Life-Cycle Costing Methodology

Principal Investigator:
Sieglinde Fuller, Office of Applied Economics, 301-975-6134

Co-Investigators:
Harold E. Marshall, 301-975-6131
Amy Rushing, 301-975-6136
Laura Schultz, 301-975-4918

Sponsor:
U.S. Dept. of Energy, Federal Energy Management Program

Objective:
Provide, on a continuing basis, economic analysis methods, data, software, training, and consulting to the Federal Energy Management Program (FEMP) in support of energy and water conservation projects and renewable energy projects in federal buildings and facilities.

Approach:
This project requires a wide range of products, which are provided on a continuing basis throughout the year. The products included are methodology, data, software, training, and consulting.

Methodology: NIST is responsible for assisting DOE in the development and modification of FEMP LCC rules, as promulgated in 10 CFR 436 Subpart A. NIST is responsible for amplifying these rules and procedures in NIST Handbook 135 Life-Cycle Costing Manual for the Federal Energy Management Program, adapting them to new legislative requirements and integrating them into software, instructional materials and supporting publications.

Data: Each year NIST computes the discount rate to be used in the analysis of federal energy and water conservation and renewable energy projects, using the procedure specified in 10 CFR 436A. In addition, NIST computes tables of discount factors and energy price indices, based on this discount rate and on energy price projections provided by the DOE Energy Information Administration for this purpose. These data are published each April 1 in the Annual Supplement to Handbook 135, and in the life-cycle costing software. The tables and software are available in electronic form from the DOE/FEMP web site.

Software: OAE has developed several computer programs for the economic analysis of energy and water conservation projects:

BLCC5 Building Life-Cycle Cost Program. Version BLCC5.1-03 is the latest release of a windows-based computer program for the economic analysis of energy and water conservation and renewable energy projects in buildings. The program contains modules for analyzing federal, state and local government projects, either funded through direct appropriations or financed through Energy Savings Performance Contracts or Utility Energy Services Contracts. Two new modules for energy conservation in MILCON projects have been added to version 5.1 in FY02, including one for Tri-Services ECIP (Energy Conservation Investment Program) projects. The remaining modules of the program's predecessor, BLCC4, supporting non-energy projects and private-sector analyses including taxes and financing, will be programmed into BLCC5 in the future.

Other BLCC-associated (DOS-based) programs are:
DISCOUNT for calculating discount factors;
ERATES for calculating time-of-use, block, and demand charges for electricity usage;
EMISS for customizing local air pollution emission factors related to energy use in buildings.

All of these programs are maintained, updated, and enhanced with new analytical capabilities annually. OAE will convert any remaining DOS-based modules and programs to windows-based programs as funding becomes available. The software is distributed by DOE and by private-sector vendors. User manuals are provided with each program.

Training: OAE has developed a basic LCC workshop which it has conducted since the 1970's several times each year at locations throughout the United States, primarily for federal engineers and energy managers, but attended also by representatives from state and local government, utilities, and consultants from the private sector. In order to extend access to the methodology to a wider audience, NIST has developed and teaches a teleconference course, which was broadcast by DOE in FY03 to nearly 600 locations across the U.S. An advanced LCC workshop that is oriented towards the analysis of complex projects using NIST LCC software is being taught alternately or in combination with the basic workshop. NIST has trained 25 instructors, mostly university professors and private consultants, to conduct the basic LCC workshop and is providing them with required teaching materials. These instructors are now conducting additional workshops throughout the United States, significantly expanding the impact of NIST research activities. NIST also distributes three LCC training videos with workbooks to promote the use of economic analysis in energy- and water-related project design and maintenance. In addition, OAE contributes web site pages and book chapters on life-cycle costing to government and private-sector proponents of economic analysis for energy and water conservation and green building projects.

Consulting: OAE provides consulting on a continuous basis to DOE, related to methods of economic analysis for federal energy and water conservation projects. For example, DOE revises FEMP LCC rules in 10 CFR 436 in consultation with OAE; OAE evaluates the requirements of cost-effectiveness related to DOE energy conservation policy; users of OAE publications and software frequently call with technical questions related to these materials and to the interpretation of 10 CFR 436A.

Recent Results:

1. Released version BLCC5.1-03 and related software to include updated emissions factors, energy price forecasts and discount rates for the year 2003. Published the 2003 Annual Supplement to Handbook 135, Energy Price Indices and Discount Factors for LCC Analysis - April 2003, NISTIR 85-3273-18 and a workshop manual Project-Oriented Life-Cycle Costing Workshop for Energy Conservation in Buildings, NISTIR 6806 2003 ED.
2. Conducted three 2-day LCC workshops for federal engineers and energy analysts, Honolulu, HI, and Philadelphia, PA; and a teleconference class broadcast to 600 downlink sites.
3. Contributed resource pages on life-cycle costing to Whole Building Design Guide, a web-based portal providing government and industry practitioners with one-stop access information on building-related subjects.
4. Supported DOE/FEMP's outreach program and served as consultants to DOE, practitioners, and instructors of life-cycle costing in the Federal Government and the private sector.