Life Cycle Cost Analysis (LCCA)IntroductionLife Cycle Cost Analysis (LCA) is defined as a financial method or tool for Evaluate the total cost of ownership of a facility, which includes the time period and discount rate using discounted cash flow. For example: costs of maintenance, use, reconstruction, rehabilitation, restoration and resurfacing. Net present value (NPV) and internal rate of return (IRR) are considered all possible cash flows and generate financial measures of LCCA. Life cycle cost analysis is used to evaluate energy efficiency measures (EEM) for building design and only considers capital and energy costs. A simple ROI analysis is defined as “the process of determining the capital cost and energy cost savings of an EEM, and dividing one by the other to determine the number of years required to that the EEM investment is reimbursed” (1). Sometimes a simple payback method is used instead of a life cycle cost analysis. By understanding the LCA process, the concept of simple payback analysis less than life cycle cost analysis will be clearly understood. For a set of energy efficiency measures, energy savings and cash flow are determined by the CCLA. Although this process presents a more comprehensive analysis than just ROI, there are more opportunities to develop the accuracy of this analysis. This report discusses a four-step process for LCA that aims to realize all cost savings opportunities: 1- Establish the baseline.2- Define Energy Efficiency Measures (EEM).3- Calculate financial measures.4- Group the measures. The following points describe the four-step process for life cycle cost analysis. 1- Establish the baseline: Establishing the baseline is considered......in the middle of the document......rnative is calculated. When the NPV of an alternative is at least 10% lower than the NPV of another competing alternative, the alternative is preferred. When the alternatives are similar or equivalent, the difference between the NPV of the alternatives will be less than 10%. Sensitivity analysis should examine the effect of variability in key input parameters for the analysis of overall results. The most important parameters whose sensitivity should be tested in the analysis are the discount rate, the timing of future rehabilitation activities, the traffic growth rate, the unit costs of the main construction components and the period of analysis.7- Re-evaluate design strategies if necessaryFigure 2 illustrates the LCCA structured approach.Figure 2: Flowchart of the LCCA processReferences:1-2- http://accountingexplained.com/managerial/capital-budgeting/npv