Guide to Computing and Reporting the Life Cycle 

Cost of Environmental Management Projects 

Laura I. Schultz and Stephen F. Weber 

 

U.S. Department of Commerce 

Technology Administration 

National Institute of Standards and Technology

Office of Applied Economics 

Building and Fire Research Laboratory 

Gaithersburg, MD 20899 

NISTIR 6968 

U.S. Department Of Energy 

Office of Environmental Management
Guide to Computing and Reporting the LifeCycle Cost of Environmental Management 

Projects 

Laura I. Schultz and Stephen F. Weber 

Funded by: 

U.S. Department of Energy 

Washington, DC 20585 

March 2003 

U.S. DEPARTMENT OF COMMERCE 

Donald L. Evans, Secretary 

TECHNOLOGY ADMINISTRATION 

Philip J. Bond, Under Secretary for Technology 

NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY 

Arden L. Bement, Jr., Director

U.S. Department of Commerce 

Technology Administration

National Institute of Standards and Technology 

Office of Applied Economics 

Building and Fire Research Laboratory

Gaithersburg, MD 20899 

NISTIR 6968
Guide to Computing and Reporting the LCC of EM Projects iii 

Abstract 

Life-cycle cost (LCC) analysis is an economic measurement technique used to determine the 

total cost of an investment project or activity over its lifetime. This Guide applies the principles 

of LCC to the special requirements of Environmental Management (EM) projects. The approach 

integrates two ASTM International consensus standards: a widely used standard on LCC, and a 

recently adopted standard on the work breakdown structure expressed in the Environmental Cost 

Element Structure (ECES) developed by a Federal interagency working group concerned with 

efficient execution of EM projects. The LCC method described in the Guide can be applied to 

any EM project that has adopted the ECES cost management framework. Users of the Guide are 

assumed to be familiar with the ECES and the consensus standards that support it. The Guide

covers economic comparisons across environmentally equivalent alternatives for an EM project 

addressing a single site as well as economic analysis of EM projects at different sites. Both onetime and recurring expenditures are covered as well as discounting on both an annual and a 

monthly basis. Several realistic case examples illustrate the method. 

Keywords: discounting; economic evaluation; engineering economics; environmental 

management; investment analysis; life-cycle costing; present value; project evaluation; standards 
Guide to Computing and Reporting the LCC of EM Projects v 

Contents 

Abstract...... ............................................................................................................ iii

List of Exhibits and Figures......................................................................................vi

1. Introduction............................................................................................................1

1.1 Purpose.......................................................................................................................1 

1.2 Scope..........................................................................................................................2 

1.3 Overview....................................................................................................................3 

2. Defining the Environmental Management Project ................................................5

2.1 Project Definition.......................................................................................................5 

2.2 Specifying Alternatives..............................................................................................5 

2.3 Illustration: Report Form for Project Definition.......................................................5 

3. Setting the LCC Parameters...................................................................................9

3.1 Base Date ...................................................................................................................9 

3.2 Study Period...............................................................................................................9 

3.3 Treatment of Sunk Costs..........................................................................................11 

3.4 Discount Rate...........................................................................................................11 

3.5 Illustration: Report Form for LCC Parameters .......................................................13 

4. Organizing ECES Cost Data................................................................................15

4.1 Timing of Costs........................................................................................................15 

4.2 Treatment of Inflation or Deflation in Cost Estimates.............................................15 

4.3 Area Cost Factors.....................................................................................................16 

4.4 Illustration: Sample Cost Database.........................................................................16 

5. Computing the LCC of the EM Project ...............................................................19

5.1 Computing the Present Value of a Single Amount..................................................19 

5.2 Discounting of Annual versus Monthly Costs.........................................................20 

5.3 Computing the Present Value of Monthly Costs .....................................................22 

5.4 Computing the Present Value of a Uniform Series..................................................23 

5.5 Illustration: Computing the LCC of the Sample Project.........................................25 

5.6 Interpreting the Total LCC.......................................................................................26 

6. Comparing EM Alternatives Using LCC Analysis..............................................27

6.1 Environmental Management Project Specification .................................................27 

6.2 Project Alternatives..................................................................................................27 

6.3 Setting Analysis Parameters ....................................................................................28 

6.4 Calculations of LCC for Both Alternatives .............................................................28 

6.5 Calculation of the Adjusted LCC.............................................................................29 

6.6 Life-Cycle Cost Report............................................................................................30 

6.7 Conclusion ...............................................................................................................32
Guide to Computing and Reporting the LCC of EM Projects vi 

References... ............................................................................................................33

Appendix A: Data for Sample Project without Alternatives....................................35

Appendix B: Data for Case Study with Two Alternatives—In Situ Soil Vapor 

Extraction ...........................................................................................43

Appendix C: Data for Case Study with Two Alternatives—Natural 

Attenuation.........................................................................................47

Appendix D: Derivation of the Equation for Discounting Monthly Costs..............53

Appendix E: Blank Report Forms............................................................................55

List of Exhibits and Figures 

Exhibit 1: Project Definition.......................................................................................................... 7 

Exhibit 2: LCC Parameters .......................................................................................................... 14 

Exhibit 3: Excerpt from the Sample Cost Database..................................................................... 17 

Exhibit 4: Illustrative Cost Data Extracted from the Sample Project in Appendix A ................. 22 

Exhibit 5: Illustrative Cost Data for a Uniform Series of Expenditures Extracted from the 

Sample Project in Appendix A ................................................................................... 24 

Exhibit 6: Present Value Costs for Phase 4 of Sample Project in Appendix A........................... 25 

Exhibit 7: Present Value Costs by Phase for Sample Project in Appendix A ............................. 26 

Exhibit 8: Present Value Costs by Phase for In Situ Vapor Extraction (Alternative A) ............. 29 

Exhibit 9: Present Value Costs by Phase for Natural Attenuation (Alternative B) ..................... 29

Figure 1: Cash Flow over the Life Cycle of a Project ................................................................. 10 

Figure 2: Uniform Series of Expenditures................................................................................... 23 
Guide to Computing and Reporting the LCC of EM Projects 1 

1. Introduction 

1.1 Purpose 

Life-cycle cost (LCC) analysis is an economic measurement technique used to determine the 

total cost of an investment project or activity over its lifetime.1 This Guide applies the general 

principles of LCC to the special requirements of Environmental Management (EM) projects. 

The approach defined and illustrated in the Guide provides a method for computing a single 

number that represents the total present value cost of an EM project over its entire life cycle. 

The approach is primarily based on a widely used consensus standard published by ASTM 

International (formerly known as the American Society for Testing and Materials).2 While this 

standard was developed to be applied to building systems, the LCC method that it defines may 

be applied to any type of investment project. As the Forward to the published compilation of 

ASTM International building economics standards states, “Although the standards focus on 

buildings and building components, the standards are equally applicable to non-building 

investments. The same principles apply in evaluating any capital budget expenditure.” 

The LCC measure explicitly takes into account the time value of money, that is, the variation in 

the cost of an expenditure due to its timing.3

 Two types of variation are accounted for in the time 

value of money. One is the result of changes in prices due to inflation or deflation. The second 

arises from the real earning power of money over time. This real earning power means that 

identical dollar expenditures impose differing costs depending on when they are incurred. The 

Guide addresses both types of variation due to timing. The LCC measure presented here 

 

1 For background on the various methods of project evaluation and capital budgeting, of which LCC is one, see 

comprehensive engineering economics texts, such as Au, Tung and Au, Thomas P. 1992. Engineering Economics 

for Capital Investment Analysis. 2nd Edition. Englewood Cliffs, NJ: Prentice Hall, and Park, Chan S. 2001. 

Contemporary Engineering Economics. 3rd Edition. Englewood Cliffs, NJ: Prentice Hall College Division. For a 

thorough treatment of LCC itself, see Fuller, Sieglinde K., and Petersen, Stephen R. 1996. Life-Cycle Costing 

Manual for the Federal Energy Management Program. NIST Handbook 135. 1995 Edition. Gaithersburg, MD: 

National Institute of Standards and Technology. 

2

 ASTM International. 2003. Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems. 

E 917-02. West Conshohocken, PA: ASTM International. 

3

 Terminology, such as “time value of money,” used in the Guide is consistent with the definitions given in: ASTM 

International. 2003. Standard Terminology of Building Economics. E 833-02a. West Conshohocken, PA: ASTM 

International. 
Guide to Computing and Reporting the LCC of EM Projects 2 

represents the total cost of a project over its life, fully accounting for the timing of every 

expenditure. 

1.2 Scope 

The Guide describes how to apply the LCC technique to EM projects by using the work 

breakdown structure defined in the Environmental Cost Element Structure (ECES). The ECES 

has been developed and maintained by the Environmental Cost Engineering Committee, a 

Federal interagency working group concerned with efficient execution of EM projects.4

 The first 

two levels of the ECES have been adopted as a voluntary consensus industry standard, ASTM 

E 2150-02.5

 In addition, an Adjunct to this standard has recently been adopted to cover the 

remaining three levels of the ECES (Levels 3, 4, and 5).6 The Guide uses examples that 

explicitly address all five levels of ECES covered by the published standard and the adjunct. 

The LCC method described in the Guide can be applied to any EM project that has adopted the 

ECES cost management framework. The ECES work breakdown structure allows project 

managers to easily manage the costs, timing, and objectives associated with an EM project. This 

framework allows for straightforward calculation of the LCC of an EM project using the Guide. 

The Guide may also be used to analyze projects whose data are organized and coded using other 

work breakdown structures, such as the Construction Specifications Institute MasterFormat 

system7

 or the ASTM International UNIFORMAT II system.8 MasterFormat arranges related 

construction products and activities into 16 level-one titles, called divisions. Each division is 

further defined in MasterFormat by numbers and titles for levels two and three, and suggested 

titles for level four. Level-two numbers and titles identify clusters of products and activities 

having an identifying characteristic in common. UNIFORMAT II is a common elemental 

 

4

 U.S. Department of Energy. 2002. Environmental Cost Element Structure. Washington, DC: Interagency 

Environmental Cost Engineering Committee. 

5

 ASTM International. 2003. Standard Classification for Life-Cycle Environmental Work Elements—

Environmental Cost Element Structure. E 2150-02. West Conshohocken, PA: ASTM International. 6

 ASTM International. 2002. Environmental Cost Element Structure at Levels 3, 4 and 5 and Definitions. Adjunct 

to ASTM Classification Standard E 2150-02. West Conshohocken, PA: ASTM International. 7

Construction Specifications Institute, MasterFormat 1995, Alexandria, VA: Construction Specifications Institute. 8

ASTM International. 2003. Standard Classification for Building Elements and Related Sitework-UNIFORMAT II. 

