The life-cycle cost (LCC) analysis takes into account all expenses that incur over a time span for a system. When different design scenarios are considered, this tool enables the designer to compare the net savings of different alternatives and choose the most cost-effective option. However, the simple payback analysis considers the short term return of investment for a system during the first year. Two methods i.e., manual calculation and Excel Spreadsheet, are used to determine the net savings and simple payback of a baseline system and nine other design options (glazing) and results are discussed below.
Based on the net saving,
From Figure 1, it is clear that alternatives 7 and 9 offer the largest savings compared to a big others options.
Figure 1 – Net savings using manual calculation
The simple payback is the ratio of the incremental first cost over first year annual savings. Hence, it focuses on the short term returns. Figure 2 shows the simple payback results for the 9 different alternatives.
Figure 2 – Simple Payback using manual calculation
It is obvious that this method yields different results from the net saving (see Figure 1). This plot indicates the best design recommendation based on this approach is
Excel Spreadsheet Calculation:
Figure 3: Net savings using Excel Spreadsheet
Figure 3 shows the net savings obtained from Excel Spreadsheet. As this figure indicates, the most cost-effective option over is
Figure 4 - Simple Payback using Excel Spreadsheet
Figure 4 shows the simple payback values calculated with the spreadsheet for nine different design alternatives. Similar to Figure 2 this graph also indicates that
The simple pay back is easy to estimate and indicates the return of an investment during the first year. However, its focus is on the short term fails to capture all future costs and benefits, capital replacement, life-cycle utility costs, operations cast, maintenance costs, and the time value of money. On the other hand, net saving parameter could provide the value of an investment over a time period and the savings in the long run.
Both manual and spreadsheet methods yielded comparable results. Although there were some insignificant deviations in the results of these two methods it did not alter the final recommendation.