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LIFE CYCLE COSTING A Tool for Energy Efficient Procurement

Learn about Life Cycle Costing (LCC) methodology to incorporate costs and benefits over the lifetime of a product into procurement decisions. Save money, reduce effort, purchase better quality equipment, and support sustainable development.

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LIFE CYCLE COSTING A Tool for Energy Efficient Procurement

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  1. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff LIFE CYCLE COSTING A Tool for Energy Efficient Procurement DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  2. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff Overview • What is Life Cycle Costing? • Why should my Local Authority use it? • How can my Local Authority use it? • What are its limitations? • Where can I find out more? DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  3. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff What is Life Cycle Costing? Life Cycle Costing (LCC) is a methodology that enables you to incorporate costs and benefits that occur over the lifetime of a product into your procurement decisions – rather than considering the initial capital cost of a product only. Costs and benefits – e.g. energy consumption, replacement of equipment or parts, consumables and disposal – they all affect the ultimate price, yet are rarely considered when selecting a product! DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  4. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff Why should my Local Authority use it? There are many benefits for Local Authorities in using Life Cycle Costing on a systematic basis: • It can save you money • It can reduce the time and effort involved in frequently replacing equipment • It supports the purchase of better quality equipment • It encourages more logical decision-making • It supports local sustainable development In summary, life cycle costing supports your responsibility to the community to use public funds wisely and sustainably DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  5. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff Example 1: energy efficient lighting Standard 60W £0.50 X10 = £5 Energy efficient: 12 W £1 x 10 = £ 10 Energy efficient: 20 W £5 x 10 = £50 DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  6. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff Results – NPV, Energy & CO2 DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  7. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  8. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff How can my Local Authority use Life Cycle Costing? • Identify types of procurement for which LCC is appropriate (e.g. buildings, energy and water using equipment). • Identify staff responsible for procurement of equipment where LCC can be applied. • Incorporate a requirement for LCC into your procurement policy – so that it becomes a systematic part of the procurement process. • Provide training in use and benefits of Life Cycle Costing. • Gain experience in using LCC, and adapt it for your needs. DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

  9. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff Limitations LCCA only takes account of the costs and benefits that accrue during Your ownership of the equipment, unlike Whole Life Costing / Life Cycle Impact Assessment in which the social and economic benefits related to its entire life-time are considered, e.g. Typical coverage of life-cycle cost analysis • Source: http://www.dk-teknik.dk/ydelser/miljo/LCA%20guide/3rd_ed/faq5.htm

  10. The DEEP Toolkit. TOOL 2.c. Life Cycle Costing Guide for Senior LA Staff How can I find out more? Contains: • Life Cycle Cost Analysis Tool • Training materials for Procurement Staff • Information on Procura+ Campaign – you can join! Plus • Other tools to support energy efficient public procurement DEEP http://www.iclei-europe.org/deep The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein DEEP – Dissemination of Energy Efficiency Measures in the Public Building Sector (EC DG TREN, 2005-2007)

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