Placepoint

Life-cycle cost

Life-cycle cost (LCC) is the sum of all costs linked to a building across its whole service life: investment, management, operation, maintenance, development, energy and disposal. The amount is discounted to present value or spread as an annuity, so that alternative building solutions can be compared on equal terms.

The Norwegian standard for LCC calculation was Norsk Standard NS 3454 Livssykluskostnader for byggverk, last revised in 2013 and withdrawn on 07/09/2023. It is replaced by NS-EN 16627:2015 Bærekraftige byggverk - Vurdering av bygningers økonomiske prestasjon, together with the international ISO 15686-5 Service life planning of buildings - Life cycle costing. These standards define which cost items to include, how service life and discount rate are chosen, and how the result is reported. NS 3454 uses a ten-chapter main structure: 0 capital costs, 1 management, 2 operation, 3 maintenance, 4 development, 5 supply (energy, water), 6 cleaning, 7 service, 8 potential, 9 decommissioning.

LCC analyses are used above all in three situations:

  • New build projects where the choice between technical solutions must be justified on total cost, not investment alone. Government clients such as Statsbygg require an LCC assessment for all new build projects above a certain size, and municipal ownership often calls for similar documentation.
  • Refurbishment projects where upgrading is weighed against new build. A thorough LCC analysis then also includes environmental accounting (the CO2 footprint from production and construction) and can be used for BREEAM-NOR certification.
  • Tender evaluations where price alone is not enough. Tender A with a low investment and high energy use can lose to tender B with a higher investment and low use when the horizon is 30-60 years.

Methodically, LCC is a structured cash flow model. The investment sits in year 0. Operating and energy costs fall each year and are discounted to present value with the chosen discount rate. Periodic replacements (roof every 30 years, façade every 40, technical systems every 20) are modelled as one-off costs in the years concerned. Residual value at the end of the analysis period is deducted as a negative cost. The result is expressed as total present value or as an annuity (annual equivalent cost) per square metre of UFA, which is the format users compare most easily. Standardised presentation makes it possible to benchmark against industry key figures from BEF Norge, Multiconsult/Holte and Statsbygg's own key figures.

Service lives vary widely between building parts and strongly affect the result. A building's load-bearing structure is normally taken to last 60-100 years, the façade 40-60, the roof 25-40, technical systems 20-30, and surfaces 10-15. Service lives stated by vendors are often optimistic, so use standardised values from Holtes prisbok or actual observed service lives from management systems where these exist. Sensitivity to the assumptions (interest rate, energy prices, service life) should always be shown, because LCC results depend heavily on them.

LCC should not be confused with BREEAM-NOR or environmental accounting (LCA, life cycle assessment). LCC measures economic costs, LCA measures environmental impact, typically CO2 equivalents. The two analyses are structurally alike (same life cycle, same components), and tools such as One Click LCA can run them in parallel. In practice they are combined more and more often, because environmental rules such as the EU taxonomy require environmental accounting while owners still want to know the total economics.

In Norwegian practice, LCC is the core of a modern FDV strategy (forvaltning, drift, vedlikehold: management, operation and maintenance). Buildings planned without LCC often end up with a higher annual cost than necessary, because the investment phase picks the cheapest solution rather than the one with the best total economics.

From Placepoint's glossary: Livssykluskostnad

More information: Standard Norge: NS 3454 (withdrawn 2023), ISO: ISO 15686-5, Statsbygg: Livssykluskostnader

English: Life-cycle cost (LCC).

Common questions we come across

What is life-cycle cost?

The sum of all costs linked to a building across its service life: investment, management, operation, maintenance, development, energy and disposal. The result is expressed as present value or as an annual annuity, often per m² of UFA.

Which standards apply?

NS 3454 in Norway (withdrawn in 2023, replaced by NS-EN 16627:2015) and ISO 15686-5 internationally. Both define cost categories, service life assumptions and the reporting format. Statsbygg and many kommuner require an LCC assessment for new builds above a certain size.

What is the difference between LCC and LCA?

LCC measures economic costs across the service life. LCA (life cycle assessment) measures environmental impact, typically CO2 equivalents. Both follow the same structural life cycle and are combined more and more often in sustainability assessments such as BREEAM-NOR and the EU taxonomy.

How sensitive is an LCC analysis to the assumptions?

Very sensitive. Changing the discount rate from 4% to 8% can increase or halve the annuity. Changing the service life of a façade from 40 to 60 years shifts the ranking between alternatives. Sensitivity analysis is therefore mandatory in serious reports.

Where do I find key figures for LCC?

Holtes prisbok, BEF Norge, Statsbygg's key figures and industry associations hold estimates for different building components and building types. Your own historical data from FDV systems is usually more precise than standard figures, but limited in scope.