Life cycle costs – an important factor in building construction

Life cycle costs and what you should take into account

The term life cycle costs – or LCC – is used to describe the total of all costs caused by products during their entire product life cycle, i.e. their entire working life. Using life cycle costing, the cost effectiveness of products can be compared, taking into account all relevant costs.

For a building, in assessing the life cycle costs of the property, the calculation will include not only the planning costs and construction costs, made up of the investment and financing costs, but also the usage costs for operating the property including renovation, renewal, change of use through to demolition, dismantling and recycling. The costs to be evaluated are given in DIN 276 “Building Costs”. In many cases, buildings that are planned and built with an eye to ecology and sustainability turn out to be the most cost-effective option, even if their construction costs are higher.

Saving life cycle costs with ALHO modular construction

In assessing the sustainability of a building according to DGNB requirements, on which ALHO bases its considerations, the factor of “building-related costs in the life cycle” plays a crucial role. Minimising life cycle costs (LCC) is a vitally important sustainability goal. In the LCC analysis, by definition, the cost groups “300 Building – building construction” and “400 Building – technical systems” under DIN 276 are considered.

These two cost groups form the basis for a very detailed, objective assessment of the planning, financing, construction, usage, renewal and demolition costs during the life cycle of the building. In the LCC analysis, the investment and operating costs over a period of 50 years are precisely determined and calculated. The following appraisal compares the life cycle costs of a modular building to those of one built using conventional building methods.

Life Cycle Costs

49% lower planning costs, 50% lower financing costs

The modular system structure and standardised processes in manufacturing along with the integrated planning process produce a saving of 49% on planning costs. The ALHO modular construction method massively reduces the construction time because of the high level of prefabrication of the modules. Consequently, the financing period is correspondingly shorter, in the first place.

Shorter financing times have a positive impact on the amount of interest payable. Secondly, the properties can be taken into operation or rented out much faster. The saving on financing costs is 50.6% compared with standard building methods. Construction costs for a comparable building using the ALHO modular construction method are 11.4% lower than for one built using standard methods.

Advantages with changes of use and demolition

The carefully conceived steel structure of the individual modules massively increases the flexibility and options for a change of use of the entire building. Thus, in comparison with standard building methods, a cost-effective change of use or renewal is possible at any time.

A further advantage of the ALHO modular construction method lies in the construction of the individual modules and the option for connecting these mechanically with each other. These factors allow the building to be dismantled at a lower cost. A saving of 13.8% compared with standard construction can thus be recorded for demolition costs. Furthermore, the structural elements of a module can be specifically recycled and thus make a positive contribution to the recirculating and recycling of building materials within the material cycle.

Modular construction is 12% cheaper

Seen overall, throughout the entire life cycle, life cycle costs are around 12% lower with the ALHO modular construction method than with standard construction methods. The results of the LCC analysis prove that investing in a sustainable ALHO modular building is also a sustainable decision economically and ecologically in the long term.

Half of the energy balance is grey energy

The Federal Government measures set out in the 2030 Climate Action Programme affecting the building sector do not go far enough: They define the optimum energy efficiency of a building for carbon reduction solely in terms of its operation. But the manufacture of building materials in particular, plus the construction and dismantling of a building consume vast quantities of energy. This is described as “grey energy” and accounts for almost half of the energy balance of a building through its life cycle. Worldwide, the building industry is responsible for consuming 30-40% of primary energy and 40-50% of raw materials. The higher the proportion of grey energy, the higher too is the total energy load of a building. Consequently, reducing it offers considerable potential for environmentally compatible, cost-effective building.

Depending on the building type and building energy standard, building methods with a lower use of grey energy can reduce carbon emissions for construction by around 40 to 60%. The choice of low-pollutant building materials with a high recycling ratio such as steel and the type of building construction can considerably reduce the proportion of grey energy.

By its very nature, modular construction can generate advantages when it comes to grey energy, because modular construction can reduce the negative effects on the climate and the environment caused by the manufacture and disposal of building materials in several ways. Even at the planning stage, the focus is on safeguarding resources. This is due to the modular system structure of the building. However, a fair quantity of grey energy is also saved during manufacture, due to the standardised processes, for example, and high proportion of industrial prefabrication.

The individual modules are joined to each other mechanically. This has a positive effect in both the construction and the demolition of the modular building. The modules can be connected to each other in just a few days, but are also easily separated again. Consequently, the buildings can easily be converted, which automatically extends their working life. Steel and plasterboard, the main building materials used in a module, are also ideal for recycling or reuse. All these factors are included in the LCC analysis. The results prove that investing in a sustainable modular building is a good decision economically and ecologically.

Calculate the life cycle costs of your building

There are various tools that you can use online to determine the life cycle costs (LCC) for two different types of building. Data can usually be entered quickly and the calculation is deliberately kept simple. In this way, it is possible, in the life cycle analysis, to gain a feeling for the ratio between construction costs and operating costs, as the building costs often only account for a low proportion of the total amount. The major proportion of the costs of a building arise during operation. The calculations in the LCC analysis are based on the normal assessment period of 50 years. You can download a calculation tool, for example, at