E 1557-02. West Conshohocken, PA: ASTM International. 
Guide to Computing and Reporting the LCC of EM Projects 3 

classification for the description, economic analysis, and management of a building over its life 

cycle. Elements—often referred to as systems or assemblies—are major components common to 

most buildings that usually perform a given function regardless of the design specification, 

construction method, or materials use. 

Users of the Guide are assumed to be familiar with the ECES and the ASTM International 

standard and adjunct that support it. It is further assumed that the cost data for EM projects to be 

analyzed by the method of this Guide are organized using ECES and that every cost item is 

coded as a specific element of ECES. Each cost item must be assigned to the specific time 

period in which it is expected to be incurred. 

The LCC method defined in the Guide may be used to perform two types of analysis, prospective 

and retrospective. Prospective LCC analysis may be used to examine a single EM project that 

has not yet started. Prospective analysis will reliably compare alternative approaches to the same 

EM project, provided all alternatives are expected to achieve the same level of environmental 

performance over the same time period. The LCC estimates may also be used for budgetary 

purposes. 

Retrospective LCC analysis examines EM projects that have been completed. The analysis may 

be used to look at past approaches to similar projects. The analysis of past projects may provide 

insight to improve the efficiency of future budget decisions. Comparisons across different EM 

projects require a geographic cost index factor to adjust for variations in construction costs 

throughout the country. 

1.3 Overview 

Section 2 describes how to define the particular EM project being analyzed. Section 3 explains 

how to establish the key LCC parameters used in calculating the LCC of any project and its 

alternatives. These parameters are the base date, the study period, and the discount rate. Section 

4 discusses the organization of the cost data in terms of timing and cost conditions sensitive to 

geographic variation as well as the treatment of inflation. Section 5 explains and illustrates how 

to compute the LCC of a sample EM project that has only one environmental solution. Section 5 
Guide to Computing and Reporting the LCC of EM Projects 4 

also covers the discounting of one-time expenditures as well as expenditures that recur over 

several time periods. It treats the discounting of both annual costs and monthly costs. Finally, 

Section 6 demonstrates how to compare the LCC of multiple alternatives. A case study with two 

alternative environmental solutions is included to illustrate the approach. Appendixes A, B, and 

C present tables of all the sample data used in the illustrations throughout the Guide. 
Guide to Computing and Reporting the LCC of EM Projects 5 

2. Defining the Environmental Management Project 

The Guide uses a comprehensive report form to organize and summarize the LCC analysis of an 

EM project. This LCC report form has four sections: (1) Project Definition; (2) LCC 

Parameters; (3) LCC by Phase and Alternative; and (4) Summary Table of LCC by Alternative. 

This section of the Guide discusses how to prepare the Project Definition section of the LCC 

report. Section 3 covers the LCC Parameters section of the report. Section 6 shows how to use 

the third and fourth sections of the report covering the results of the LCC analysis. 

2.1 Project Definition 

Define the EM project before performing any calculations. The project definition allows readers 

to understand the scope of the project analysis and provides them with information about 

important factors that may influence the results. Include the Title, Location, Type, Record of 

Decision Date, Analyst contact information, and Project Description in the Project Definition 

Section of the LCC report. 

2.2 Specifying Alternatives 

If the purpose of the LCC analysis is to evaluate alternative approaches to completing a single 

project, include a description of the alternatives in the project definition. Although the 

alternatives may employ different environmental remediation methods, they must all be designed 

to achieve the same level of environmental performance. The alternatives must be analyzed 

using the same base date, study period, and discount rate, as discussed in Section 3. 

2.3 Illustration: Report Form for Project Definition 

To better illustrate the principles of LCC, a sample project has been developed based on an 

actual EM project. This project offers only one environmental solution, so that there is no need 

to evaluate and compare multiple alternatives. The examples given through Section 5 use data 

from this sample project. A table with all cost data for this sample project is in Appendix A. 

Section 6 presents a case study of a more complex project that involves two alternatives. 
Guide to Computing and Reporting the LCC of EM Projects 6 

The sample EM project used through Section 5 is a decontamination of a former nuclear 

production facility. The clean-up site is a three-story building measuring approximately 27.4 m 

x 45.7 m x 45.7 m (90 ft x 150 ft x150 ft), constructed in 1950 to convert uranium hexafluoride 

(UF6) to uranium tetrafluoride (UF4). The production was initiated in 1953 and continued until 

1957. This facility contains asbestos, radiological contamination, lead paint and flashing, and 

health risk due to biological contaminants such as bacteria found in soil and plant debris. The 

facility is located on 0.4 hectares (1 acre) of land, near the town of Lockport, in upstate New 

York. Cleaning the facility and surrounding area will begin in January 2004. Once the facility 

has been decontaminated, the site will be in long-term surveillance and maintenance (legacy 

management) until 2028. Exhibit 1 is the first section of the LCC report form, called Project 

Definition, filled out using information from the sample EM project. Blank versions of all four 

sections of the LCC report form can be found in Appendix E. 
Guide to Computing and Reporting the LCC of EM Projects 7 

Exhibit 1: Project Definition 

1. Project Definition 

Project Title: Nuclear Production Facility Decontamination

Location (City / ST / Zip): Lockport / NY / 14094 

 

Project Type (Circle One): RCRA CERCLA A WM D&D

Record of Decision Date: January / 31 / 2003 

Analyst: John Doe Phone: (XXX)XXX-XXXX Email: John.Doe@doe.gov 

Project Description: 

Decontam ination, m onitoring, and long-term stewardship of a form er nuclear 

production facility. The facility was shut down and decom m issioned when it was

transferred into the environm ental program . This is a three-story building 

m easuring approxim ately 27 m x 46 m x 46 m (90 ft x 150 ft x 150 ft), constructed 

roof and steel siding panels on the exterior. Som e of the soil surrounding the 

facility is also contam inated.

in 1950 to convert uranium hexafluoride (UF6) to uranium tetrafluoride (UF4). 

Production was initiated in 1953 and continued until 1957. This facility 

contains asbestos, radiological contam ination, lead paint and flashing, and health 

risk due to biological debris. The facility consists of steel fram e with steel 

Number of Alternatives: 1

 List of Alternatives: 

 Short Name Description

 Alternative A Decontamination
Guide to Computing and Reporting the LCC of EM Projects 9 

3. Setting the LCC Parameters 

Several parameters must be defined before computing the LCC of an EM project.9

 The first is 

the base date, which is the date to which all expenditures are discounted. The second parameter 

is the length of the study period (also referred to as the time horizon), which establishes the start 

and end date of the project. The length of the study period thus determines the number of years 

and months over which project expenditures are included in the analysis. The third parameter is 

the discount rate used to account for the time value of money. Use the same values for these 

three LCC parameters across all alternatives within a project. 

3.1 Base Date 

The base date of a project is the date to which all future (and past) costs are discounted. 

Theoretically, the base date could be any point in time within or even outside the study period, 

but it usually coincides with the beginning of the study period. The date on which the LCC 

analysis is conducted (the Analysis Date) is also sometimes used as the base date. The base date 

may fall on any date, although the beginning of either a particular month or a particular year is 

recommended. 

When performing a prospective analysis, define the timing of all costs included in the project 

relative to the base date. All cost elements should be denominated in terms of base-date dollars. 

If an analysis is performed in January 2004, all costs should be denominated in January 2004 

dollars, regardless of the expected date of expenditure. Information on adjusting costs for 

changes in the price level can be found in Section 4. 

3.2 Study Period

The study period of an LCC analysis is the length of the time period covered by the economic 

evaluation. With the exception of sunk costs (discussed in the next subsection), the study period 

 

9

 Standard definitions for these parameters can be found in: American Society for Testing and Materials. 2003. 

Standard Terminology of Building Economics. E 833-02a. West Conshohocken, PA: American Society for Testing 

and Materials. 
Guide to Computing and Reporting the LCC of EM Projects 10 

spans the very first expenditure and the last expenditure for the environmental clean up. This is 

illustrated in the typical cash flow diagram of Figure 1. The study period extends from the 

project start date (the beginning of the period in which the very first expenditure occurs) to the 

project end date (the end of the period in which the very last expenditure occurs). The analysis 

may be performed prior to the beginning of the study period. 

Figure 1: Cash Flow over the Life Cycle of a Project 

When comparing multiple alternatives for a single project, the ASTM International LCC 

methodology requires that the study period be the same across all alternatives. If the alternatives 

have expenditures extending over different lengths of time, set the study period equal to the life 

of the longest project. Then match the same study period for all the other alternatives by adding 

the required number of periods assigned with zero costs. As long as all the alternatives are 

expected to have the same benefits, no further accounting is necessary. If the benefits vary 

across the alternatives, then develop economic estimates of the present value of the additional 

benefits and credit each alternative accordingly. For example, if one alternative makes the site 

available for a useful economic purpose earlier than the others, estimate the economic value of 

those additional periods of use. The case study in Section 6 illustrates how to develop and apply 

such credits. 

 

Time 

Periods

Today = 

Analysis 

Date

Project 

Costs ($)

Project 

End

Project 

Start Study Period
Guide to Computing and Reporting the LCC of EM Projects 11 

3.3 Treatment of Sunk Costs 

A sunk cost is any cost that has already been incurred prior to the date of the LCC analysis and 

that cannot be recovered regardless of present or future decisions.10 Because sunk costs have 

already been spent prior to the analysis, they should not influence decisions about which 

alternative to select for an EM project. Thus when comparing multiple alternatives for the same 

EM site in a prospective analysis, ignore sunk costs. If the purpose of LCC analysis is 

retrospective, however, include all sunk costs.

3.4 Discount Rate 

In LCC analysis the discount rate is the parameter used to represent the time value of money. It 

reflects the opportunity cost of capital to an investor over time. To illustrate the concept, 

suppose you must pay a bill of $1,000 one year from now. Consider how much you need now to 

be able to pay the bill at the end of the year. Suppose you could put your money in ank account 

that pays 5 % interest per year. If you deposit the full $1,000 now,you would have $1,050 in 

your account at the end of the year – $50 extra because of the interest you earned. How much 

should you deposit to end up with exactly $1,000 to pay the bill? The answer is found by 

discounting the $1,000 cost at the end of the year to its equivalent present value using the 

discount rate of 5 %. As explained in greater detail in Section 5, the amount you need to deposit 

is only $952.38.11 Thus, the $1,000 cost due one year from now is worth $47.62 less than a 

$1,000 cost that is due immediately. 

