiish Water briee braieetians Operation Maintenance and Repair Oust Naneiuei t r n t n M a t estirnate than ii i yary Train buiiaing ta buiiaing there is great yariatian in these easts eyen Tar buiiaings aithe r n iuugii ii ii ii estirnating these msts Su bii i and repair msts Same Bf the data estirn atian guiaes aeriye east aata Train statistieai reiatianshibs an n M n t far i sguare iaat by age aibuiiaing geagrabhie iaeatian nurn ber Dfsturies and nurnber aisguare feet in the buiiaing The whitestane Research Buidmg Maintenance and Rgair CQSKReference giyes annuaiizea msts Tar buiiaing systerns and eierne ts as wen as seryiee iite estirn ates fur speci c The u 5 u i ii n eustarnizea OMEtR database fur rniiitary eanstruetian eantaet Terry L Pattun HNDD1 usaee arrny rnii http www wbdg orgdesxgnlcca php7pnn 11112006 W39BDG foesCycle CostAnalysxs LC A Page 5 of 11 HVAC Svslem Cnsl Overan Years A Enuuvcn snll39h d a wanenee calm1 u c whom Cal 211 Cnurtesy er Washmdtpn state D Epam39n ent er a enera1 Dn nvncnmomum Adm1n1snatmn Replacement Oust d Ummg nf cap1ta1rep1aeements nfbu dmg systems depend en the est1m ated hte nf um per an the system and the 1endth ufthe study penpd Use the same spurees that pmwde epst Est1mates ter1mt1a1 myestm n n ar mup m 11 a 1 1 pa date The LCCA methpd w111esca1ate paseeyear ampunts tp the1r future We nfncmrrence Residual Value er the study penpd 1 1n p1aee resa1e ya1ue sa1yade ya1ue pr serap ya1ue net nfany seng mnversmn pr d1sppsa1 epsts As a ru1e ufthum p the res1dua1ya1ue Ufa system mth rem ammd usetu1 hte 1n p1aee ean pe a epsts Fur Exam p1e ter a system mth an Expel ed usetu tahed 5 years befure the end ufthe study penpd the res1dua1ya1ue weu1d pe apprnwm ate1y 231571EI15Df1ts 1mt1a1 epst other cost Fmanoe marges and taxes Fur tedera1prp1edsnnanee charges are usuauy npt re1eyant nnanee charges and ether payments app1yhpweyer1ta prp 211 15 nanced thrpudh an Energy Savmgs pertermande Centrad ESPC pr Unht Ener Serwees Centraet UESC T e nance charges are usuauy 1ne1uded 1n the epntrad payments negunated w1th the Energy Sen102 Cpm pany ESCO er the utmty a tumnuau nar me n m prtrpm m n h rh new n the1r nature tn the LCCA put 1f 1ndud2d m TD fnrmahze the 1ndusmn Dfnnnrm pnetary epsts pr bene ts 1n ypur demsmn mak1ngynu can use 1 tp epmmpn Emnumu Evamatmn measures when Evamanng pruject a1ternat1yes ASTME 1755 AHP 0 w armpute Deesron s 7 11112006 http www wbdg orgdesxgnlcca php7pnn WBDG LifeCycle Cost Analysis LCCA Page 6 of 11 International presents a procedure for calculating and interpreting AHP scores of a project39s total overall desirability when making building related capital investment decisions A source of information for estimating productivity costs for example is the WBDG Productive Branch C Parameters for PresentValue Analysis Discount Rate In order to be able to add and compare cash flows that are incurred at different times during the life cycle of a project they have to be made time equivalent To make cash ows time equivalent the LCC method converts them to present values by discounting them to a common point in time usually the base date The interest rate used for discounting is a rate that reflects an investor39s opportunity cost of money over time meaning that an investor wants to achieve a return at least as high as that of her next best investment Hence the discount rate represents the investor39s minimum acceptable rate of return The discount rate for federal energy and water conservation projects is determined annually by FEMP for other federal projects those not primarily concerned with energy or water conservation the discount rate is determined by w These discount rates are real discount rates not including the general rate of inflation Cost Periods Length ofstudy period The study period begins with the base date the date to which all cash ows are discounted The study period includes any J39 g uctiun 39 39 period and the service or occupancy period The study period has to be the same for all alternatives considered Service period The service period begins when the completed building is occupied or when a system is taken into service This is the period over which operational costs and bene ts are evaluated In FEMP analyses the service period is limited to 25 years Contract period The contract period in ESPC and UESC projects lies within the study period It starts when the project is