Life Cycle Cost

Evaluating the entire life cycle of a building for a cost-aware management

The overall cost of a building does not only include the purchase and refurbishment costs, but also the full set of expenses required for its use throughout its life.

Estimating the overall cost aims at providing decision makers with all the elements they need to make the right choices when it comes to investing in the process, considering the stages of conception, construction or renovation and management of the building over time.

To apply the life cycle cost, you need to:

Define the type of realization and the investment and performance goals.

Define the project and its possible alternatives, by identifying all physical, functional and regulatory constraints and the design alternatives that are technically sound and meet specific technical performance.

Define the period of study, the time frame during which the costs and benefits, once linked to the investment, affect the investor’s interests.

Identify costs that are ‘relevant’ and ‘not relevant’ for the assessment

‘Relevant’ costs are investment (design, purchase, construction costs), operating (electricity, water, gas, and so on) and maintenance costs (renovation and/or restoration costs). ‘Non relevant’ costs are those that do not vary across design alternatives, the so-called ‘irrecoverable costs’, the tax or financial costs, and so on.

The life cycle cost analysis is therefore essential when evaluating a project that involves high initial investments that are functional in reducing the operating costs over time.