| Title |
The Variation Characteristics of Life Cycle Cost in a Office Building according to the Discount Rates and Inflation Rates |
| Authors |
Choi Min-Soo ; Kim Moo-Han |
| Keywords |
Life Cycle Cost ; Discount Rate ; Inflation Rate ; Present Worth ; Equivalent Uniform Annual Cost |
| Abstract |
This study tried to calculate the LCC(Life Cycle Cost) of a supposed office building with a construction period of two years approximately. Moreover, this study analyzed the characteristics of variation in the LCC of the office building according to the changes of discount rates and inflation rates. In the trial calculation, the LCC was calculated through not only present worth but also equivalent uniform annual cost. In calculating the LCC, the analysis period was sixty years, on condition that the discount rate was 4% and inflation rate was 3%. According to the calculated results, in case of a medium-scale office building with construction cost of 2.2 billion won, the total present worth of the LCC was calculated 9.4 billion won, and the equivalent uniform annual cost was around 500 million won on and after sixth years. Judging from the trial calculation results, in order to compare alternative plans, an equivalent uniform annual cost is more practicable than present worth. The reason is because the annualized cost is able to minimize the variation of LCC, when the analysis period extends over a long period of time. Meanwhile, according to the results of sensitivity analyses based on the changes of discount rates and inflation rates, using the building for the long run was economical in case the inflation rates were 3～5% level. But, it was analyzed that the economical efficiency of the office building was remarkably declined, in case the inflation rate passed over 10%. |