formally accepted energy savings begin to accrue and contract payments begin to be due The contract period generally ends when the loan is paid off Discounting Convention In OMB and FEMP studies all annually recurring cash flows eg operational costs are discounted from the end of the year in which they are incurred in MILCON studies they are discounted from the middle of the year A single amounts eg replacement costs residual values are discounted from their dates of occurrence Treatment of Inflation An LCCA can be performed in constant dollars or current dollars Constant dollar analyses exclude the rate of general inflation and current dollar analyses include the rate of general inflation in all dollar amounts discount rates and price escalation rates Both types of calculation result in identical present value life cycle costs Constant dollar analysis is recommended for all federal projects except for projects financed by the private sector ES PC UESC The constant dollar method has the advantage of not requiring an estimate of the rate of inflation for the years in the study period Alternative financing studies httpwwwwbdgorgdesignlccaphpprint1 11112006 WBDG LifeCycle Cost Analysis LCCA Page 7 of 11 are usually performed in current dollars if the analyst wants to compare contract payments with actual operational or energy cost savings from year to year D LifeCycle Cost Calculation Alter identifying all costs by year and amount and discounting them to present value they are added to arrive at total life cycle costs for each alternative LCC IRep ResEWOMampRO LCC Total LCC in present value PV dollars ofa given alternative I PV investment costs if incurred at base date they need not be discounted Repl PV capital replacement costs Res PV residual value resale value salvage value less disposal costs E PV of energy costs W PV of water costs OMampR PV of non fuel operating maintenance and repair costs 0 PV of other costs eg contract costs for ESPCs or UESCs E Supplementary Measures Supplementary measures of economic evaluation are Net Savings NS Savings to Investment Ratio SIR Adjusted Internal Rate of Return AIRR and Simple Payback SPB or Discounted Payback DPB They are sometimes needed to meet speci c regulatory requirements For example the FEMP LCC rules 10 CFR 436A require the use of either the SIR or AIRR for ranking independent projects competing for limited funding Some federal programs require a Payback Period to be computed as a screening measure in project evaluation NS SIR and AIRR are consistent with the lowest LCC of an alternative if computed and applied correctly with the same time adjusted input values and assumptions Payback measures either SPB or DPB are only consistent with LCCA if they are calculated over the entire study period not only for the years of the payback period All supplementary measures are relative measures ie they are computed for an alternative relative to a base case NS Net Savings operational savings less difference in capital investment costs SIR Savings to Investment Ratio ratio of operational savings to difference in capital investment costs AIRR Adjusted Internal Rate of Return annual yield from an alternative over the study period taking into account reinvestment of interim returns at the discount rate SPB Simple Payback time required for the cumulative savings from an alternative to recover its initial investment cost and other accrued costs without taking into account the time value of money Discounted Payback time required for the cumulative savings from an alternative to recover its initial investment cost and other accrued costs taking into account the time value of money DPB F Evaluation Criteria Lowest LCC for determining cost effectiveness NS gt 0 for determining cost effectiveness SIR gt 1 for ranking projects AIRR gt discount rate for ranking projects httpwwwwbdgorgdesignlccaphpprint1 11112006 WBDG LifeCycle Cost Analysis LCCA Page 8 of 11 SPB DPB lt than study period for screening projects G Uncertainty Assessment in LifeCycle Cost Analysis Decisions about building related investments typically involve a great deal of uncertainty about their costs and potential savings Performing an LCCA greatly increases the likelihood of choosing a project that saves money in the long run Yet there may still be some uncertainty associated with the LCC results LCCAs are usually performed early in