Because costs expended at different times have different values, costs of an EM project 

occurring at different times cannot be directly compared or summed. Costs must first be 

converted into their time-equivalent value at the base date before being combined to compute the 

total LCC of a project. This time-equivalent value is referred to as the Present Value (PV) of the 

costs. The discount rate is the interest rate used to convert (or “discount”) future expenditures to 

 

10 Standard definitions for the LCC parameters can be found in: American Society for Testing and Materials. 2003. 

Standard Terminology of Building Economics. E 833-02a. West Conshohocken, PA: American Society for Testing 

and Materials. This definition of sunk costs draws on this standard as well as OMB Circular A-94 Revised 10/29/92, 

Definition of Terms. 

11 The computation is as follows: 1000/(1+0.05) = 952.38. 
Guide to Computing and Reporting the LCC of EM Projects 12 

their present value at the base date, taking into account the investor’s time value of money. The 

discount rate selected for LCC analysis must make an investor indifferent between a future cash 

amount and its present value. 

Two types of discount rates are used in computing the present value: a “real” rate or a “nominal” 

rate. The real discount rate reflects the time value of money without accounting for the effects of 

inflation and deflation. That is, it reflects the real earning power of money over time. Use the 

real discount rate (excluding the rate of inflation) when all cost data are denominated in terms of 

“constant” dollars, that is, dollars with constant purchasing power. Nominal or market discount 

rates take into account general inflation or deflation plus the real earning power of money. Use a 

nominal rate when all cost data are denominated in “current” dollars, that is, dollars that change 

in value from year to year depending on the general price level. The need for a nominal or 

market discount rate often arises when the future cost estimates are based on a maintenance 

contract that is typically specified to be paid in current dollars in future time periods. For all 

illustrations in the Guide, a real discount rate is used, since all the cost estimate data in the 

sample projects are in terms of constant dollars. For more information on how to treat inflation, 

consult Section 4. 

In the private sector, an individual investor’s discount rate is determined by the investor’s 

minimum acceptable rate of return (MARR) for investments, as governed by available 

investment opportunities and his or her risk tolerance. Because different investors have different 

investment opportunities available to them as well as different levels of acceptable risk, private 

discount rates vary greatly. 

Most environmental projects using the ECES will be sponsored by government agencies rather 

than by private investors. Two government agencies annually publish discount rates to be used 

in the economic analysis of government projects. 

The Department of Energy (DOE) establishes the specific discount rate to be used for energy and 

water conservation and renewable resource projects under the Federal Energy Management 
Guide to Computing and Reporting the LCC of EM Projects 13 

Program (FEMP). This discount rate applies only to investments devoted to these specific 

objectives in federally owned or leased facilities. The rates are published annually on April 1.12

Other Federal projects are required to use the discount rates published in January of each year by 

the Office of Management and Budget (OMB). The real and nominal discount rates to be used 

for investment analyses of Federal projects are found in Appendix C of OMB Circular A-94. 

Appendix C is updated annually at the time of the President’s budget submission to Congress in 

January. The rates vary by the length of the project with separate rates for 3-year, 5-year, 7-year, 

10-year, and 30-year projects. The Circular requires use of the rate that corresponds to the 

length of the study period for the project and indicates that one should interpolate linearly where 

necessary. If the study period is longer than 30 years, the Circular says to use the 30-year rate.13

3.5 Illustration: Report Form for LCC Parameters 

The sample EM project described below specifies decontamination beginning in January 2004. 

Once the facility has been decontaminated, it will be in surveillance and maintenance mode until 

2028. The study period will be 24 years and 2 months. Analysis of the EM project will begin in 

2003. The date of analysis and the base date are both January 1, 2003. The discount rate will be 

taken from the OMB Circular A-94, January 2003. Because the project will extend to 24 years, 

the discount rate should be interpolated, as recommended by OMB. The most recently 

published14 OMB rates for 10 years and 30 years are 2.5 % and 3.2 %, respectively. Thus the 

interpolated rate for a 24-year project is 2.99 %.

15 The LCC Parameters should be entered into 

the appropriate fields in the Report Form. 

 

12 The most recent edition can be found in: Fuller, Sieglinde K., and Rushing, Amy S. 2002. Energy Price Indices 

and Discount Factors for Life-Cycle Cost Analysis - April 2002. NISTIR 85-3273-17. Gaithersburg, MD: National 

Institute of Standards and Technology. Updated annually. 

13 Office of Management and Budget (OMB). 2003. Guidelines and Discount Rates for Benefit-Cost Analysis of 

Federal Programs. Circular A-94. Washington, DC: Office of Management and Budget. The OMB tables of rates 

are available online at http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html. The complete Circular can 

be found at http://www.whitehouse.gov/omb/circulars/a094/a094.html, and a table of past years’ rates is located at 

http://www.whitehouse.gov/omb/circulars/a094/DISCHIST-2003.pdf. Updates of the appendix are also available 

upon request from the OMB Office of Economic Policy (202-395-3381). 

14 January 31, 2003 

15 The 24 year rate is interpolated as follows: 

ilow + [(study period - yearlow) /(yearhigh – yearlow)]*(ihigh – ilow) = i. 

2.5 + (24-10)/(30-10) * (3.2-2.5) = 2.99. 
Guide to Computing and Reporting the LCC of EM Projects 14 

Exhibit 2: LCC Parameters 

2. LCC Parameters 

Study Period (Years):_24 Years, 2 Months Discount Rate: 2.99 %

Analysis Date: 01 / 01 / 2003 Base Date: 01 / 01 / 2003 
Guide to Computing and Reporting the LCC of EM Projects 15 

4. Organizing ECES Cost Data 

Before performing the LCC analysis, all relevant costs associated with a project must be 

compiled. The ECES provides a hierarchical list of elements representing all cost components 

that are expected to occur over the life-cycle of an EM project. Each cost element represents a 

task or activity performed during environmental projects. For easy reporting and analysis, 

compile cost data into the work breakdown structure defined by the ECES classification. For 

more information on designing and documenting the cost estimates for an EM project, consult 

the Environmental Protection Agency’s Guide to Developing and Documenting Cost Estimates 

During the Feasibility Study.16

4.1 Timing of Costs 

In addition to compiling all costs, include the timing of each cost. The timing is needed to 

correctly discount each cost to its equivalent present value. Discounting is keyed to a single 

point in time (that is, the distance in time from the base date). The most appropriate approach 

would be to discount from the exact date at which the expenditure takes place. However, it is 

common practice to model expenditures that are incurred at varying times within a period as if 

they were all incurred either at the beginning of the period, middle of the period, or the end of 

the period. For example, ASTM International uses the end-of-year convention in its precalculated discount factor tables.17

4.2 Treatment of Inflation or Deflation in Cost Estimates 

General price inflation/deflation causes a reduction/increase in the purchasing power of the 

dollar over time. The analysis can be calculated in constant-dollar terms (explicitly excluding 

changes in the general price level) or in current-dollar terms (including changes in the general 

price level). When excluding inflation, express all costs in terms of base date dollars and use 

 

16 U.S. Environmental Protection Agency. 2000. A Guide to Developing and Documenting Cost Estimates During 

the Feasibility Study. Washington, DC. 

17 ASTM International. 2003. Discount Factor Tables: Adjunct to ASTM Practice E 917, for Measuring Life-Cycle 

Costs of Buildings and Building Systems. West Conshohocken, PA: ASTM International. 
Guide to Computing and Reporting the LCC of EM Projects 16 

 the real discount rate. On the other hand, if costs are expressed in current dollars (i.e., if they 

include changes in prices), then a consistent projection of general price inflation must be used 

throughout the cost estimates. In this case, the LCC analysis must take account of this price 

inflation by using the nominal discount rate as discussed in Section 3 and published by the OMB. 

It is preferable to use constant-dollar analysis since it eliminates the need to estimate the rate of 

inflation over the duration of the study period. Current-dollar analysis may be used if there are 

budgeting considerations based on current dollars included in the analysis. For example, if cost 

data are based on a multiyear contract with fixed current dollar amounts, adjust future 

expenditures for inflation. 

4.3 Area Cost Factors 

Projects may have different construction costs based on the geographic location of the site. 

When comparing alternatives for the same site, use the area cost factors appropriate for that site 

for all cost estimates. However, when comparing the LCCs of two projects at different sites, the 

costs have to be adjusted by their area cost factors to put them on a common locality basis. 

4.4 Illustration: Sample Cost Database 

The costs may be arranged in any way convenient for the analysis. List each cost element by 

Phase and Level and include the description, the cost, and the time period during which the task 

will be performed. Exhibit 3 is an excerpt from a sample database showing costs for the case 

study. 
Guide to Computing and Reporting the LCC of EM Projects 17 

Phase 2nd 3rd 4th 5th Description Cost Date 

2 .09 .01 Prepare and Ship Environmental 

Samples $5,000 Apr-2004

2 .09 .04 Provide Sample Management $6,600 Apr-2004

2 .09 .08 Data Reduction, Tabulation and 

Evaluation $7,040 Apr-2004

3 .02 .01 Project Management 

Support/Administration $16,624 Mar-2005

3 .04 .12 .01 Preliminary Design $17,955 Mar-2005

3 .04 .12 .02 Intermediate Design $3,217 Mar-2005

3 .04 .12 .03 Pre-final/Final Design $26,434 Mar-2005

3 .02 .05 .02 .01 Support preparation of solicitation 

package $2,089 Mar-2005

3 .02 .05 .02 .03 Advertising/soliciting of bids $1,200 Mar-2005

3 .02 .05 .02 .05 Pre-bid (pre-solicitation) meetings $350 Mar-2005

3 .02 .05 .03 Perform Pre-Award Activities $3,520 Mar-2005

4 .02 .01 Project Management 

Support/Administration $2,707,041 Aug-2005

4 .05 .01 Mobilization $78,281 Aug-2005

4 .05 .36 Demobilization $27,398 Aug-2005

4 .07 .08 Air Monitoring and Sampling $10,560 Aug-2005

Exhibit 3: Excerpt from the Sample Cost Database 
Guide to Computing and Reporting the LCC of EM Projects 19 

5. Computing the LCC of the EM Project 

The total LCC of an EM project is the sum of all project-related expenditures. Before being 

totaled all costs must be discounted to their present value. The primary formula for computing 

the present-value LCC of a project is:18 

0 (1 )

N

t

t

t

C PVLCC

i =

= + ∑

where: 

PVLCC = total Life-Cycle Cost in present value dollars at the base date; 

Ct = costs occurring in period t, where t=1...N discounting periods; 

N = the number of time periods in the study period; and 

i = the discount rate in decimal form (e.g., 5 % is entered as 0.05). 

