Lifetime costing and total costs of ownership


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Traditionally there is a strong focus on the construction costs of a building, even if it is now known that often expected future costs such as running costs may easily outnumber construction costs. The method of ‘life cycle costing’ is therefore often applied to determine both construction and future costs of a building. Life cycle costing is described in an ISO standard (ISO 15686) and it is based on a set of boundary conditions to best fit to specific project conditions. Conditions which may typically vary from project to project are the expected lifespan of the building, cost groups considered in the evaluation and discount rates applied. The net present value is a suitable figure to evaluate future expenses.

The evaluation of the ‘total costs of ownership’ adds the impact of future benefits to the cost scenario described in life cycle costing. Based upon the specific project requirements performance evaluations and benefit ratings may typically vary between products.