the design process when only estimates of costs and savings are available rather than certain dollar amounts Uncertainty in input values means that actual outcomes may differ from estimated outcomes There are techniques for estimating the cost of choosing the quotwrongquot project alternative Deterministic techniques such as sensitivity analysis or breakeven analysis are easily done without requiring additional resources or information They produce a single point estimate of how uncertain input data affect the analysis outcome Probabilistic techniques on the other hand quantify risk exposure by deriving probabilities of achieving different values of economic worth from probability distributions for input values that are uncertain However they have greater informational and technical requirements than do deterministic techniques Whether one or the other technique is chosen depends on factors such as the size of the project its importance and the resources available Since sensitivity analysis and break even analysis are two approaches that are simple to perform they should be part of every LCCA Sensitivity Analysis Sensitivity analysis is the technique recommended for energy and water conservation projects by FEMP Sensitivity analysis is useful for 0 identifying which of a number of uncertain input values has the greatest impact on a specific measure of economic evaluation determining how variability in the input value affects the range of a measure of economic evaluation and 0 testing different scenarios to answer quotwhat ifquot questions To identify critical parameters arrive at estimates of upper and lower bounds or answer quotwhat ifquot questions simply change the value of each input up or down holding all others constant and recalculate the economic measure to be tested Breakeven Analysis Decision makers sometimes want to know the maximum cost of an input that will allow the project to still break even or conversely what minimum bene t a project can produce and still cover the cost of the investment To perform a break even analysis bene ts and costs are set equal all variables are speci ed and the break even variable is solved algebraically Sensitivity analysis and break even analysis and a number of other approaches to risk and uncertainty assessment both deterministic and probabilistic are described in detail in Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Building Investments by Harold Marshall NIST Special Publication 757 September 1988 Request a copy of this publication from the Of ce of Applied Economics at NIST H Design and Analysis Tools httpwwwwbdgorgdesignlccaphpprint1 11112006 W39BDG L1fesCycle CostAndybs LCCA Page 9 of 11 tdnn d1at1ng rh 1 tccAere1ated sD WarE brbgrarns rarn ndtnntgtr Enrgrdrat Energy Managern ent ngram FEMP ECONPACK tbr WmdDWsiAn Emnnmu ana1ys1stbb1deye1bbed by the u 5 Anny CDrps Df Engmeers 1n suppurt DfDOD fundmg reddests Energye1 aya11ab1e fr rn Sam ttteeCyde Custm D251gn WmLCCID Prugram 2D47D2v2mp2d tdr MILCON ana1yses by the gmeenng Research LabDratDry Df the u 5 Arrny CDrps Df Engmeers Ebr CDHSUUEUDH En assWDrd ebnta SuEDEssESU g ta 1 aya11ab1e trbrn u 5 Cast APPLICATION nn tat ebsts are 1n1t1a11nyestrnentmsts mfferent Dperatmg and mamtenanue and repav casts and bbss1b1y mfferent hyes LCCA rbytdes a s1gn1fcan y better assessrnent DHHE 1bngeterrn msteetteettyeness bta prDJEEt than a1ternat1ye EEDHDNH rnethbds that tdeds bn1y bn rst msts br bn bberattnge re1ated ebsts 1n the shbrt run 1 1 111 MI 1 tca was ambnd the many destdn and ana1ys1s tbb1s dsed td transtbrm th1stum erthe eertdry bd11d1nd1beated1n dDanWn Tacuma WA mm 1 an enemy Ef ment shbwease bd11d1n CDurtesv er Washmg un state Department er cenera1Adm1n1strat1bn a bamebfethee 1 r enye1bbe 1 The Extensweness DHHE Effurt shbd1d beta11bredtb the needs DHHE prDJEI RELEVANT CODES AND STANDARDS 1 CFR 435 Subgart AiFeden Energy Managern ent and p1ann1ng Prugrams Methbdb1bgy and Prucedu es tdr Dfecyde cast Ana1yses cremar ND A79476u1d2hnes and D155Dunt Rates fDr Bene tecust Ana1ys1s beedera1 Prugrams Energy Puhg Act bfzuus nor 1 9 MB 55D v95 Ex der 13123icr22mng the GDvemment thrbugh Ef ment Energy Managernent eeutwe or DoE Gmdance bn Ltteecyde cast Ana1ys1s Regmred by Executwe order 13123 http www wbdg orgdes1gnlcca php7pnn 11112006 WBDG LifeCycle Cost Analysis LCCA Page 10 of 11 Facilities Standard for the Public Buildings Service