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How to Use Life Cycle Costing in Construction Estimating

LCCA is especially useful for evaluating design choices that have different initial investment prices, operating, maintenance and repair costs, and future cost responsibilities. LCCA weighs the money invested today against the money that will be spent in the future to evaluate which choice has the best value.

Maintenance costs are more accurately predicted with life cycle cost analysis. Facility managers can prepare a maintenance schedule that promotes efficiency.

Cost Analysis

The process of preparing cost estimates requires extensive data collection and organization. Often, the data used in preparing these estimates are based on historical cost records. This type of data is only useful for forecasting costs if it has been collected and stored in a format that will be compatible with future uses. Data should also be updated periodically as prices change.

Construction estimators use a variety of techniques to determine the cost of projects. These methods include project comparison estimating, parametric estimating, area and volume estimating, and assembly and system estimating. Each method offers different levels of accuracy and confidence. However, they all have limitations and drawbacks that need to be considered.

Life cycle costing is a process that takes into account the total cost of a building over its lifespan, including initial investment, operation, maintenance, and decommissioning expenses. This method also takes into consideration the environmental impact of a building, which is an important aspect of sustainable design.

Besides the direct construction costs, life cycle cost analysis also includes indirect costs such as site preparation, financing costs, insurance premiums, and rental charges. It can also take into account intangible assets such as a business’s brand and patents. However, it is harder to calculate the cost of intangible assets than for physical ones. This is because it is not easy to find relevant and reliable information about these items.

Life Cycle Assessment

A life cycle assessment (LCA) is an economic analysis method that calculates the total costs of a project over its lifetime. It takes into account all the costs of acquiring, operating, maintaining, and disposing of a facility. It is particularly useful when alternative projects that meet the same performance requirements but differ in initial costs have to be compared to find the one that maximizes net savings. For example, it can help you decide whether to incorporate a high-performance HVAC or glazing system that may increase the initial cost but save you substantially on operational and maintenance costs in the long run.

The life cycle assessment can be performed in either constant or current dollars, depending on the time frame of interest. Constant-dollar analyses exclude the rate of general inflation, while current-dollar analyses include the rate of inflation and price escalation rates. It is also possible to use multiple LCAs in parallel, allowing for different scenarios or alternative designs to be tested at the same time.

A comprehensive life cycle analysis can provide insights into the environmental impacts of building materials and equipment choices, as well as give you a better sense of the overall energy efficiency of your construction project. This type of information is essential for value engineering a project’s budget. However, it is important to work with a construction team that understands your budget and can offer creative suggestions without overextending your funds.


Construction benchmarking is a valuable tool for creating more accurate estimates, identifying cost-saving opportunities and improving project outcomes. However, it can be difficult to implement benchmarking effectively and overcome a range of challenges that may hamper the process.

The first step in the benchmarking process is to collect data from past projects that are similar in scope and size. This information can include material costs, labor hours and equipment expenses. It is also important to adjust historical data for inflation and other economic changes. Once the data has been collected, it is necessary to identify which variables should be compared. This is an important aspect of the process because comparing too many variables may distort the results.

It is also important to consider regional and market differences when analyzing the data. These variations can significantly affect project costs. For example, labor rates and material availability vary based on location. Additionally, different types of projects require varying skill sets. Generic benchmarking averages typically do not account for these differences, which can result in inaccurate estimates.

Finally, it is crucial to assess the current business processes and identify areas for improvement. This can be done through a variety of methods, including internal benchmarking. While it is not as effective as competitive benchmarking, internal analysis can help improve productivity and boost company profitability.

Energy Efficiency

In order to minimize life cycle costs, building owners should use energy efficient products and construction methods. This will save money in the long run by reducing the need for maintenance and repair. Additionally, it will reduce the amount of waste generated by the building. There are several ways to make a building more energy efficient, including using LED lighting, installing solar panels, and using appliances with high efficiency ratings.

Detailed cost estimates for the submittal stages of design are prepared based on quantity take-off calculations and referenced against construction cost databases such as Commercial Unit Price Book (CUPB) and R. S. Means Company. Testing organizations such as ASTM International and trade associations also offer reference data for materials and products. Energy price projections are based on supplier quotes for future energy prices and on the energy price escalation rate published each year in NIST Handbook 135. Water pricing is based on current rates and water consumption, with some estimates taking in disposal and treatment costs as well.

It’s important to use life cycle cost analysis throughout the entire process of design. It can help you choose the best product and improve the overall quality of your project. By comparing the initial and operating costs of different alternatives, you can make the most informed decision about which product will meet your requirements while saving you money in the long run.