This general formula discounts an individual cost, Ct, to the base date. Then all costs are 

summed to calculate the PVLCC. The first step in calculating the PVLCC for an EM is to 

compute the present value of a single expenditure. 

5.1 Computing the Present Value of a Single Amount 

The LCC calculated in Equation (1) is the sum of all costs associated with a project. Before the 

costs are summed, they must be converted to their present value. The formula used to convert a 

single future cost to present value is: 

1 *

(1 )t P F

i = +

where: 

F = the future cost; 

P = discounted present value of the expenditure. 

(1) 

(2) 
Guide to Computing and Reporting the LCC of EM Projects 20 

The future cost, F, is equivalent to one of the costs included in Ct in the PVLCC formula, 

Equation (1). To calculate the discounted present value, F is multiplied by a discount factor. 

The factor is dependent upon the discount rate, i, and the time, t, that is expected to elapse 

between the base date and the date of expenditure. 

Consider an example where a project manager will incur an expense of $10,000 in ten years. The 

manager can earn a 5 % return on investments. The present-value equation can be used to 

calculate how much money the manager must set aside today to be able to pay $10,000 in ten 

years. Using Equation (2), 

10

1 $10,000* $6,139 (1 0.05)

P = = +

The present value of the $10,000 cost paid ten years from now is $6,139. The manager is 

indifferent between paying $6,139 now and $10,000 ten years from now, given a discount rate of 

5 %. 

5.2 Discounting of Annual versus Monthly Costs 

The above example discounts the future value using annual discounting, that is, each period is 

one year long. Discounting using year-long periods is common. Most discount rates, including 

those published by OMB, are intended for annual discounting.19 When using annual discounting, 

it is most often assumed that the cost occurs at the last day of the year. For example, an 

expenditure occurring as early as January of 2005 will be calculated as if it occurred on 

December 31, 2005. This may cause a problem when paying the expense in January. Annual 

discounting assumes that interest will be earned on capital throughout 2005. There would be 

insufficient funds to pay earlier in the year. 

 18 As defined in: ASTM International. 2003. Standard Practice for Measuring Life-Cycle Costs of Buildings and 

Building Systems. E 917-02. West Conshohocken, PA: ASTM International. 19 See OMB Circular No. A-94 APPENDIX C (Revised January 2003). A copy of the updated appendix can be 

obtained at http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html. For more information on discount 

rates see section 3.4. 
Guide to Computing and Reporting the LCC of EM Projects 21 

Using shorter periods will reduce the magnitude of this problem. Shorter discounting periods 

allow for more precise timing of expenditures. The period used for discounting can be of any 

length and is determined by the timing of the project’s expenditures. The costs of EM projects 

are usually defined by month, so discounting of monthly costs will be used to calculate the LCC. 

The equation used for the discounting of monthly costs is: 

12

1 *

(1 )mon P F

i

=

+

where: 

mon = the number of months elapsed since the base date. 

Equation (3) calculates the present value where i is the annual discount rate and mon is the 

number of months between the base date and the date of expenditure. Appendix D discusses the 

derivation of Equation (3) and its relationship to the standard annual discounting formula, 

Equation (2). 

To illustrate the difference in the two present-value calculation methods, consider the example 

used above. With a discount rate of 5 % and the time elapsed equal to ten years, the present 

value was $6,139. Suppose the cost was incurred in the first month of the 9th year instead of the 

last. The time elapsed would be 109 months instead of 120. The annually discounted present 

value can be compounded into the future using the following equation: 

12 *(1 )mon

FP i = +

The compounding of the annually discounted present value of $6,139, occurring 109 months in 

the future, yields: 

109

12 F = += $6,139*(1 0.05) $9,562

The annual discounting approach will fall $438 short at the date of expenditure. The more 

accurate approach of discounting monthly costs finds the present value: 

(3) 

(4) 
Guide to Computing and Reporting the LCC of EM Projects 22 

109

12

1 $10,000* $6, 420

(1 0.05)

P = =

+

The present value found with Equation (3), $6,420, represents an expenditure of $10,000 in 109 

months. 

5.3 Computing the Present Value of Monthly Costs 

The cost and task data from the sample project is documented in the data table in Appendix A. 

As can be seen in Exhibit 4, a small section of data extracted from the data table, all dates of 

expenditure in the sample project are given in terms of both month and year. 

Phase 2nd 3rd 4th 5th Description Cost Date 

4 .05 .36 Demobilization $27,398 Aug-2005

4 .07 .08 Air Monitoring and Sampling $10,560 Aug-2005

4 .07 .14 .01 Hand Scanning $109,927 Aug-2005

4 .07 .14 .02 Smears and Swipes $274,817 Aug-2005

4 .07 .14 .03 Destructive Sampling $164,890 Aug-2005

Exhibit 4: Illustrative Cost Data Extracted from the Sample Project in Appendix A 

In the sample project, several of the expenditures occur only a few months after the base date. 

For example, task item number 4.07.14.01, “Hand Scanning,” will be completed in August 2005, 

for a cost of $109,927. This is only 32 months after the base date of January 2003. Assuming the 

OMB discount rate of 2.99 % defined in Exhibit 2, Equation (3) is used to discount the monthly 

cost: 

32

12

1 $109,927 * $101,621

(1 0.0299)

P = =

+

The final column of the spreadsheet in Appendix A lists the present values of all costs for the 

sample project. 
Guide to Computing and Reporting the LCC of EM Projects 23 

5.4 Computing the Present Value of a Uniform Series 

Often an expense will be repeated over several consecutive time periods. This is not uncommon 

in EM projects where some testing or maintenance tasks must be repeated annually. Figure 2 

below, illustrates the timing of a six-period uniform series of expenditures. Starting in period 5, 

there will be an annual cost that is repeated for 6 years. The final expenditure of the series is 

scheduled for the end of period 11. 

Figure 2: Uniform Series of Expenditures 

When calculating the present value of a series of annually repeated expenses, each occurrence 

could be calculated individually. It is more efficient, however, to use an equation to calculate the 

discounted value of the entire series of expenditures. The following equation calculates the 

discounted future value of a uniform series: 

1

(1 ) 1 *

(1 )

t

t

i FVS A

i i −

+ − = +

where 

FVS = Future value of the uniform series; 

t = the number of years the cost is incurred; 

A = the annual cost of the series. 

(5) 

Time 

Periods(t) 

Project 

Costs ($)

 

t=0 

Base 

Date 

 

Uniform Series 

Length=6 

t=5 t=11 
Guide to Computing and Reporting the LCC of EM Projects 24 

Equation (5) discounts the entire value of the series back to the date of the first expenditure. 

Using the example in Figure 2, the series would be discounted to the last day in period 5. This is 

the date that the first expenditure of the series is incurred. The FVS is the total of all the 

expenditures in the series discounted to the time of the first occurrence of the uniform series. To 

calculate the present value of the series, the FVS must be further discounted back to the base 

date. To calculate the present value, use Equation (3): 

12

1 *

(1 )

P FVS mon

i

=

+

In the sample project, there are maintenance tasks that must be repeated in Phase 6, Surveillance. 

Exhibit 5 shows an expense that must be repeated for five years starting in 2010. 

Phase 2nd 3rd 4th 5th Description Cost Date 

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2010

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2011

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2012

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2013

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2014

Exhibit 5: Illustrative Cost Data for a Uniform Series of Expenditures Extracted from the Sample Project in 

Appendix A 

The future value of the series is calculated using Equation (5): 

5

4

(1 0.0299) 1 .1587 $6,336* $6,336* $29,890 (0.0299)(1 0.0299) (0.0299)(1.1251)

FVS + − = == +

The total cost of the series has been discounted to February 2010, the beginning of the series. To 

calculate the value in terms of base date dollars, the $29,890 must be discounted back 86 months 

to the base date in January 2003. Using Equation (3) the calculation would be: 

86 /12

1 $29,890* $24, 201 (1 0.0299)

P = = +
Guide to Computing and Reporting the LCC of EM Projects 25 

Exhibit 6: Present Value Costs for Phase 4 of Sample Project in Appendix A 

5.5 Illustration: Computing the LCC of the Sample Project 

The present value of each cost element of the sample project is included in the far right column 

of the worksheet in Appendix A. Exhibit 6 is an excerpt of the cost worksheet consisting of all 

costs incurred during Phase 4, which covers construction activities. 

The final step in computing the LCC of an entire project is to sum all present value costs 

associated with the project. Exhibit 7 lists the LCC of each Phase of the sample project as well as 

the total LCC of the project. 

Phase 2nd 3rd 4th 5th Description Cost Date PVC 

4 .02 .01 Project 

Management/Support/Administration $2,707,041 Aug-2005 $2,502,503

4 .05 .01 Mobilization $78,281 Aug-2005 $72,366

4 .05 .36 Demobilization $27,398 Aug-2005 $25,328

4 .07 .08 Air Monitoring and Sampling $10,560 Aug-2005 $9,762

4 .07 .14 .01 Hand Scanning $109,927 Aug-2005 $101,621

4 .07 .14 .02 Smears and Swipes $274,817 Aug-2005 $254,052

4 .07 .14 .03 

Destructive Sampling (Including 

Removal of Paints, Drilling, Cutting 

of Structures/Equipment, etc) $164,890 Aug-2005 $152,431

4 .15 .04 Asbestos Abatement $1,553,564 Aug-2005 $1,436,180

4 .15 .05 Piping & Pipeline Removal $288,428 Aug-2005 $266,635

4 .19 .01 Contaminated Soil Collection 

(Excavation) $623,308 Aug-2005 $576,212

4 .31 .08 .06 Surface Decontamination of Floors $1,181,105 Aug-2005 $1,091,864

4 .31 .08 .07 Surface Decontamination of Walls $966,359 Aug-2005 $893,343

4 .31 .08 .19 Decontamination Area/Facility for 

Equipment and Vehicles $62,625 Aug-2005 $57,893

4 .31 .08 .20 

Decontamination Area/Facility for 

Personnel (i.e., Showers, Changing 

Rooms, Monitors, Waste Handling) $15,656 Aug-2005 $14,473

4 .32 .01 Waste Stream Handling/Packaging $1,243,720 Aug-2005 $1,149,747

4 .32 .11 Transportation by truck $1,854,400 Aug-2005 $1,714,286

4 .33 .08 Off-Site Commercial Disposal Costs, 

Fees, and Taxes $3,231,217 Aug-2005 $2,987,074

 Phase 4 Total LCC: $13,305,773
Guide to Computing and Reporting the LCC of EM Projects 26 

Phase Description Present Value 

1 Assessment $147,494 

2 Studies $6,229,478 

3 Design $66,809 

4 Construction $13,305,773 

5 Operations and Maintenance $383,778 

6 Surveillance $1,624,700 

Total LCC: $21,758,032 

Exhibit 7: Present Value Costs by Phase for Sample Project in Appendix A 

5.6 Interpreting the Total LCC 

The total LCC may be used for budgetary purposes or for comparison across multiple EM 

projects. Note that when using the LCC for budget planning, the total LCC is an estimate. It is 

only as accurate as estimations of the cost elements. 

