When first developing design ideas for a building, it’s important to understand that everything has a financial value. And conducting a building performance analysis beforehand can help designers understand what decisions can yield a more valuable economic return. Because some building owners have more strict construction budgets, it’s important the design and building process remains within a firm financial budget throughout the project. But how, exactly, is this budget calculated? We’ll give you an inside look at the different cost analyses designers take into consideration when developing building plans.
Life Cycle Analysis (LCA)
Most of the time, costs get associated with monetary expenses only, yet there are many other factors we can associate it with. For example, for a building’s design, there are environmental impact costs, resource use costs, human health costs, and time costs. And when designing a sustainable building, the process of analyzing environmental impact costs is often referred to as the Life Cycle Analysis.
Life Cycle Cost Analysis (LCCA)
This analysis does, in fact, cover monetary expenses of a project. From start to finish and once the facility is in full operation, the LCCA will classify monetary costs into three separate categories. These include:
● Investment (initial) costs - These include how much something put into the operation costs. An example could be the cost of purchasing a hot water solar panel and installing it on the facility's roof.
● Operation (ongoing) costs - These costs stem from the initial costs and could be commissioning the water tank the solar panel is supplying heat to.
● Return (residual) costs - The return would be the energy production that provides a positive monetary return simply because the feature would reduce the amount of energy that is supplied and paid for.
Full Life Cycle Cost Analysis
Not all buildings perform as efficiently as they could be. If this is the case, the building’s Return on Investment (ROI) would be immediate, however it would not be sustainable in the long run. Take this scenario for example: if a building costs “X” to build and is predicted to be sold or rented for “Y,” the ROI would be the difference between “Y” and “X.” However, when building a structure, one can only base a predicted ROI on real estate projections, which are always changing.
When Gausman and Moore works on new buildings, the initial investment costs (“X”) dictate fifty percent of the equation, meaning the initial cost of a building is vital for getting a significant ROI. For this reason, the cost to build a structure has been the deciding factor in how the building is designed. Therefore, sustainable buildings may seem more expensive to build, but keep in mind, it’s the ROI that’s key. If a building is built with innovative sustainable building practices, it will save the owner or investors money in the long run by using less energy than a traditional building. Therefore, we must consider the LCCA, which we’ll label “Z.” This variable then accounts for any recurring return.
When starting the building process, it’s important to consider all methods of financial payback when developing designs. For more information on how Gausman and Moore incorporates our green building practices into sustainable building designs.