Page 110 - Materials Chemistry, Second Edition

106 5. Development and applicability of life cycle impact assessment methodologies

Alterations cost
Nonrecurring cost
Initial cost
Overhaul cost
LCC
Future cost Maintenance cost

Operating cost
Repetitive cost
Administrative cost

Repairing cost

FIG. 5.5 Time dependence classification.

5.3.2 Analyze content
Compared to a traditional economic evaluation method, which only considers one ex-
pense, LCC takes the whole life cycle cost as the standard. The core of an LCC is to obtain
expenses of different equipment or projects and estimate the total cost of the LCC by a
corresponding estimation method. The content of an LCC consists of several aspects, as
discussed below (Politano and Frohlich, 2006).

5.3.2.1 Cost breakdown
In order to improve computational accuracy, the LCC should be classified from top to bot-
tom to gain the minimum cost unit until it can be evaluated. The minimum cost unit is a tree
diagram that is neither repeated nor omitted, which includes all related cost units.
5.3.2.2 Cost estimate
The cost estimate of an LCC is aimed at providing better choice among different products
and equipment. The most effective method is to quantify them as unit cost for comparison.
The process of estimation is also before the expense, called cost modeling. The problems be-
tween different algorithms can be solved by constructing cost estimation methods for each
expense.

5.3.2.3 Cost conversion
Some differences exist in the fixed number of years of cost estimation, the service life of
equipment and system. The money also has different value in different years. It is thus nec-
essary to standardize the parameters above for the convenience of calculation and compar-
ison. There are three common methods: the net present value method, the equivalent
annual method, and the final value method.
5.3.2.4 Sensitivity analysis
All cost units have many elements affecting the result, with different kinds of units. In or-
der to confirm whether an element is important, the influence of elements to cost units should