The total LCC can be helpful in comparing EM projects addressing similar environmental 

conditions. When comparing across projects, use the same discount rate to calculate the 

individual LCCs for all projects. There are other factors that can contribute to differences in cost 

estimates. To make projects comparable be sure to account for differences in location with area 

cost factors. The scale of the project will also impact the estimate and should be considered 

when making comparisons. 
Guide to Computing and Reporting the LCC of EM Projects 27 

6. Comparing EM Alternatives Using LCC Analysis 

When determining the best treatment for an EM project that addresses a single site, it is common 

to examine multiple alternatives. In this section a detailed case study is used to illustrate the 

application of LCC analysis to find the most cost-effective solution for an EM site. The proper 

method for analyzing these multiple alternative projects is to compute the LCC for each 

alternative and then select the one with the least cost, as indicated in ASTM E 1185-02, the 

standard guide for selecting economic analysis methods.20 This ASTM International guide 

identifies types of design and system decisions that require economic analysis and recommends 

the appropriate economic methods for each decision type. It cautions that alternatives being 

compared must all offer the same benefits over the same study period. This issue of equal 

benefits and study period is treated in Subsection 6.5. 

6.1 Environmental Management Project Specification 

This illustrative case study is an EM project that includes the costs of program and project 

management, characterization, feasibility study, design, remediation, monitoring, and long-term 

stewardship activities associated with clean-up of a gasoline spill site located in north central 

California, near Sacramento. The site was used as a refueling station from 1975 to 1992. The soil 

and the surrounding groundwater were contaminated as a result of leaking gasoline tanks. The 

contaminants of concern include lead and volatile organic compounds. The contaminated area is 

approximately 3,720 m2

 (40,000 ft2) and about 4.5 m to 15.2 m (15 ft to 50 ft) deep. 

6.2 Project Alternatives 

Two alternatives have been identified as options for remediation. Alternative A, In Situ Soil 

Vapor Extraction, would begin in January 2004 and continue until August 2007. It would then 

be monitored until September 2016. Alternative B is Natural Attenuation. Natural Attenuation 

consists of initial model development and continued operation of the model and the sampling and 

analysis conducted at the site. This alternative would also start in January 2004. The Natural 

Attenuation alternative would continue until December 2034. After this period, air monitoring, 

 

20ASTM International. 2003. E 1185-02 Standard Guide for Selecting Economic Methods for Evaluating 

Investments in Buildings and Building Systems. West Conshohocken, PA: ASTM International. 
Guide to Computing and Reporting the LCC of EM Projects 28 

records management, and other activities would be performed at the site until August 2043. 

Note that the Vapor Extraction alternative would make the site available for other uses much 

earlier than the Natural Attenuation alternative. To make the economic comparison valid, a 

credit must be assigned to the Vapor Extraction alternative to account for the benefit of these 

additional years of use of the site. 

6.3 Setting Analysis Parameters 

Before computing the LCC of multiple alternatives, a base date, study period, and discount rate 

must be selected. The base date will be the date of analysis. The study period must be the same 

across all alternatives. Most alternatives will have different life-cycle lengths. In this case, 

Natural Attenuation will take longer than In Situ Vapor Extraction. When alternatives have 

different lengths, the study period is defined using the completion date of the longest project. 

This assumes all remediation for the shorter project has been completed. The shorter projects 

will assume zero costs for any year after their completion, and benefits of earlier use should be 

included, if applicable. Annual benefits for the remainder of the study period will be treated 

separately below. In this example the study period will end in August 2043, a total of 40 years 

and 8 months from the base date of January 1, 2003. The In Situ Vapor Extraction alternative, 

which will be completed in September 2016, will record an annual cost of $0 from 2017 to 2043. 

In addition to the zero costs, the shorter project will be credited with benefits received from 

earlier use of the land. 

Finally, the discount rate used in the analysis must be the same for all cash flows. For more 

information on selecting the appropriate discount rate, consult Section 3. In this example we use 

the discount rate of 3.2 %, as currently prescribed by OMB for projects lasting 30 years or 

longer. 

6.4 Calculations of LCC for Both Alternatives 

The cost data and LCC calculations for the two alternatives are included in Appendices B and C. 

Exhibits 8 and 9 give summaries of the LCC results by Phase for each alternative. 
Guide to Computing and Reporting the LCC of EM Projects 29 

Phase Description Present Value 

1 Assessment $80,989 

2 Studies $3,507,900 

3 Design $89,438 

4 Construction $8,929,017 

5 Operations and Maintenance $2,501,762 

6 Surveillance $78,985 

Total LCC: $15,188,091 

Exhibit 8: Present Value Costs by Phase for In Situ Vapor Extraction (Alternative A) 

Phase Description Present Value 

1 Assessment $80,989 

2 Studies $3,507,913 

3 Design $8,499 

4 Construction $4,670,585 

5 Operations and Maintenance $0 

6 Surveillance $50,355 

 Total LCC: $8,318,341 

 

Exhibit 9: Present Value Costs by Phase for Natural Attenuation (Alternative B) 

6.5 Calculation of the Adjusted LCC 

When comparing the LCC of these two alternatives, any differences in the length of the clean-up 

process must be analyzed further. Using Vapor Extraction will make the site available much 

earlier than Natural Attenuation. The additional years of usage is a benefit of the alternative and 

must be quantified and subtracted from the LCC of the alternative that makes it available (Vapor 

Extraction). 

An appropriate credit could be established by examining the real estate values in the area. One 

method requires finding comparable land in the area that is leased and assigning an estimated 

lease value for the intervening period. Comparable sale prices for similar land in the area could 

also be used to establish a value. In this case, the credit is calculated by comparing the present 

values of the proceeds of a sale of the land when available under each of the two alternatives. 
Guide to Computing and Reporting the LCC of EM Projects 30 

Alternative A (Vapor Extraction) makes the land available for sale October 1, 2016 (165 months 

from the base date), while Alternative B (Natural Attenuation) makes it available September 1, 

2043 (488 months from the base date). Thus, if the value of the uncontaminated commercial 

land is $600,000 in today’s prices, then compute the present values of the amount for the two 

dates using Equation (3) for each computation. The difference is the credit earned by the Vapor 

Extraction alternative. 

165 /12 488 /12

1 1 $600,000 * $600,000 * (1 0.032) (1 0.032)

$389,095 $166,665 $222, 430

Credit

Credit

= − + +

=−=

Subtract the credit calculated from the LCC of the Vapor Extraction alternative. 

$15,188,091 $222,430

$14,965,661

Adjusted LCC LCC Credit

Adjusted LCC

=− = −

=

6.6 Life-Cycle Cost Report 

The following is the Life-Cycle Cost Report form completed for this case study. Section 1, 

Project Definition, provides information about the project, its location, and the alternatives being 

examined with LCC analysis. Section 2 of the report defines the LCC parameters used for 

analysis. Section 3, Life-Cycle Costs by Phase and Alternative, provides a cost breakdown by 

ECES phase and alternative. The final section, Section 4, lists the total LCCs for each 

alternative. It also lists the credit to be granted to the alternative where applicable, and the 

Adjusted LCC. 
Guide to Computing and Reporting the LCC of EM Projects 31 

Life-Cycle Cost Report Forms for EM Projects 

2. LCC Parameters 

Study Period (Years): 40 Years, 8 months Discount Rate: 3.2 % 

Analysis Date: 01 01 2003 Base Date: 01 01 2003 

1. Project Definition 

Project Title: Gasoline Spill Clean Up 

Location (City / ST / Zip): Sacramento / CA / 95838 

Project Type (Cirlce One): RCRA CERCLA X WM D&D 

Record of Decision Date: 01 / 31 / 2003

Analyst: Phone: Email: 

Project Description: 

result of gasoline tanks leaking. C ontam inants include lead and volatile 

organic com pounds. The contam inated area is 3,720 m ^2 (40,000 ft^2).

The program and project m anagem ent, characterization, feasib ility study,

design, rem ediation, m onitoring and long-term stewardship activities for 

clean-up of a gasoline spill site. The site was a refueling station from 

1975 to 1992. The soil and surrounding groundwater were contam inated as a

Number of Alternatives: 2

List of Alternatives: 

 Short Name Description

 Alternative A In Situ Soil Vapor Extraction

Alternative B Natural Attenuation 

John Doe (XXX) XXX-XXXX John.Doe@doe.gov 
Guide to Computing and Reporting the LCC of EM Projects 32 

3. Life-Cycle Costs by Phase and Alternative 

Phase Alternative A Alternative B

Assessment $80,989 $80,989

Studies $3,507,900 $3,507,913

Design $89,438 $8,499

Construction $8,929,017 $4,670,585

O&M $2,501,762 $0

SLTM $78,985 $50,355

Total LCC $15,188,091 $8,318,341

6.7 Conclusion 

In this prospective LCC analysis two alternatives for a EM project addressing a single site were 

compared. Each alternative would achieve the objective of cleaning gasoline spills to the same 

level. The total cost for each alternative was calculated using LCC. Alternative A, the Vapor 

Extraction approach, has a significantly higher LCC than Alternative B, Natural Attenuation. 

