Life-Cycle Cost Analysis
Will an investment in energy-saving projects pay off in the long run? You can find out whether projects are a wise investment by performing a life-cycle cost (LCC) analysis. To help facility managers make sound decisions, FEMP provides software, training, publications, and guidance on how to apply LCC to evaluate the cost-effectiveness of energy and water investments. Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader
Federal Requirements
Life-cycle cost analysis rules are promulgated in 10 CFR 436 A, Life Cycle Cost Methodology and Procedures and conforms to requirements in the NECPA and subsequent energy conservation legislation as well as Executive Order 13423. The LCC guidance and materials provided here assume discount rates and energy price projections (TXT 18 KB) determined annually by FEMP and the Energy Information Administration. FEMP provided guidance on the LCC requirements under Executive Order 13123 (PDF 139 KB).
Software
FEMP's Building Life-Cycle Cost (BLCC) software programs can help you calculate life-cycle costs, net savings, savings-to-investment ratio, internal rate of return, and payback period for Federal energy and water conservation projects funded by agencies or alternatively financed. The BLCC programs also estimate emissions and emission reductions. An energy escalation rate calculator (EERC) computes an average escalation rate for ESPC contracts when payments are based on energy cost savings. Check out more about BLCC5 (windows-based) and BLCC4 (DOS-based) and associated programs.
Training
Take advantage of LCC workshops offered by FEMP. Each year, FEMP conducts a 2-hour televised workshop on life-cycle cost methods and the use of BLCC (Building Life-Cycle Cost) software programs. In some years, two-day classroom workshops are offered at various U.S. locations.
Publications
Handbook 135, Life-Cycle Costing Manual for the Federal Energy Management Program (PDF 9.2 MB), is a guide to understanding the LCC methods and criteria FEMP established for evaluating the economics of energy and water conservation and renewable energy projects at Federal facilities. Order a free copy by calling the Energy Efficiency and Renewable Energy (EERE) Information Center at 1-877-337-3463.
Annual Supplement to Handbook 135 (ASHB 135), Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis (PDF 1 MB), contains annually updated tables of discount factors. These tables incorporate FEMP and Office of Management and Budget (OMB) discount rates and energy price escalation rates as assumed in 10 CFR 436 and OMB Circular A-94.
Related Links and Support
The National Institute of Standards and Technology (NIST), Office of Applied Economics, provides technical LCC support to FEMP and LCC practitioners. Contact Barbara (Bobbie) Lippiatt or Amy Rushing.