A new version of Autocase for Buildings is in beta testing and over the next few posts we’ll share some of the features you can expect to see come October.
Financial analysis is obviously extremely important in making a business case for building designs. Someone has to pay money upfront for expected returns and needs to be convinced they will get their investment back … and more. Autocase does this financial analysis. But we go beyond simple payback analysis. We even go beyond life cycle cost analysis.
LCCA, Total Cost of Ownership & Beyond
Life Cycle Cost Analysis (LCCA) evaluates the Total Cost of Ownership (TCO) over the life of a building in order to compare the cost-effectiveness of design options. It is usually conducted in the early design phase of a project, as it offers an opportunity to amend designs to reduce life cycle costs.
The LCCA or TCO is just the starting point for Autocase’s analysis – to LCCA Autocase adds non-market externalities, such as carbon emissions, the social value of water, and the health benefits to employees for example.
Autocase for Buildings allows you to input LCCA/TCO information about your investments in:
- Rainwater Harvesting
- Greywater Reuse
- Renewable Energy Production
- Building Site Lines
- Heating, Ventilation & Air Conditioning
And Autocase will then calculate the financial value over the lifecycle of the project of all of your investments.
Here is where you will find the financial value (discounted to the present):
And here is where you can find the financial value broken out by financial outlays (negative values, such as upfront capital costs) and additions to value (such as tax credits):
After discounting, LCCA = capital costs + replacement costs + non-utility operations and maintenance costs + utility operations and maintenance costs – residual value – salvage value.
Here are the LCCA inputs:
LCCA Inputs – The Financial Fine Print
Our economists are consummate professionals. They are sticklers for detail. They want you to know that they have thought of everything. So, to keep them happy, here are details of the LCCA components:
Upfront Capital Costs
- Upfront capital costs are the initial costs incurred during the construction period. Cost items can include the purchase of assets, systems, and any other materials during construction, including labour costs for installation.
- Upfront capital costs in each design case are compared to the base case. Positive incremental upfront capital cost in the results implies that the design was less costly than the base case.
- For example, for HVAC investments, upfront capital costs may include a furnace, ductwork, and thermostats. These components may be compared to a less efficient system in the base case.
- Replacement costs refer to the costs required to replace an asset or system during the specified life of a building (or study period). An asset may be replaced multiple times over the life of a building/study period.
- The replacement cost may cost more, less, or the same as the upfront capital costs of the asset.
- For instance, a furnace, part of an HVAC investment, may only have a useful life of 20 years, therefore must be replaced throughout the life of the building if the study period is longer than the useful life.
- The residual value of an asset or investment refers to the financial benefit arising at the end of the life of a building or study period, for any assets with a remaining useful life.
- Autocase calculates residual values using straight-line depreciation.
- If, for example, a furnace still has useful life remaining at the end of the life of the building or study period, a residual value will be applied.
- The salvage value is the financial benefit associated with the disposal of assets at the end of their useful life.
- For instance, at the end of the useful life of a furnace, there may be a financial benefit from the scrap metal in the unit.
Non-Utility Operations and Maintenance Costs
- Non-utility operations and maintenance (O&M) costs include all costs associated with operating, repairing, upgrading and/or recommissioning investments over the course of an investment’s useful life but exclude any costs from utilities. These costs include preventative measures and anticipated repairs to extend the useful life of materials and equipment.
- For example, to keep a furnace in proper working order, filters must be changed as part of preventative maintenance performed over the life of the asset.
- There are two types of O&M costs: annual and variable.
- Annual O&M costs are incurred each year during the life of the building (or study period) and may escalate if real costs increase over the study period. Escalation rates are capture growth beyond general inflation (i.e. costs increase every year by the rate of inflation; these cost increases should not be included).
- Variable O&M costs are those that occur sporadically throughout the study period. If for example, a cost of $200 is incurred in 2020, 2030, and 2035, one cost will be included in this section and “add a new cost” to your LCCA analysis for the other costs in the future.
Utility Operations and Maintenance Costs
- For utility operations and maintenance (O&M) costs you can put in your utility rates. Autocase also provides defaults to get you started:
- Autocase has a database of average electricity prices by city. Prices for the U.S. are collected by state from the U.S. Energy Information Administration and by municipality from municipal electric utility websites for Canada. If a user has more accurate prices for their project, it is encouraged to override this input in order to get more representative results. This value must be inputted in current US Dollars, regardless of project location.
- Autocase’s default natural gas prices are collected by state from the U.S. Energy Information Administration and by municipality from municipal utility websites for Canada.
- Autocase defaults to city-specific water cost estimates using American Water Works Association’s Water and Wastewater Survey (2014) for US cities, and Environment Canada’s Municipal Water Pricing Data (2009) for Canadian cities. Autocase provides estimated growth rates using historical growth rates in water prices from American Water Works Association (2014). Autocase defaults to city-specific wastewater cost estimates using American Water Works Association’s Water and Wastewater Survey (2014) for US cities, and Environment Canada’s Municipal Water Pricing Data (2009) for Canadian cities. Autocase provides estimated growth rates using historical growth rates in wastewater prices from American Water Works Association (2014).
Autocase: Making the business case for high performing and sustainable buildings.
Autocase for Buildings is a software tool that models the environmental and social dollar values of building designs and, together with financial costs, evaluates their net, triple bottom line (TBL) benefit over the life of a project using a rigorous cost-benefit analysis (CBA) framework. With Autocase, the cost and time required to compare design alternatives at any stage of a project is a fraction of today’s custom studies. As a result, design firms can easily evaluate and justify different approaches and, in so doing, contribute to the future economic, social, and environmental success of every project.
For more information about how TBL-CBA would assist your high performing and sustainable building project, go to www.autocase.com