P100 GSAi Chapter 18 Life Cycle Costincl P 442 Economic Analysis Handbook NAVFAC Standards on Building Economics 5th ed ASTM 2004 ASTM Stock BLDGEC99 ISBN 0 8031 27146 Sustainable Building Technical Manual DOElEPA Tri Services Memorandum of Agreement MOA on quotCriterialStandards for Economic Analyseleife Cycle Costing for MILCON Designquot 1991 LCCA Guidelines for OMB Projects Office of Management and Budget OMB Circular A 94 Guidelines and Discount Rates for Bene t Cost Analysis ofFederal Programs October 1992 applies to building related benefit cost or cost effectiveness analyses of federal programs or policies that are not primarily concerned with energy or water conservation or renewable energy projects Appendix C of Circular A 94 updated annually in February provides the OMB discount rates LCCA Guidelines for FEMP Projects FEMP has published life cycle costing rules and procedures in its Code of Federal Regulations CFR 436 Subpart A These FEMP rules are consistent with OMB rules They are to be followed by all federal agencies unless speci cally exempted in evaluating the cost effectiveness of potential energy and water conservation projects and renewable energy projects for federally owned and leased buildings NIST Handbook 135 Life ycle Costing for the Federal Energy Management Program explains and ampli es the LCC rules of 10 CFR 436A The Annual Supplement to Handbook 135 Energy Price Indices and Discount Factors for Life cycle Cost Analysis updated annually on April 1 provides the FEMP discount rates The same publication contains tables of discount factors for time periods up to 30 years using either the OMB or FEMP discount rate The FEMP discount factors also include the most recent energy price escalation rates projected by the DOE Energy Information Administration EIA The discount factors are embedded in BLCC5 and WinLCCID and other federal LCC computer programs LCCA in the Department of Defense DOD The Tri Services Memorandum of Agreement MOA on quotCriteriaStandards for Economic AnalysesLife Cycle Costing for MILCON Designquot 1991 provides the guidelines for LCCA for DoD energy and non energy projects These guidelines are consistent with FEMP and OMB guidelines However the MOA recommends but does not require that cash flows are discounted from the middle of each year rather than from the end of each year as are cash ows of FEMP and OMB projects ADDITIONAL RESOU RCES WBDG Design Objectives Cost Effective Branch Functional Operational Productive Sustainable Publications Building Economics Theory and Practice by Rosalie T Ruegg and Harold E Marshall New York httpwwwwbdgorgdesignlccaphpprint1 11112006 W39BDG LmeeCyde CostAnalysxs LCCA Page 11 of 11 Van Nestrand 12e1nbe1d 199d 17d11d1ng Mantenanee and Rgav Cestpebrenee by wb1testene Researdn 2mm Enegy pnee 1nd1ces and 019031171 Factors br beecme CestAna1ys1s Armua 5119919777971 to W by 51ed11nde 1lt FuHEr Arny 5 Rushmg and Laura 1 sdnd1tz 11151112 95927349 ca1tbersbdrd MD Nat1ena11nst1tdte DfStandards and Tedwn919dvAbr112uu5 A1se aya11ab1e fmm tbe DOEFEMP He1b Desk at 1E77 EERE INF 141713379453 Engmeenng Ebenerny by c 1 Thuesen and w 1 Fabrycky Prentme Ha11 1993 15911 new 2774914 GSA LEED Cestsmdy GSA 2mm GSA LEED AQgmancms 3111119 GSA zuus begeb Cesan Manua for tne Federal Energy Managementprgqrarn by 51ed11nde FuHEr and 5 12 Petersen NIST Handbuuk 135 Nat1ena11nst1tdte DfStandards and Tecbnmudy 1995 S1mp1 ed Energy Des1gn Economcs by Hare1d E Marsba11 and Rnsahe 1 Ruegg was 59 544 Wasb1ndten DC Nat1ena1adread DfStandards January 19am others na 9db11sbes standards tnat suppurt LCCA 11 Means Cern an ioffers eenstrddtmn eest databases Susta1nab1e ad11d1n s 1nddstr Cednd1 saxc ioffers Wnrkshnps en Des1dn1nd LeweEnerdy ad11d1nds tbat1nddde1nstrdet1en 1n ds1nd Enerdyem sn wara A y Curbs DfEngmeerS t1teeCyde Cest Medd1e u a b d e 1111a 1am Est1rn at1nd System WES rnede1s seyera1t1rnes eaeb year 11 5 Department b111ad 111a1nA trern whmh 1nc1ud25 an 1ntruduct1nr1 te BLCCS 11 1 D and partners bJe s1rn11ar data ee11eet1en and ana1ys1s rnetneds Updated 172178217175 WEDG15 a bmdram artne Nat1ana11nst1tdte af Bu11d1mz seenees mas 1d9d yennant Ayende 11w Smte 7nd Wasnmdtan DCZEIEIEIS 1 39 39 2d272d9e7ddd Fax 29272591992 nus Nat1ana1 1nst1tdte af Bu11d1m1 51212111225 A11 wants Reserved 11112006 http 11www wbdg orgdesxgnlcca php7pnn
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'