Life-cycle costing can help builders and developers evaluate whether or not it makes financial sense to install high-performance or green products
Life-cycle costing (LCC), or a life-cycle costing analysis (LCCA), examines the cumulative costs associated with owning a product, material or technology over a defined time period and can be very useful to builders and developers for choosing the most economical building designs. This approach takes into account a range of price considerations such as initial costs and installation, as well as future expenses over the life of the product associated with utility expenses, maintenance, repairs, operation and even disposal.
According to the Whole Building Design Guide of the National Institute of Building Sciences, an LCCA is especially useful when project alternatives that fulfill the same performance requirements, but differ with respect to initial costs and operating costs, have to be compared in order to select the one that maximizes net savings.
LCC is closely related to the life-cycle assessment (LCA) approach, which seeks to measure the cradle-to-grave environmental impact of materials and products. An LCA takes into account all stages associated with a product or material, including extraction, manufacturing, transportation, building and assembly, operation, and demolition and disposal.
“An LCA is a useful approach for environmentally minded builders who are interested in specifying products and materials with relatively low carbon footprints,” says John Carmody, director of the Center for Sustainable Building Research at the University of Minnesota, who conducts research on life-cycle assessments of materials.
LCC, says Carmody, involves a very similar structural approach but brings a monetary element to the picture. Instead of environmental performance, costing is the end focus. “LLC takes into account the total financial obligation of using a product or material over the life of a building,” he says. “By applying LCC, it is possible to show the financial advantage of one product over another, given a certain time period. Looking at the performance of products and materials in a specific environment from an all-inclusive cost perspective, it can help builders and homeowners make better decisions.”
LCC can help builders and homeowners quantitatively measure the benefits and advantages of green products, says Jeffrey Dinkle, president of Atlanta-based Eco Custom Homes. “LCC allows me to compare different products in order to determine which one will be the most cost-effective option over the life of a home,” Dinkle says. “It is a valuable tool in custom home building. It emphasizes sophisticated design and helps build a better product at the most economical price.”
Depending on the product or the technology, the calculation can vary, whether it involves evaluating different siding options, assessing a potential solar photovoltaic purchase, or seeing if it makes financial sense over the long run to install a tankless water heater. “Green materials have higher up-front costs, but have the advantage of offering long-term financial incentives such as monthly energy savings, lower maintenance and operating expenses, and longer life spans.”
In the greater Dallas/Fort Worth area, Chris Miles of GreenCraft Builders utilizes LCC principles in designing and building high-performance homes that are demonstration projects for the U.S. Department of Energy. One such project, the TimberCreek Zero Energy House, was loaded with a multitude of eco-friendly designs and technical strategies to achieve a house that is ultra energy- and water-efficient, and built with minimal impact on the environment.
“The up-front costs were definitely more for this project, but the materials and technologies used are extremely resilient and efficient, and will last the life of the house,” Miles says.
On the exterior, this included fiber cement siding and a standing-seam metal roof—products that are highly durable, very low in maintenance and most likely will never need to be replaced. “Considering that hailstorms can be a frequent occurrence in our area, it made economical sense to go with the metal roof,” Miles says. “By doing so, we are taking potential repair costs out of the equation.”
Throughout the interior Miles used LED lighting, an option that involved a higher purchase price, but is also very economical considering that LED bulbs use considerably less electricity and last much longer as compared to standard incandescent lighting. “From a LCC perspective, these installations were very economical, especially considering that the client is planning on staying in that house indefinitely,” Miles says.
Another home completed by GreenCraft was the Colleyville Eco House, a U.S. Department of Energy demonstration project that was also a 2008 national project of the Building Science Consortium. Included among the numerous innovative designs are an incredibly tight and high-performing building envelope, solar photovoltaic panels, and geothermal heating systems. Although these project alternatives involved considerably higher design and installation costs, a LCCA justified the expense—the extremely low electrical, heating and cooling costs combined with the longevity of the systems will more than pay the investment back.
Miles also installed reclaimed hardwood floors in the Colleyville Eco House that were obtained from a house in Fort Worth that was going to be demolished. LCA-wise, this was considered highly beneficial in the sense that the useful life of the floors was extended while materials were diverted from a landfill. However, the LCCA was equally as positive. “The floors were purchased for only $1 per square foot and will last the life of the home,” Miles said. “After being refurbished, they look absolutely beautiful.”
Ed Gorman, president of Modus Development which creates highly innovative condominium communities in the greater Phoenix area, utilizes LCC as an educational tool for helping potential buyers understand the long-term, economical benefits of investing in housing that incorporates sustainable and high-performance features.
“Like so many things in building, LCC is something that must be utilized based on potential return on investment (ROI),” says Gorman. “Homeowners typically do not want to pay higher initial costs, but if we can show them how green and durable designs will result in lower utility bills and maintenance expenses, then the higher purchase price can be justified.”
When constructing buildings that will be held long-term, Gorman says builders and developers can plug the energy performance values (such as the R-value) of materials and designs into modeling programs in order to calculate energy efficiency. “It’s possible to estimate the energy savings from incorporating masonry block in the building envelope or that polyurethane foam “cool roof” technology with reflective elastomeric covering—despite having higher initial costs—will significantly reduce energy consumption in a building,” Gorman says.
LCC is also very useful for quantifying extremely durable designs, such as the zinc used on the exterior of Modus Development’s Galleries at Turney. “Zinc is a lifetime material that never needs to be repainted or repaired,” Gorman says. “LCC can be used to measure its durability over time by generating an actual ROI.”