Purpose of LCCA

LCCA is an engineering economic analysis tool useful in comparing the relative merit of competing project alternatives. By considering all of the costs incurred during the service life of an asset, the engineer is able to analyze and select the lowest cost option

In brief, the LCCA process begins with the development of alternatives to accomplish the structural and performance objectives for a project. The analyst then defines the schedule of initial and future activities involved in implementing each project design alternative. Next, the costs of these activities are estimated.

Life Cycle Cost Analysis (LCCA) should be conducted as early in the project development cycle as possible. The appropriate time for conducting the LCCA is during the project design stage.

Net Present Value (NPV) is the economic efficiency indicator of choice. Future cost and benefit streams should be estimated in constant dollars and discounted to the present using a real discount rate. The real discount rate employed in LCCA should reflect historical trends over long periods of time.

The Stadium’s LCCA tools in additional to the deterministic approach; the probabilistic approach is included by the Risk Analysis.

Risk Analysis: LCCA, as a minimum, should include a sensitivity analysis to address the variability within major analyses input assumptions and estimates. Traditionally, sensitivity analysis has evaluated different discount rates, normally evaluating a best and worst case scenario. The ultimate extension of sensitivity analysis is a probabilistic approach, which allows some significant inputs to vary simultaneously.

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