Many factors must weigh into mechanical, electrical and plumbing high level system decisions. While up front costs are very important, the overall comparative cost of each system over its life or the life of the hospital must be a major consideration.

Too often these long term costs are not taken into consideration when the owner and architect are trying to cut construction costs, but it can make a huge impact to the operating costs of a facility. In todays volatile economy, low overhead is paramount to a hospitals survivability.

Life cycle cost analysis takes into account many factors, including the following: up front construction costs, maintenance costs, energy costs, time of use costs, square footage costs for equipment of differing sizes, acceptable return on investment, and equipment replacement costs. These factors can sometimes be difficult to obtain or assume, and it is important to understand the affect of incorrect assumptions on the overall outcome.

A large part of the analysis deals with energy costs. Because energy prices are so volatile, it is hard to predict what energy prices will do next year, much less 20 years from now. However, by analyzing the sensitivity to price fluctuations, and using good historical data, it is possible to come out with a very good estimation of the overall value of an option throughout its life cycle.

The output of a life cycle cost analysis has two parts: a net present value of each option over its life, and a payback. The net present value is the entire value over the course of the systems life in todays dollars, taking into account increases in factors such as energy and maintenance costs and a return on investment if the capital was used somewhere else. Payback refers to the length of time it will take to make up the additional up-front costs of a system with its decreased operating costs.

In addition to detailing how a life cycle cost analysis is pursued, this presentation will look at two different case studies and how life cycle cost analysis was used in making final system configuration decisions. The first case study is the HVAC system at a 500,000 square foot hospital expansion, involving modeling the efficiency of each system. The second study looked at the possibility of using a cogeneration plant to provide power, chilled water, and steam to a large medical campus.