PSI - Issue 64

Gabriella Maselli et al. / Procedia Structural Integrity 64 (2024) 1743–1751 Author name / Structural Integrity Procedia 00 (2019) 000 – 000

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positive, if there is an economic residual value, and negative if the work is expected to be demolished at the end of its life cycle. Having estimated the costs, at step (3) the economic performance indicators are estimated, i.e: Net Present Cost (NPC), Net Savings (NS), Simple/Discounted Pay Back Period (PBP), Savings to Investment Ratio (SIR), Adjusted Internal Rate of Return (AIRR) (Calabrò et al., 2021). According to Standard EN 15459:2007, later specified in the corresponding Guidelines and Commission Delegated Regulation (EU) No. 244/2012, the result of the LCC analysis is expressed in terms of Global Cost (C G ). This sums the present value of all costs over the life cycle, including residual values such as negative costs : C G = C i +∑ C + C 0 + C − V ( 1 + r ) t n t =1 Where: C i = investment costs; C m = maintenance costs; The discount rate r allows monetary flows occurring at different times to be compared in financial terms and reflects the time value of money (Nesticò et al., 2023). According to International Standard ISO 15686-5:2008, for private sector projects it is recommended to estimate the discount rate using the opportunity cost of capital approach. For public sector projects, on the other hand, it is advisable to use the social discount rate set by the central government. Gluch and Baumann (2004) identify three alternative approaches for discounting in LCC analyses: (a) classical approach based on the calculation of the net present value (NPV), where the discount rate is considered as the time preference rate; (b) escalation rate approach, based on the use of discount rates that increase over time, considering that some cost items increase more rapidly than others over time; (c) environmental hurdle rate technique, which uses different rates according to the negative impact on the environment produced by the input variables and their cost items. Sensitivity analysis and risk analysis (4) can be crucial when evaluating new building materials. The costs and technical performance of new materials are inherently uncertain; therefore, it may be useful to analyse how the results of the analysis change as the input data change. If certain input variables are significant, in that small changes in them significantly affect the estimate of the Global Cost, then a risk analysis can be associated with the sensitivity analysis. The latter consists in generating the cumulative frequency distribution of the performance indicator, specifically the Global Cost (output), from the estimated probability distribution of the system ’ s sensitive variables (input). This can be done by implementing Monte Carlo analysis. Using step (5) of the evaluation approach, the comparison of the results obtained for the various structural materials takes place. Considering the entire life cycle of the construction, it is now possible to determine which material is the most cost-effective. This process, schematised in Figure 1, also makes it possible to analyse for each alternative in which phases of the life cycle the most significant costs occur. C o = operation costs; C el = end of life costs; V r = residual value; t = year in which the cost is incurred; n = number of years of analysis; r = discount rate.