Life Cycle Costs: An Important Factor When Building

Life cycle costs and what you should consider

The term “life cycle costs,” or LCC abbreviated, refers to the sum of all expenses which are generated by a product over its entire life cycle, i.e. the service life of the product. The economic efficiency of products can be compared by taking all relevant costs into consideration in what is called “life cycle costing.”

In life cycle costing for a building, the real estate along with the planning and construction costs, which is comprised of the investment and funding costs, plus the usage costs for maintaining the real estate, including renovation, renewal, conversion, even demolition, dismantling and recycling are all taken into consideration. The costs to be assessed can be taken from DIN standard 276 “Kosten im Bauwesen” (Construction Costs). Buildings which have been designed and implemented for the aspects of ecology and sustainability frequently prove to be the most economic variant, even considering greater construction costs.

Save on life cycle costs with modular construction from ALHO

“Building-related costs in life cycle costing” play a pivotal role when evaluating the sustainability of a building according to DGNB (German Sustainable Building Council), upon which ALHO bases the observation. The minimization of life cycle costs (LCC) is a primary goal in sustainability. By definition, the cost groups “300 Bauwerk – Baukonstruktion” (Structures – Building Construction) and “400 Bauwerk – technische Anlagen” (Structures – Technical Systems) from DIN 276 are observed.

These two cost groups form the basis for a very detailed and objective evaluation of the planning, financing, production, usage, renewal and demolition costs which can occur during the life cycle of a building. For the LCC analysis, the investment costs and operating costs for a 50-year period are determined and calculated precisely. The following observations present the life cycle costs of a modular building compared to those of a conventionally-constructed building.

49% lower planning costs, 50% lower financing costs

A savings of 49% in the planning costs has been recorded, thanks to the modular system construction and standardized fabrication processes, as well as the organized planning process. ALHO modular construction allows for an extremely short setup time because of the level of prefabrication. This in turn translates to a reduced financing period.

Shorter financing times have a positive impact on interest. In addition, the real estate can be put into operation quicker or rented sooner. The saving in financing costs is 50.6% compared to standard construction. The construction costs for a building in the ALHO modular construction are 11.4% lower than for a comparable building using standard construction.

Advantages when re-purposing and dismantling

The well-thought-out steel construction of the individual modules greatly increases the flexibility and usability of the entire building. This permits cost-effective conversion and renovation any time when compared to standard construction methods.

An additional advantage of ALHO modular design is the construction of the individual modules and the possibility of connecting these to each other mechanically. These factors lead to economic dismantling of the buildings. This means demolition costs can be reduced by 13.8% when compared to conventionally constructed buildings. Furthermore, the constructive elements of a module can be individually recycled thus making a positive contribution in the sense of return and recycling of building materials.

Modular construction is 12% less expensive

Overall, ALHO modular construction results in around 12% lower life cycle costs than standard construction methods over the entire life cycle. The results of the LCC analysis show that investment in a sustainable ALHO modular building is also a sustainable decision for economy and ecology. We answer frequently asked questions about investment in modular construction here.

Gray energy makes up half of the energy balance

The German Federal Government's measures for the 2030 climate protection program, which affect the building sector, don’t go far enough: they define the optimal energy efficiency of a building for CO2 reduction solely for its operation. But the production of building materials and the construction and dismantling of a building, in particular, consume great amounts of energy. This is known as “gray energy” and accounts for almost half of the energy balance of a building over its entire life cycle. Worldwide, the construction industry is responsible for the consumption of 30 to 40 percent of the primary energy and 40 to 50 percent of the raw materials. The higher the proportion of gray energy, the higher the total energy load of a building. Therefore, reduction of this burden has great potential for environmentally friendly and cost-effective construction.

Depending on the building type and building energy standard, construction methods which use less gray energy can reduce the CO2 emissions for construction by around 40 to 60 percent. Choosing low-emission building materials with a high recycling rate such as steel and the type of construction can significantly reduce the proportion of gray energy.

Modular construction delivers advantages in terms of gray energy depending on the individual system! Because modular construction can reduce negative environmental and climate effects caused by the production and disposal of building materials through multiple factors. Beginning in the planning stage, the focus is on conserving resources. That’s due to the modular system design of the building. However, much of the gray energy is already saved in the production, for example through the standardized processes and the high degree of industrial prefabrication.

The individual modules are connected to each other mechanically. That means the setup and dismantling of the modular construction have a positive effect. The modules can be connected to each other within a few days, but can also be easily separated. As a result, this means a high level of usability, which naturally leads to a longer service life. Steel and drywall, the key building materials in a module, are ideal for recycling or reuse. All of these aspects are included in the LCC analysis. The results show that investing in a sustainable modular building is a good decision for economic and ecological reasons.

Calculate your life cycle costs

There are various online tools that can be used to determine the life cycle costs (LCC) for two different building types. Input is usually quick and the calculation is kept extremely uncomplicated. This way you can get a feeling for the relationship between construction costs and operating costs in the life cycle analysis, because the construction costs often only take up a small part of the overall view. The majority of the costs of a property are incurred in the operation. The calculations of the LCC analysis are based on a standard observation period of 50 years.  You can find a tool for calculating LCC at