LCCA best practices

Incorporate these best practices when working with a building owner to create a lifecycle cost analysis (LCCA).


Economic analysis is useful only if stakeholders have results and recommendations prior to making project decisions. The following best practices will help ensure your analysis stays on track:

  • Only evaluate design alternatives that meet the owner's project requirements; all options, including the base case, need to be technically feasible.
  • Design and analysis effort is another project cost, which should always be considered. Scale effortsaccordingly.
  • Discuss the "time value of money" concept with the owner at the start of the project. Remember that the discount rate is specific to each owner, but try to discourage the use of "real" discount rates above 7% or below 2%.
  • Use a constant dollar approach for treating general price inflation; be sure to use "real" discount and escalation rates.
  • Avoid using multiple sources for initial project cost estimates; only incremental costs are necessary. If a cost estimator is on the team, have design options priced as alternates.
  • Use actual utility rate structures in the energy model, particularly when evaluating demand reduction or load-shifting strategies. If utility rate structures are not available, use the appropriate U.S. Energy Information Association (EIA) average blended rates.
  • Evaluate interdependent systems (e.g., envelope and HVAC) in concert.
  • If alternatives provide varying levels of indoor environmental quality, make adjustments in the energy model so that differences are expressed in terms of energy cost.
  • For more reliable operating, maintenance, and repair (OM&R) cost estimates, have equipment manufacturers provide quotes for preventive maintenance service contracts.
  • Provide stakeholders with results early on and be transparent about the level of uncertainty; include a sensitivity analysis to identify critical inputs. Iterate and refine input assumptions as the project progresses and more accurate data is available.

David J. MacKay is an associate with Kohler Ronan LLC in the New York City office. MacKay's expertise includes building performance modeling, building commissioning, energy auditing, energy reduction plan development and energy procurement consulting.

Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
How to use IPD; 2017 Commissioning Giants; CFDs and harmonic mitigation; Eight steps to determine plumbing system requirements
2017 MEP Giants; Mergers and acquisitions report; ASHRAE 62.1; LEED v4 updates and tips; Understanding overcurrent protection
Integrating electrical and HVAC for energy efficiency; Mixed-use buildings; ASHRAE 90.4; Wireless fire alarms assessment and challenges
Power system design for high-performance buildings; mitigating arc flash hazards
Transformers; Electrical system design; Selecting and sizing transformers; Grounded and ungrounded system design, Paralleling generator systems
Commissioning electrical systems; Designing emergency and standby generator systems; VFDs in high-performance buildings
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me