However, the more aggressive extraction approach used in Alternative A allows for earlier 

economic use of the land for other purposes. To account for the benefits expected from the 

earlier availability, a value was estimated to account for the extra years of use and credited to 

that alternative. Even after the value of the land is taken into account, the natural attenuation 

method is economically preferred. The savings achieved from selecting Alternative B over A are 

$6,647,320. 

4. Summary Table of Life-Cycle Costs by Alternative 

Alternative Total LCC Credit Adjusted Total LCC

Alternative A $15,188,091 $222,430 $14,965,661

Alternative B $8,318,341 $0 $8,318,341 
Guide to Computing and Reporting the LCC of EM Projects 33 

References 

ASTM International. 2002. Environmental Cost Element Structure at Levels 3, 4 and 5 and 

Definitions. Adjunct to ASTM Classification Standard E 2150-02. West Conshohocken, PA: 

ASTM International. 

ASTM International. 2003. Discount Factor Tables: Adjunct to ASTM Practice E 91-027, for 

Measuring Life-Cycle Costs of Buildings and Building Systems. West Conshohocken, PA: 

ASTM International. 

ASTM International. 2003. Standard Classification for Life-Cycle Environmental Work 

Elements—Environmental Cost Element Structure. E 2150-02. West Conshohocken, PA: 

ASTM International. 

ASTM International. 2003. E 1185-02 Standard Guide for Selecting Economic Methods for 

Evaluating Investments in Buildings and Building Systems. West Conshohocken, PA: ASTM 

International. 

ASTM International. 2003. Standard Practice for Measuring Life-Cycle Costs of Buildings and 

Building Systems. E 917-02. West Conshohocken, PA: ASTM International. 

ASTM International. 2003. Standard Terminology of Building Economics. E 833-02a. West 

Conshohocken, PA: ASTM International. 

ASTM International. 2003. Standard Classification for Building Elements and Related 

Sitework-UNIFORMAT II. E 1557-02. West Conshohocken, PA: ASTM International. 

Au, Tung and Au, Thomas P. 1992. Engineering Economics for Capital Investment Analysis. 

2nd Edition. Englewood Cliffs, NJ: Prentice Hall. 

Construction Specifications Institute. 1995. MasterFormat 1995, Alexandria, VA: Construction 

Specifications Institute. 

Fuller, Sieglinde K., and Rushing, Amy S. 2002. Energy Price Indices and Discount Factors 

for Life-Cycle Cost Analysis - April 2002. NISTIR 85-3273-17. Gaithersburg, MD: National 

Institute of Standards and Technology. *updated annually. 

Fuller, Sieglinde K., and Petersen, Stephen R. 1996. Life-Cycle Costing Manual for the Federal 

Energy Management Program. NIST Handbook 135. 1995 Edition. Gaithersburg, MD: 

National Institute of Standards and Technology. 

Office of Management and Budget (OMB). 2003. Guidelines and Discount Rates for BenefitCost Analysis of Federal Programs. Circular A-94 revised 10/29/92. Washington, DC: Office 

of Management and Budget. 
Guide to Computing and Reporting the LCC of EM Projects 34 

Park, Chan S. 2001. Contemporary Engineering Economics. 3rd Edition. Englewood Cliffs, 

NJ: Prentice Hall College Division. 

U.S. Department of Energy. 2002. Environmental Cost Element Structure. Washington, DC: 

Interagency Environmental Cost Engineering Committee. 

U.S. Environmental Protection Agency. 2000. A Guide to Developing and Documenting Cost 

Estimates During the Feasibility Study. Washington, DC. 

.
Guide to Computing LCC of EM Projects 

Appendix A: Data for Sample Project without Alternatives 

Phase 2nd 3rd 4th 5th Description Cost Date M

1 .02 .01 .01 Project Management $28,445 Jan-2004 

1 .02 .01 .02 Support Subcontracting Activities $3,346 Jan-2004 1 .07 .01 .07 .01 Collection and review of existing documents $109,927 Jan-2004 1 .07 .08 Air Monitoring and Sampling $10,560 Jan-2004 2 .02 .01 Project Management/Support/Administration $479,930 Apr-2004 2 .02 .03 .05 Regulatory Permitting (e.g., RCRA Part B Permit) $639,377 Apr-2004 

2 .03 .02 Chemical Data Acquisition Plan $2,816 Apr-2004 2 .03 .03 Sampling and Analysis Plan $3,520 Apr-2004 2 .03 .10 Risk Assessment Plan $1,760 Apr-2004 2 .03 .11 Technical Project Goals and Objectives $1,584 Apr-2004 

2 .04 .02 Human Health Risk Assessment $18,000 Apr-2004 

2 .04 .03 Ecological Risk Assessment $18,000 Apr-2004 

2 .04 .04 Risk Assessment Documentation $16,800 Apr-2004 

2 .04 .05 Environmental Investigation Report $11,000 Apr-2004 

2 .04 .06 Develop Environmental Alternatives $7,200 Apr-2004 2 .04 .07 Screen Environmental Alternatives $4,224 Apr-2004 2 .04 .08 Evaluate Alternatives $4,200 Apr-2004 2 .04 .09 Refinement of Alternatives $3,520 Apr-2004 2 .04 .10 Document FS (CMS) $10,560 Apr-2004 

2 .04 .16 Engineering Evaluation/Cost Analysis $2,112 Apr-2004 

2 .04 .17 Record of Decision $4,200 Apr-2004 2 .07 .03 Site Contaminant Surveys/Radiation Monitoring $47,520 Apr-2004 

2 .07 .08 Air Monitoring and Sampling $6,336 Apr-2004 

2 .07 .11 .01 Surface Soil Sample Collection $26,500 Apr-2004 

2 .07 .11 .02 Subsurface Soil Sample Collection $70,000 Apr-2004 

2 .07 .14 .01 Hand Scanning $824,453 Apr-2004 

2 .07 .14 .02 Smears and Swipes $2,061,128 Apr-2004 

Sample Project: Nuclear Production Facility DecontaminationLocation: Lockport, NYBase Date: January 2003Study Period: 24 Years, 2 MonthsDiscount Rate: 2.99%
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date M

2 .07 .14 .03 Destructive Sampling (Including Removal of Paints, Drilling, Cutting of Structures/Equipment, etc) $1,236,677 Apr-2004 

2 .08 .04 Soil/Sediment Sample Analysis $604,500 Apr-2004 2 .08 .07 Solid Material/Waste Sampling $354,500 Apr-2004 2 .09 .01 Prepare and Ship Environmental Samples $5,000 Apr-2004 2 .09 .04 Provide Sample Management $6,600 Apr-2004 2 .09 .08 Data Reduction, Tabulation and Evaluation $7,040 Apr-2004 3 .02 .01 Project Management/Support/Administration $16,624 Mar-2005 

3 .04 .12 .01 Preliminary Design $17,955 Mar-2005 3 .04 .12 .02 Intermediate Design $3,217 Mar-2005 3 .04 .12 .03 Pre-final/Final Design $26,434 Mar-2005 3 .02 .05 .02 .01 Support preparation of solicitation package $2,089 Mar-2005 3 .02 .05 .02 .03 Advertising/soliciting of bids $1,200 Mar-2005 3 .02 .05 .02 .05 Pre-bid (pre-solicitation) meetings $350 Mar-2005 

3 .02 .05 .03 Perform Pre-Award Activities $3,520 Mar-2005 4 .02 .01 Project Management/Support/Administration $2,707,041 Aug-2005 

4 .05 .01 Mobilization $78,281 Aug-2005 

4 .05 .36 Demobilization $27,398 Aug-2005 

4 .07 .08 Air Monitoring and Sampling $10,560 Aug-2005 4 .07 .14 .01 Hand Scanning $109,927 Aug-2005 4 .07 .14 .02 Smears and Swipes $274,817 Aug-2005 4 .07 .14 .03 Destructive Sampling (Including Removal of Paints, Drilling, Cutting of Structures/Equipment, etc) $164,890 Aug-2005 4 .15 .04 Asbestos Abatement $1,553,564 Aug-2005 

4 .15 .05 Piping & Pipeline Removal $288,428 Aug-2005 4 .19 .01 Contaminated Soil Collection (Excavation) $623,308 Aug-2005 4 .31 .08 .06 Surface Decontamination of Floors $1,181,105 Aug-2005 

4 .31 .08 .07 Surface Decontamination of Walls $966,359 Aug-2005 4 .31 .08 .19 Decontamination Area/Facility for Equipment and Vehicles $62,625 Aug-2005 4 .31 .08 .20 Decontamination Area/Facility for Personnel (i.e., Showers, Changing Rooms, Monitors, Waste Handling) $15,656 Aug-2005 4 .32 .01 Waste Stream Handling/Packaging $1,243,720 Aug-2005 

4 .32 .11 Transportation by truck $1,854,400 Aug-2005 

4 .33 .08 Off-Site Commercial Disposal Costs, Fees, and Taxes $3,231,217 Aug-2005 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date M

5 .02 .01 Project Management/Support/Administration $35,058 Sep-2005 

5 .07 .14 .01 Hand Scanning $67,822 Sep-2005 

5 .07 .14 .02 Smears and Swipes $169,554 Sep-2005 5 .07 .14 .03 Destructive Sampling (Including Removal of Paints, Drilling, Cutting of Structures/Equipment, etc) $101,732 Sep-2005 5 .31 .08 .20 Decontamination Area/Facility for Personnel (I.e. Showers, Changing Rooms, Monitors, Waste Handling) $42,000 Sep-2005 6 .02 .01 Project Management/Support/Administration $13,885 Feb-2008 

6 .02 .01 Project Management/Support/Administration $7,134 Feb-2009 6 .02 .01 Project Management/Support/Administration $7,414 Feb-2010 6 .02 .01 Project Management/Support/Administration $7,515 Feb-2011 6 .02 .01 Project Management/Support/Administration $8,039 Feb-2012 6 .02 .01 Project Management/Support/Administration $8,387 Feb-2013 6 .02 .01 Project Management/Support/Administration $8,761 Feb-2014 6 .02 .01 Project Management/Support/Administration $9,164 Feb-2015 6 .02 .01 Project Management/Support/Administration $9,596 Feb-2016 6 .02 .01 Project Management/Support/Administration $18,827 Feb-2017 

