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What is life cycle cost optioneering?

Life cycle cost optioneering is a way of assessing alternative design options, analyzing their long-term capital and operational costs to identify those with the lowest price tag, over the entire life cycle. 

December 09, 2013 |
Constructive Thinking Blog

Life cycle cost optioneering is a way of assessing alternative design options, analyzing their long-term capital and operational costs to identify those with the lowest price tag, over the entire life cycle. 

A key benefit of this technique is that it pinpoints the design features and solutions that consume less energy, produce less CO2 and consume less materials and water, in addition to program implications, operational impact, logistics, etc. This, in turn, helps decision makers clearly see the advantages of choosing green solutions and the options available, while providing sound financial evidence for supporting them. 

Life cycle cost optioneering is a combination of life cycle costing and life cycle assessment. Similar tools were used when the 32nd floor of the Empire State Building was retrofitted to meet high environmental standards throughout a 15-year lease.

Thinking in life cycles has made a big difference in our business. It means seeing a building, bridge, or road in terms of a cycle. Function, environmental consequences, and costs are spread over its lifetime, from construction and operation to final reuse when it has completed its service. 

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Of course, planning for the entire life cycle requires a lot more work on the front end. Issues become more complex when you have to plan decades or even centuries ahead, and that can sometimes mean a departure from standard financial models. But the gains are that much greater. 

Lifecycle analysis means figuring in--from the very start--the environmental benefits that will save energy and reduce emissions throughout a structure’s lifetime. You can plan in flexibility to efficiently utilize a building even when new conditions arise later in its lifetime. It also means selecting materials and designs that can be easily recycled. 

Similarly, a lifecycle cost calculation includes not only figuring out what it will cost to build a hospital, for example, but what it will cost for its entire lifetime. Buildings and infrastructure that are planned, budgeted, and designed in this way might well be more expensive up front to build than those traditionally procured, but lower operating costs over the lifetime of the project can soon make it worth the investment.


About the author

Myrrh Caplan is the Skanska USA National Program Manager - Green Construction. More posts by Caplan.

Constructive Thinking Blog | Skanska USA

Skanska USA is one of the largest, most financially sound construction and development networks in the country, serving a broad range of industries including healthcare, education, sports, data centers, government, aviation, transportation, power, energy, water/wastewater and commercial. Skanska USA is committed to a set of core values which they call the Five Zeros: zero loss making projects, zero environmental incidents, zero accidents, zero ethical breaches and zero defects. Constructive Thinking is Skanska USA’s blog, where team members share their experiences and viewpoints on Skanska’s core values and explore trends in U.S. construction, development and infrastructure.

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