Here is an LCC formula for refrig- eration systems:9
LCC = I + E + Med + OM&R + Repl –Res + Ins + Env 10
LCC: Total LCC in present value kronor of a given alternative
I: Present value investment costs
E: Present value energy costs
Med: Present value capital costs for the media in use
OM&R: Present value non-fuel oper- ating, maintenance, and repair costs
Repl: Present value capital replace- ment costs
Res: Present value residual value
Ins: Present value insurance costs
Env: Present value capital environ- mental costs (due to emissions)
Faithful reader (and you are faithful if you’ve made it to this point!), you can see these three examples have a lot in common. More importantly, you understand that there is a lot more monetary commitment to any one item, or group of items, than that data normally recorded in our property con- trol systems under Acquisition Cost.
This life cycle cost concept truly links the “Assets” on the Balance Sheet to the “Operating Costs” on the Income Statement.
Understanding and using this con- cept under the guidance of a standard written by NPMA and vetted via the ASTM International’s process will, in your author’s opinion, further enhance our roles as Property Professionals by adding, significantly, to the ‘bottom line.”
Hopefully, you’ve seen enough to pique your interest and convince you that you want to be a part of this excit- ing process. There are several ways to get involved:
Respond to this article.
Write your own article.
Contact the author, and give voice to your opinions.
Join ASTM and be a part of the for- mal process.
Use the standards already in place.
Hope to hear from you soon! ■
Lyle V. Hestermann, CPPM ,CF 3222 N. Washington Rd., Ft Wayne, IN 46802
LYLE HESTERMANN CPPM, CF has 23 years in the Property profession, 32 years in the Army and Air National Guard, is the NPMA Foundation Administrator and the Vice Chair of ASTM Committee E53 on Property Management Systems.
“E 917 – 02, Standard Practice for Measuring Life- Cycle Costs of Buildings and Building Systems,” ASTM Int’l, Oct 10, 2002
“Federal Real Property Asset Management”, Execu- tive Order, February 4, 2004 http://www.websters- online dictionary.org/definition/english/Li/Life+ Cycle + Cost.html
“Life Cycle Costing,” Successful Delivery Kit, Office of Government Compliance, Sep. 2004
David V. Spitzley, Darby E. Grande, Timothy Gruhl, Gregory A. Keoleian and James C. Bean , “Report No. CSS04-01, Automotive Life Cycle Economics and Replacement Intervals”, Center for Sustain- able Systems, University of Michigan, Ann Arbor, MI, January 7, 2004, <http://css.snre.umich.edu/css_doc/CSS04-
“P.6 Lowest Life Cycle Cost”, Guidelines, Perfor- mance Management, State of Minnesota, 2003- 2004
<http://www.csbr.umn.edu/b3/p_6_support.html?> 9. “Life Cycle Costing,” Photovoltaic Systems Research and Development, Sandia National Labo- ratories, 2002 <http://www.sandia.gov/pv/docs/LCcost.htm> 10.s Yang You, “Investigation of Deep-freeze Refriger- ation Systems in Supermarket Application”, a Mas- ters Thesis presented to the Royal Institute of Technology, Stockholm, Sweden <http://www.dem.se/upload/XFvwz6Be.pdf>
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Volume 17 Issue 3 PROPERTY PROFESSIONAL 15