6 .02 .01 Project Management/Support/Administration $10,561 Feb-2018 

6 .02 .01 Project Management/Support/Administration $11,098 Feb-2019 6 .02 .01 Project Management/Support/Administration $11,676 Feb-2020 6 .02 .01 Project Management/Support/Administration $12,297 Feb-2021 6 .02 .01 Project Management/Support/Administration $12,964 Feb-2022 6 .02 .01 Project Management/Support/Administration $13,682 Feb-2023 6 .02 .01 Project Management/Support/Administration $14,453 Feb-2024 6 .02 .01 Project Management/Support/Administration $15,282 Feb-2025 6 .02 .01 Project Management/Support/Administration $16,174 Feb-2026 6 .02 .01 Project Management/Support/Administration $39,046 Feb-2027 

6 .02 .04 .04 Land Record Management $2,640 Feb-2008 6 .02 .04 .04 Land Record Management $2,640 Feb-2009 6 .02 .04 .04 Land Record Management $2,640 Feb-2010 6 .02 .04 .04 Land Record Management $2,640 Feb-2011 6 .02 .04 .04 Land Record Management $2,640 Feb-2012 

6 .02 .04 .04 Land Record Management $2,640 Feb-2013 6 .02 .04 .04 Land Record Management $2,640 Feb-2014 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date M

6 .02 .04 .04 Land Record Management $2,640 Feb-2015 

6 .02 .04 .04 Land Record Management $2,640 Feb-2016 6 .02 .04 .04 Land Record Management $2,640 Feb-2017 6 .02 .04 .04 Land Record Management $2,640 Feb-2018 6 .02 .04 .04 Land Record Management $2,640 Feb-2019 6 .02 .04 .04 Land Record Management $2,640 Feb-2020 6 .02 .04 .04 Land Record Management $2,640 Feb-2021 6 .02 .04 .04 Land Record Management $2,640 Feb-2022 6 .02 .04 .04 Land Record Management $2,640 Feb-2023 6 .02 .04 .04 Land Record Management $2,640 Feb-2024 6 .02 .04 .04 Land Record Management $2,640 Feb-2025 6 .02 .04 .04 Land Record Management $2,640 Feb-2026 6 .02 .04 .04 Land Record Management $2,640 Feb-2027 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2008 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2009 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2010 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2011 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2012 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2013 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2014 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2015 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2016 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2017 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2018 6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2019 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2020 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2021 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2022 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2023 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2024 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2025 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2026 

6 .02 .04 .05 Transferred Property Restriction $1,584 Feb-2027 

6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2008 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2009 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date M

6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2010 

6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2011 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2012 

6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2013 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2014 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2015 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2016 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2017 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2018 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2019 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2020 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2021 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2022 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2023 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2024 6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2025 

6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2026 

6 .02 .04 .06 Verification of Institutional Controls $1,920 Feb-2027 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2008 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2009 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2010 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2011 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2012 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2013 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2014 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2015 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2016 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2017 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2018 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2019 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2020 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2021 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2022 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2023 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2024 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date M

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2025 

6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2026 6 .06 .03 .01 Surveillance and Inspections $18,400 Feb-2027 6 .06 .03 .02 Facility/Building Maintenance $31,600 Feb-2008 

6 .06 .03 .02 Facility/Building Maintenance $33,970 Feb-2009 

6 .06 .03 .02 Facility/Building Maintenance $36,518 Feb-2010 

6 .06 .03 .02 Facility/Building Maintenance $39,257 Feb-2011 

6 .06 .03 .02 Facility/Building Maintenance $42,201 Feb-2012 

6 .06 .03 .02 Facility/Building Maintenance $45,366 Feb-2013 

6 .06 .03 .02 Facility/Building Maintenance $48,768 Feb-2014 

6 .06 .03 .02 Facility/Building Maintenance $52,426 Feb-2015 

6 .06 .03 .02 Facility/Building Maintenance $56,358 Feb-2016 

6 .06 .03 .02 Facility/Building Maintenance $60,585 Feb-2017 

6 .06 .03 .02 Facility/Building Maintenance $65,129 Feb-2018 

6 .06 .03 .02 Facility/Building Maintenance $70,013 Feb-2019 

6 .06 .03 .02 Facility/Building Maintenance $75,264 Feb-2020 

6 .06 .03 .02 Facility/Building Maintenance $80,909 Feb-2021 

6 .06 .03 .02 Facility/Building Maintenance $86,977 Feb-2022 

6 .06 .03 .02 Facility/Building Maintenance $93,501 Feb-2023 

6 .06 .03 .02 Facility/Building Maintenance $100,513 Feb-2024 

6 .06 .03 .02 Facility/Building Maintenance $108,052 Feb-2025 

6 .06 .03 .02 Facility/Building Maintenance $116,155 Feb-2026 

6 .06 .03 .02 Facility/Building Maintenance $124,867 Feb-2027 

6 .06 .03 .04 Major Facility Repairs $63,750 Feb-2008 

6 .06 .03 .04 Major Facility Repairs $79,688 Feb-2017 

6 .06 .03 .04 Major Facility Repairs $199,219 Feb-2027 

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2008 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2009 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2010 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2011 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2012 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2013 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2014 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2015 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2016 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date M

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2017 

6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2018 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2019 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2020 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2021 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2022 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2023 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2024 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2025 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2026 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2027 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2008 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2017 6 .07 .08 .04 Air Monitoring and Sampling $6,336 Feb-2027 

Total 
Guide to Computing and Reporting the LCC of EM Projects 

Appendix B: Data for Case Study with Two Alternatives—In Situ Soil Vapor Extraction 

Phase 2nd 3rd 4th 5th Description Cost Date Mont

1 .02 .01 .01 Project Management $16,760 Jan-2004 13 1 .02 .01 .02 Support Subcontracting Activities $6,080 Jan-2004 13 1 .07 .01 .07 .01 Collection and review of exisiting documents $50,400 Jan-2004 13 1 .07 .08 Air Monitoring and Sampling $10,560 Jan-2004 13 2 .02 .01 Project Management/Support/Administration $322,437 Mar-2004 15 2 .02 .03 .05 Regulatory Permitting(e.g, RCA Part B Permit) $639,377 Mar-2004 15 2 .03 .03 Sampling and Analysis Plan $3,520 Mar-2004 15 2 .03 .10 Risk Assessment Plan $1,760 Mar-2004 15 2 .03 .11 Technical Project Goals and Objectives $2,112 Mar-2004 15 2 .04 .02 Human Health Risk Assessment $27,600 Mar-2004 15 2 .04 .03 Ecological Risk Assessment $18,000 Mar-2004 15 2 .04 .04 Risk Assessment Documentation $19,320 Mar-2004 15 2 .04 .05 Environmental Investigation Report $14,520 Mar-2004 15 2 .04 .06 Develop Environmental Alternatives $9,600 Mar-2004 15 2 .04 .07 Screen Environmental Alternatives $5,632 Mar-2004 15 2 .04 .08 Evaluate Alternatives $4,200 Mar-2004 15 2 .04 .09 Refinement of Alternatives $4,211 Mar-2004 15 2 .04 .10 Document FS(CMS) $12,060 Mar-2004 15 2 .04 .16 Engineering Evaluation/Cost Analysis $2,112 Mar-2004 15 2 .04 .17 Record of Decision $5,040 Mar-2004 15 2 .07 .03 Site Contaminant Surveys/Radiation Monitoring $21,120 Mar-2004 15 2 .07 .08 Air Monitoring and Sampling $12,672 Mar-2004 15 2 .07 .11 .02 Subsurface Soil Sample Collection $460,000 Mar-2004 15 2 .07 .09 Groundwater Sampling/Monitoring $354,500 Mar-2004 15 2 .08 .04 Soil/Sediment Sample Analysis $1,155,000 Mar-2004 15 2 .08 .06 Liquid Material/Waste Sample Analysis $503,220 Mar-2004 15 2 .09 .01 Prepare and Ship Environmental Samples $5,000 Mar-2004 15 2 .09 .04 Provide Sample Management $17,600 Mar-2004 15 

Sample Project: Gasoline Spill Clean-up

Alternative A: In Situ Soil Vapor ExtractionLocation: Sacramento, CABase Date: January 2003Study Period: 40 Years, 8 MonthsDiscount Rate: 3.2%
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date Mont

2 .09 .08 Data Reduction, Tabulation and Evaluation $28,160 Mar-2004 15 3 .02 .01 Project Management/Support/Administration $10,126 Sep-2004 21 3 .04 .12 .01 Preliminary Design $44,380 Sep-2004 21 3 .04 .12 .02 Intermediate Design $23,880 Sep-2004 21 3 .04 .12 .03 Pre-final/Final Design $7,040 Sep-2004 21 3 .02 .05 .02 .01 Support preparation of solicitation package $3,520 Sep-2004 21 3 .02 .05 .02 .03 Advertising/soliciting of bids $1,200 Sep-2004 21 3 .02 .05 .02 .05 Pre-bid (pre-soliciatation) meetings $840 Sep-2004 21 3 .02 .05 .03 Perform Pre-Award Activities $3,520 Sep-2004 21 4 .02 .01 Project Management/Support/Administration $1,018,888 Dec-2004 24 4 .02 .04 .03 Fencing/Barriers $132,361 Dec-2004 24 4 .05 .01 Mobilization $78,281 Dec-2004 24 4 .05 .36 Demobilization $27,398 Dec-2004 24 4 .07 .08 Air Monitoring and Sampling $10,560 Dec-2004 24 4 .07 .09 Groundwater Sampling/Monitoring $18,304 Dec-2004 24 4 .08 .01 Air/Gas Sample Analysis $68,000 Dec-2004 24 4 .08 .06 Liquid Material/Waste Sample Analysis $80,000 Dec-2004 24 4 .08 .04 Solid Material/Wast Sample Analysis $92,000 Dec-2004 24 4 .09 .01 Prepare and Ship Environmental Samples $1,340 Dec-2004 24 4 .26 .04 Air Stripping $53,476 Dec-2004 24 4 .26 .23 Granular Activated Carbon Absorption-Liquid $6,196 Dec-2004 24 4 .26 .30 Oil/Water Separation $12,323 Dec-2004 24 4 .27 .04 Steam/Hot Water Injection Vacuum Extraction $1,572,153 Dec-2004 24 4 .31 .08 .20 Decontamination Area/Facility for Personnel $9,000 Dec-2004 24 4 .32 .01 Waste Steam Handling Packaging $1,243,720 Dec-2004 24 4 .32 .11 Transportation by truck $1,854,400 Dec-2004 24 4 .33 .08 Off-site Commerical Disposal Costs, Fees and T $3,231,217 Dec-2004 24 5 .02 .01 Project Management/Support/Administration $94,568 Aug-2005 32 5 .02 .01 Project Management/Support/Administration $85,318 Aug-2006 44 5 .02 .01 Project Management/Support/Administration $74,682 Aug-2007 56 5 .02 .04 .03 Fencing/Barriers $840 Aug-2005 32 5 .02 .04 .03 Fencing/Barriers $840 Aug-2006 44 5 .02 .04 .03 Fencing/Barriers $990 Aug-2007 56 5 .07 .08 Air Monitoring and Sampling $7,040 Aug-2005 32 5 .07 .08 Air Monitoring and Sampling $7,040 Aug-2006 44 5 .07 .08 Air Monitoring and Sampling $5,632 Aug-2007 56 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date Mont

