How do you calculate the lifecycle costs of your Sustainable Design?

1 What is lifecycle costing?

Lifecycle costing (LCC) is a method of evaluating the economic efficiency of a design by estimating all the relevant costs and benefits associated with it from cradle to grave. This means that you have to account for not only the initial purchase and installation costs, but also the operating and maintenance costs, the energy and water consumption, the emissions and waste generation, the potential savings and revenues, and the disposal and recycling costs. LCC can help you compare different design alternatives and choose the one that offers the best value for money over time.

2 How to calculate lifecycle costs?

Calculating lifecycle costs is not a one-size-fits-all formula, as each design project has its own characteristics and assumptions. However, a general process can be followed to perform a LCC analysis. This involves defining the scope and objectives of the analysis, identifying design alternatives to compare, estimating the lifespan of each alternative, and determining the discount rate to convert future costs and benefits into present values. Additionally, you must identify and quantify all relevant cost and benefit categories for each alternative, such as capital costs, operating costs, maintenance costs, energy costs, water costs, environmental costs, social costs, and residual value. Sum up all present values of the costs and benefits for each design alternative to calculate net present value (NPV), benefit-cost ratio (BCR), or internal rate of return (IRR) as indicators of economic efficiency. Finally, compare the results of the LCC analysis to select the design alternative that has the lowest lifecycle cost or highest NPV/BCR/IRR or meets other criteria such as environmental or social performance.

3 What are the benefits of lifecycle costing?

Using a lifecycle costing approach can help you make more informed and sustainable design decisions, as it can provide an extensive and accurate picture of the costs and benefits of your design over its lifespan. This approach can also motivate you to think about the environmental and social impacts of your design, and to adopt strategies that reduce resource consumption, waste generation, emissions, and negative externalities. Additionally, it can assist in optimizing your design for efficiency, durability, adaptability, and recyclability, as well as in communicating the value of your design to clients or investors. All of these factors can help you justify your design choices based on evidence and data.

4 What are the challenges of lifecycle costing?

Lifecycle costing can be a powerful tool for sustainable design, but it also has its challenges and limitations. Obtaining the necessary data and information for different design alternatives may be difficult, especially for innovative solutions. Additionally, there are many assumptions and uncertainties that can affect the accuracy of the results, such as the lifespan of the design, the discount rate, and future prices of resources and energy. Qualitative or intangible aspects of a design may not be taken into account, such as aesthetic value or user satisfaction. Finally, lifecycle costing may not reflect all stakeholder perspectives and interests since different parties may have different preferences or objectives.

5 How to improve your lifecycle costing skills?

If you want to improve your lifecycle costing skills and apply them to your sustainable design projects, there are some tips and resources that can help. You should learn the basic concepts and principles of lifecycle costing, as well as the common methods and tools for performing a LCC analysis. Practicing on real or hypothetical design projects can help you compare your results with other sources or experts. It is also important to review and update your LCC analysis regularly, and monitor the actual costs and benefits of your design over time. Additionally, seeking feedback and input from other stakeholders, such as clients, users, suppliers, or regulators can be beneficial in incorporating their views and expectations into your LCC analysis. Lastly, exploring other examples and case studies of sustainable design projects that have used a lifecycle costing approach can be useful in identifying best practices and lessons learned.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?