U.S. Department of Energy - Energy Efficiency and Renewable Energy

Federal Energy Management Program

Life Cycle Cost Analysis for Sustainable Buildings

To help facility managers make sound decisions, FEMP provides guidance and resources on applying life cycle cost analysis (LCCA) to evaluate the cost-effectiveness of energy and water efficiency investments.

Federal Requirements

Life cycle cost (LCC) rules are promulgated in 10 CFR 436 A, Life Cycle Cost Methodology and Procedures and conforms to requirements in the National Energy Conservation Policy Act 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 17 KB) determined annually by FEMP and the Energy Information Administration.

Building Life Cycle Cost Software

FEMP's Building Life Cycle Cost (BLCC) software 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. BLCC also estimates emissions and emission reductions. An energy escalation rate calculator (EERC) computes an average escalation rate for energy savings performance contracts when payments are based on energy cost savings.

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. In some years, two-day classroom workshops are offered at various U.S. locations.

Publications

Handbook 135, Life Cycle Costing Manual, 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.

Annual Supplement to Handbook 135 (ASHB 135), Energy Price Indices and Discount Factors for Life Cycle Cost Analysis, 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 Applied Economics Office, provides technical LCC support to FEMP and LCC practitioners. Contact Joshua Kneifel or Amy Rushing.