Engineering professionals frequently consider life cycle costs, but others may be unfamiliar to some onsite professionals and the property owners they work with. The LCC is the total cost of a project over its life, which includes design, construction, operation, maintenance, repair and replacement.
This concept can be applied to single-family home upgrades as well as small communities, which may have additional costs such as land acquisition, engineering and legal fees. A key variable is how long the system will last without a major upgrade. Usually this is a 20-year period, but it can be done for a longer or shorter lifetime as desired.
Total LCCs help homeowners understand the project and how they may need to budget as an owner or a community. As an example, after reviewing a project’s LCCs, homeowners may be better able to choose from one of these two solutions:
- A solution that has a high initial capital cost with low operating and maintenance fees. This may be more appealing to people on fixed incomes who cannot afford high monthly costs.
- A solution with a low initial capital cost if they are willing to pay higher operating and maintenance fees over the life of the system. This may be more appealing to young families with growing incomes.
The numbers
To calculate LCC of an onsite sewage treatment system over a 25- to 30-year span, add your initial capital installation cost, recurring operation and maintenance expenses, and future component replacement costs, then subtract any salvage value. If the owner wants to know the true cost over 25 years, we also need to include inflation. Let’s start by determining our base costs.
Initial Capital Costs (ICC)
Permit: State or local health department fees
Design: Site evaluation, system design and surveying, if needed. This may be done by a permitting authority, but is becoming more common for an installer, soil classifier, designer or engineer to evaluate the site and prepare plans for review as part of the permitting process.
Installation: Decommissioning of old system (if needed), extraction, tanks, piping, treatment/soil treatment
Operation and Maintenance (O&M) Costs
- Routine pumping: For systems with only septic and dosing tanks, pumpouts are typically needed every two to five years.
- Filter cleaning: For systems with filters, they typically require maintenance every six months or annually.
- Electricity: An electricity source is needed for pumps, blowers and compressors, which are part of an aerobic treatment unit.
- Disinfection supplies: Systems with disinfection will have additional product related costs for chlorine or UV bulbs.
- Regular inspections, service and sampling: For advanced systems, regular service may be required as frequently as every six months as well as sampling.
- Operating Permit: For some advanced systems in some jurisdictions,there may be an operating permit, which has to be renewed every one to five years.
- Data Subscription: Systems and control panels that alert owners and service providers to issues with their system.
Midlife Repairs and Component Replacements (RCR)
- Effluent pump replacement, which typically occurs once or twice in 25 years
- Control panel or electrical switch
Salvage Value (SV) – This would include components that could be reused when larger portions of the system will need to be replaced. Future decommissioning and removal costs are subtracted from this value.
To get the true cost of the system over the design life of 25 years, you can adjust future costs for inflation. This is a hard number to choose as it can vary, but the most used is 3% annually. The initial cost is not subject to inflation but the O&M and RCR are. This calculation is as follows:
Future cost in year X (FCx) =
FCx = Cost today × (1 + annual inflation rate)Number of years until expense occurs
This is easiest done in a spreadsheet or an online tool.
Finally, to determine the total cost of the system, we add:
ICC + O&M (adjusted) + RCR (adjusted) - SV (adjusted)
Doing a LCC analysis on a project helps the decision process. Be careful to consider any differences in the years of life and categories of costs when comparing options. With many options available, your customer should use a clear decision-making process: Gather as much information as possible and evaluate it against the criteria they have identified as important. The cost is an important variable, but others such as aesthetics, performance and sustainability should also be considered.
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