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Equivalent Uniform Annual Cost: A New Approach to Roof Life Cycle Analysis

Equivalent Uniform Annual Cost: A New Approach to Roof Life Cycle Analysis. James L. Hoff, DBA. Firestone Building Products. Canadian Roofing Symposium Calgary, Alberta June 5, 2007. Life Cycle Cost Problems. How long do roofs last? How much do roofs cost?

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Equivalent Uniform Annual Cost: A New Approach to Roof Life Cycle Analysis

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  1. Equivalent Uniform Annual Cost: A New Approach to Roof Life Cycle Analysis James L. Hoff, DBA Firestone Building Products Canadian Roofing Symposium Calgary, Alberta June 5, 2007

  2. Life Cycle CostProblems • How long do roofs last? • How much do roofs cost? • How do you compare roofs with different service lives?

  3. Life Cycle Cost ProblemsHow Long Do Roofs Last? Average Service Life Study Cash (1997) Schneider & Keenan (1997) EPDM 14.1 Years 17.7 Years Asphalt BUR 17.4 Years 13.6 Years

  4. Life Cycle Cost ProblemsHow Long Do Roofs Last? Manufacturer’s Warranty Period System Asphalt BUR Modified Bitumen Single-Ply Up to15 Years Type IV Felt MB Cap over Non-MB Base 45 Mil Up to 20 Years Type VI Felt MB Cap over MB Base 60 Mil Up to 30 Years See Below MB Cap over Multiple Plies 80-90 Mil

  5. Life Cycle CostSystem Details / Est. Min. Service Life System details and warranty period based on data from NRCA 2004-05 Low-Slope Roofing Materials Guide (2005) and published manufacturer data.

  6. Life Cycle Cost ProblemsHow Much Do Roofs Cost? • Initial Cost • Maintenance Cost • Replacement Cost

  7. Life Cycle CostStandard Life Cycle Cost Model LCC = IC + MCPV + RCPV Where: LCC = Life cycle cost ($/ sq. ft.) IC = Initial Cost MCPV = Present value of all future maintenance costs RCPV = Present value of future removal and replacement costs In other words, how much money in today’s dollars do I need to pay all the costs associated with this roof over its service life?

  8. Life Cycle CostStandard Life Cycle Cost Model Replacement Cost Initial Cost $ Maintenance Cost Year 1 Year 2 Year 3 Year 4 Year 5 Year N $ Present Value

  9. Standard Life Cycle Cost Model How to Calculate Standard LCC: • Determine System / Service Life • Determine Cost Elements • Initial Cost • Annual Maintenance Costs • Replacement Cost • Adjust Cost Elements to Present Value • Determine Cost of Money / Interest Rate • Discount Replacement Cost to Present Value • Annuitize Maintenance Cost to Present Value • Add Adjusted Cost Elements Together

  10. Standard Life Cycle Cost Model Step 1: Determine System / Service Life System details and warranty period based on data from NRCA 2004-05 Low-Slope Roofing Materials Guide (2005) and published manufacturer data.

  11. Standard Life Cycle Cost Model Step 2: Determine Cost Elements Initial cost data derived from contractor survey. Replacement and maintenance cost data derived from Cash (1997).

  12. Standard Life Cycle Cost Model Step 3: Adjust Costs To Present Value • Determine Cost of Money • This Example: 5% Annual Interest Rate • Discount Replacement Cost to Present Value • Annuitize Annual Maintenance Cost to Present Value Replace At: 15 Years 20 Years 30 Years PV Discount Rate: 48% 38% 23% Service Life: 15 Years 20 Years 30 Years Initial Annuity: 11 X Annual Cost 13 X Annual Cost 16 X Annual Cost

  13. Standard Life Cycle Cost Model Step 4: Summarize Adjusted Cost Elements

  14. Life Cycle CostStandard Life Cycle Cost Model Life Cycle Cost at Present Value (Dollars per Square Foot) $8.60 $8.09 $7.49 15 Year MB 20 Year MB 30 Year MB

