Ernie asks: Can you tell me how Lifecycle cost analysis (LCA) figures into green building materials and whether it's a very important thing to consider when making purchasing decisions? Also is it true that the government requires building material providers to pass a LCA test?
Ernie, two very good questions. The short answers are “yes” lifecycle cost analysis is very important when making purchasing decisions, and “no” the government does not require a lifecycle cost analysis test.
But the details are much more interesting…
There are actually two related items that have a similar acronym: Lifecycle Analysis (LCA) which deals with a product or materials environmental impact over its lifecycle, but doesn’t deal with cost. There’s also Lifecycle Cost Analysis (LCCA) which deals with the cost impact of a product or material, but doesn’t deal with the environmental impact. Both have important roles to play in sustainability and on Federal projects in particular.
Lifecycle Analysis (LCA)
Lifecycle Analysis (LCA) is the analysis method most directly related to sustainability. LCA provides an assessment of a product or building component over its lifecycle. Instead of focusing on a single aspect of a product’s sustainability, such as recycled content, it measures a product’s entire life including extraction/harvesting of materials, processing/manufacturing, transportation, installation, operations & maintenance, and reuse/recycling/disposal. This provides for a more accurate assessment of a materials true environmental impact.
This assessment also would take into consideration things such as a product’s durability while in use and the overall embodied energy of a product.
One of the most common certification systems for LCA, especially with respect to LEED, is the “Cradle to Cradle (C2C)” program developed by McDonough Braungart Design Chemistry (MBDC). This program measures the LCA of various products and establishes a ranking system of how sustainable they are. There is a LEED Innovation in Design credit available for utilizing C2C products that meet a 2.5% material cost threshold.
Lifecycle Cost Analysis (LCCA)
Lifecycle Cost Analysis (LCCA) is one of several methods used to identify the potential cost savings of a product, system or building component compared to other similar products. It is more often than not a requirement on Federal projects when selecting certain building systems and materials, but like many things at the Federal level the requirements will vary from agency to agency and even project to project. You’ll have to examine your specific project requirements to see what is actually required, but here is a generality that “should” apply to most Federal projects.
LCCA at the Federal level is generally referenced to 10 CFR 436, Subpart A and the National Institute of Standards and Technology (NIST) Handbook 135. This CFR deals specifically with the method and procedures to be used when calculating the LCCA. As a generality the term of the LCCA is 25-years, but is being increased on projects to 40-years. The term may be more or less based on various factors such as the life expectancy of the building.
LCCAs typically take into consideration the cost of purchasing/installing, operating & maintaining, repairing and then disposing of the product, system or building component being analyzed compared to other products or systems. LCCA decision making requires that the lowest overall cost be used when selecting a system. In some situations, the decision to install a product or system is not made if/when the LCCA is determined to not be cost effective compared to other products. The most common example of this is providing hot water through solar thermal systems. Due to the installation cost of the panels and equipment, as well as the actual usage of hot water in a building, the installation of these systems may not be cost effective on some buildings, but may be very cost effective on others.
LCCAs are most commonly encountered in HVAC system selection, but are also encountered is also required by several other Federal requirements. Certain projects may require formal LCCAs to be performed for almost all products and materials used on a project, although this is the exception and not the rule. Typically LCCAs will be limited to HVAC and renewable energy systems.
Looking at LCCAs only from the material purchasing perspective and how they would apply to any project, they still maintain much of their importance. By conducting an LCCA, the design team and building owner will have an understanding of the overall costs involved with a particular system compared to other systems and can better decide on what technology best suits the project without unnecessarily inflating the project budget. Some building owners may be willing to pay a little more during construction to install a system that has a lower overall cost due to a longer expected lifecycle. Whatever LCCA decisions are made obviously need to be discussed with the entire design team and owner so that all implications of the selected product or system can be analyzed how it will affect the entire project.
Federal LCCA Requirements and Sustainability
Several Federal Mandates and Regulations require LCCA analysis that directly relates to sustainability:
Executive Order 13423
Section 1 requires Federal agencies to consider LCCA when planning and investing in capital assets, services and procurements in an effort to lower the government’s overall cost and improve energy and water efficiency.
Section 2 (b) requires that renewable energy generation be generated on projects when lifecycle cost effective.
Section 2 (c) requires water use to be reduced compared to a 2007 agency baseline when lifecycle cost effective.
Section 2 (e) iii requires agencies to maintain cost effective recycling programs.
Section 2 (g) requires agencies to purchase Plug-In Hybrid vehicles when lifecycle cost effective compared to traditional vehicles.
Energy Independence and Security Act (EISA) of 2007
Section 434 requires that major replacements of equipment, or renovation or expansion of existing space, employ the most energy efficient designs, systems, equipment, and controls that are life-cycle cost effective.
Section 436 the General Services Administration to establish an Office of Federal High-Performance Green Buildings to coordinate green building information and activities within GSA and with other federal agencies. The Office must also develop standards for federal facilities, establish green practices, review budget and life-cycle costing issues, and promote demonstration of innovative technologies.
Section 431 is where the 25-year LCCA term was increased to 40-years.
Section 523 requires that at least 30% of the hot water demand of the building be met through the installation of solar hot water heaters, when lifecycle cost effective.
I’ve never heard of a government LCCA test that is across the board and I’m not even sure what an LCCA test could accurately show. Due to the varying factors that encompass an LCCA such as installation costs, utility rates and maintenance costs which will vary from project site to project site a product may be LCCA beneficial for one project based on its use and location (utility rates), but the same project use in a different location may not be LCCA beneficial due to differing utility rates. So LCCA assessments must be evaluated on a project by project basis.
For a further detailed explanation of LCCA and how it applies to government projects take a look at the Whole Building Design Guide as well as the specific LCCA requirements of your project and the agency you’re working for.