  15. Life Cycle CostStandard Life Cycle Cost Model Life Cycle Cost at Present Value (Dollars per Square Foot) $8.35 $7.74 $7.49 15 Year EPDM (Adhered 45 mil) 20 Year EPDM (Adhered 60 mil) 30 Year EPDM (Adhered 90 mil)

  16. Life Cycle CostStandard Life Cycle Cost Model Life Cycle Cost at Present Value (Dollars per Square Foot) 15 Year System 20 Year System 30 Year System … but which system is the best investment?

  17. Life Cycle CostEquivalent Annual Uniform Cost Model EUAC = A/PLCC (i,n) Where: EUAC = Equivalent Uniform Annual Cost A/P = Annualized cash flow or payment ($ / sq. ft.) LCC = Standard Life Cycle Cost i = annual interest rate (%) n = service life (years)

  18. Life Cycle CostEquivalent Annual Uniform Cost Model(EUAC) $ ….. = Payment Year 1 Payment Year 2 Payment Year 3 Payment Year N Standard LCC In other words, what are my estimated annual payments over the service life of this roof?

  19. Life Cycle CostEquivalent Annual Uniform Cost Model How to Calculate EUAC: • Calculate Standard Life Cycle Cost • Calculate the Annual “Payments” Required to Finance • Over The Service Life • At a Defined Interest Rate EUAC = A/PLCC(i,n)

  20. Life Cycle CostEquivalent Annual Uniform Cost Model Equivalent Uniform Annual Cost (Annual Dollars per Square Foot) $0.72 $0.65 $0.56 15 Year MB 20 Year MB 30 Year MB

  21. Life Cycle CostEquivalent Uniform Annual Cost Model Equivalent Uniform Annual Cost (Annual Dollars per Square Foot) $0.72 $0.62 $0.54 15 Year EPDM (Adhered 45 mil) 20 Year EPDM (Adhered 60 mil) 30 Year EPDM (Adhered 90 mil)

  22. Life Cycle CostEquivalent Uniform Annual Cost Ballasted Adhered Mech. Att. Mech. Att. Modified Built-Up EPDM EPDM EPDM T'Plastic Bitumen Roofing 20 Year System 30 Year System 15 Year System

  23. Life Cycle CostConclusions • EUAC may be very useful in comparing the value of roof systems with different service lives. • Specification enhancements such as thicker membranes and redundant details appear to add tangible value. • Using the EUAC method, the life cycle costs of different roofing systems appear to be very close over the same time frames.

  24. Life Cycle CostReferences Boon, R. A. (2001).Better roofs are less expensive. Roofing Contractor, November. Cash, C. G. (1997). The relative durability of low-slope roofing. Proceedings of the Fourth International Symposium on Roofing Technology, 119-124. National Roofing Contractors Association: Rosemont, IL. Hoff, J. L. (2007) Equivalent uniform annual cost: A new approach to life cycle cost analysis. RCI Interface, January, 2006. Fuller, S. K., & Rushing, A. S. (2005). Energy price indices and discount factors for life-cycle cost analysis, April 1, 2005 to March 31, 2006. Annual supplement to NIST Handbook 135 and NBS special publication 709 (NISTIR 85-3273-20). Gaithersburg, MD: National Institute of Standards and Technology. 2004-05 Low-Slope Roofing Materials Guide (2005). Rosemont, IL: National Roofing Contractors Association. Means Building Construction Cost Data (2005). Kingston, MA: R. S. Means. Schneider, K. G., & Keenan, A. S. (1997). A documented historical performance of roofing assemblies in the United States 1975-1996. Proceedings of the Fourth International Symposium on Roofing Technology, 132-137. Rosemont, IL: National Roofing Contractors Association. White paper on sustainability (2003). Building Design & Construction, November supplement.

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