5 .07 .09 Groundwater Sampling/Monitoring $7,040 Aug-2005 32 5 .07 .09 Groundwater Sampling/Monitoring $7,040 Aug-2006 44 5 .07 .09 Groundwater Sampling/Monitoring $7,040 Aug-2007 56 5 .08 .01 Air/Gas Sample Analysis $27,200 Aug-2005 32 5 .08 .01 Air/Gas Sample Analysis $27,200 Aug-2006 44 5 .08 .01 Air/Gas Sample Analysis $27,200 Aug-2007 56 5 .08 .06 Liquid Material/Waste Sample Analysis $32,000 Aug-2005 32 5 .08 .06 Liquid Material/Waste Sample Analysis $32,000 Aug-2006 44 5 .08 .06 Liquid Material/Waste Sample Analysis $32,000 Aug-2007 56 5 .08 .07 Solid Material/Waste Sample Analysis $36,800 Aug-2005 32 5 .08 .07 Solid Material/Waste Sample Analysis $36,800 Aug-2006 44 5 .08 .07 Solid Material/Waste Sample Analysis $36,800 Aug-2007 56 5 .09 .01 Prepare and Ship Environmental Samples $4,300 Aug-2005 32 5 .09 .01 Prepare and Ship Environmental Samples $4,300 Aug-2006 44 5 .09 .01 Prepare and Ship Environmental Samples $4,300 Aug-2007 56 5 .26 .04 Air Stripping $54,008 Aug-2005 32 5 .26 .04 Air Stripping $59,409 Aug-2006 44 5 .26 .04 Air Stripping $55,808 Aug-2007 56 5 .26 .23 Granular Activated Carbon Absorption-Liquid $54,008 Aug-2005 32 5 .26 .23 Granular Activated Carbon Absorption-Liquid $46,807 Aug-2006 44 5 .26 .23 Granular Activated Carbon Absorption-Liquid $36,005 Aug-2007 56 5 .26 .30 Oil/Water Separation $9,001 Aug-2005 32 5 .26 .30 Oil/Water Separation $9,001 Aug-2006 44 5 .26 .30 Oil/Water Separation $9,001 Aug-2007 56 5 .27 .04 Steam/Hot Water Injection Vacuum Extraction $574,440 Aug-2005 32 5 .27 .04 Steam/Hot Water Injection Vacuum Extraction $483,739 Aug-2006 44 5 .27 .04 Steam/Hot Water Injection Vacuum Extraction $393,038 Aug-2007 56 5 .31 .08 .20 Decontamination Area/Facility for Personnel $139,000 Aug-2005 32 5 .31 .08 .20 Decontamination Area/Facility for Personnel $139,000 Aug-2006 44 5 .31 .08 .20 Decontamination Area/Facility for Personnel $139,000 Aug-2007 56 6 .02 .01 Project Management/Support/Administration $957 Sep-2007 57 6 .02 .01 Project Management/Support/Administration $957 Sep-2008 69 6 .02 .01 Project Management/Support/Administration $957 Sep-2009 81 6 .02 .01 Project Management/Support/Administration $957 Sep-2010 93 6 .02 .01 Project Management/Support/Administration $957 Sep-2011 105 6 .02 .01 Project Management/Support/Administration $957 Sep-2012 117 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date Mont

6 .02 .01 Project Management/Support/Administration $957 Sep-2013 129 6 .02 .01 Project Management/Support/Administration $957 Sep-2014 141 6 .02 .01 Project Management/Support/Administration $957 Sep-2015 153 6 .02 .01 Project Management/Support/Administration $957 Sep-2016 165 6 .02 .04 .04 Land Record Management $1,650 Sep-2007 57 6 .02 .04 .04 Land Record Management $1,650 Sep-2008 69 6 .02 .04 .04 Land Record Management $1,650 Sep-2009 81 6 .02 .04 .04 Land Record Management $1,650 Sep-2010 93 6 .02 .04 .04 Land Record Management $1,650 Sep-2011 105 6 .02 .04 .04 Land Record Management $1,650 Sep-2012 117 6 .02 .04 .04 Land Record Management $1,650 Sep-2013 129 6 .02 .04 .04 Land Record Management $1,650 Sep-2014 141 6 .02 .04 .04 Land Record Management $1,650 Sep-2015 153 6 .02 .04 .04 Land Record Management $1,650 Sep-2016 165 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2007 57 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2008 69 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2009 81 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2010 93 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2011 105 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2012 117 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2013 129 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2014 141 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2015 153 6 .02 .04 .05 Transferred Property Restriction $1,584 Sep-2016 165 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2007 57 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2008 69 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2009 81 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2010 93 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2011 105 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2012 117 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2013 129 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2014 141 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2015 153 6 .07 .08 Air Monitoring and Sampling $6,336 Sep-2016 165 

Total LC
Guide to Computing and Reporting the LCC of EM Projects 

Appendix C: Data for Case Study with Two Alternatives—Natural Attenuation

Phase 2nd 3rd 4th 5th Description Cost Date 

1 .02 .01 .01 Project Management $16,760 Jan-2004 

1 .02 .01 .02 Support Subcontracting Activities $6,080 Jan-2004 1 .07 .01 .07 .01 Collection and review of existing documents $50,400 Jan-2004 1 .07 .08 Air Monitoring and Sampling $10,560 Jan-2004 2 .02 .01 Project Management/Support/Administration $322,437 Mar-2004 2 .02 .03 .05 Regulatory Permitting (e.g., RCRA Part B Permit $639,377 Mar-2004 

2 .03 .03 Sampling and Analysis Plan $3,520 Mar-2004 2 .03 .10 Risk Assessment Plan $1,760 Mar-2004 2 .03 .11 Technical Project Goals and Objectives $2,112 Mar-2004 2 .04 .02 Human Health Risk Assessment $27,600 Mar-2004 2 .04 .03 Ecological Risk Assessment $18,000 Mar-2004 2 .04 .04 Risk Assessment Documentation $19,320 Mar-2004 2 .04 .05 Environmental Investigation Report $14,520 Mar-2004 2 .04 .06 Develop Environmental Alternatives $9,600 Mar-2004 2 .04 .07 Screen Environmental Alternatives $5,632 Mar-2004 2 .04 .08 Evaluate Alternatives $4,200 Mar-2004 2 .04 .09 Refinement of Alternatives $4,224 Mar-2004 2 .04 .10 Document FS (CMS) $12,060 Mar-2004 2 .04 .16 Engineering Evaluation/Cost Analysis $2,112 Mar-2004 

2 .04 .17 Record of Decision $5,040 Mar-2004 2 .07 .03 Site Contaminant Surveys/Radiation Monitoring $21,120 Mar-2004 2 .07 .08 Air Monitoring and Sampling $12,672 Mar-2004 2 .07 .11 .02 Subsurface Soil Sample Collection $460,000 Mar-2004 2 .07 .09 Groundwater Sampling/Monitoring $354,500 Mar-2004 2 .08 .04 Soil/Sediment Sample Analysis $1,155,000 Mar-2004 2 .08 .06 Liquid Material/Waste Sample Analysis $503,220 Mar-2004 2 .09 .01 Prepare and Ship Environmental Samples $5,000 Mar-2004 2 .09 .04 Provide Sample Management $17,600 Mar-2004 

Sample Project: Gasoline Spill Clean-UpAlternative B : Natural AttenuationLocation: Sacramento, CABase Date: January 2003Study Period: 40 Years, 8 MonthsDiscount Rate: 3.2%
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date 

2 .09 .08 Data Reduction, Tabulation and Evaluation $28,160 Mar-2004 3 .04 .01 Project Management/Support/Administration $962 Sep-2004 3 .04 .12 .01 Preliminary Design $1,055 Sep-2004 3 .04 .12 .02 Intermediate Design $1,938 Sep-2004 3 .04 .12 .03 Pre-final/Final Design $2,254 Sep-2004 3 .02 .05 .02 .01 Support preparation of solicitation package $569 Sep-2004 3 .02 .05 .02 .03 Advertising/soliciting of bids $625 Sep-2004 3 .02 .05 .02 .05 Pre-bid (pre-solicitation) meetings $521 Sep-2004 3 .02 .05 .03 Perform Pre-Award Activities $1,057 Sep-2004 4 .02 .01 Project Management/Support/Administration $48,471 Dec-2004 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2005 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2006 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2007 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2008 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2009 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2010 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2011 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2012 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2013 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2014 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2015 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2016 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2017 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2018 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2019 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2020 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2021 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2022 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2023 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2024 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2025 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2026 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2027 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2028 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2029 4 .02 .01 Project Management/Support/Administration $21,206 Dec-2030 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date 

4 .02 .01 Project Management/Support/Administration $21,206 Dec-2031 4 .02 .01 Project Management/Support/Administration $23,776 Dec-2032 4 .02 .01 Project Management/Support/Administration $26,903 Dec-2033 4 .02 .01 Project Management/Support/Administration $27,977 Dec-2034 4 .02 .04 .03 Fencing/Barriers $132,361 Dec-2004 4 .02 .04 .03 Fencing/Barriers $840 Dec-2005 4 .02 .04 .03 Fencing/Barriers $840 Dec-2006 4 .02 .04 .03 Fencing/Barriers $840 Dec-2007 4 .02 .04 .03 Fencing/Barriers $840 Dec-2008 4 .02 .04 .03 Fencing/Barriers $840 Dec-2009 4 .02 .04 .03 Fencing/Barriers $840 Dec-2010 4 .02 .04 .03 Fencing/Barriers $840 Dec-2011 4 .02 .04 .03 Fencing/Barriers $840 Dec-2012 4 .02 .04 .03 Fencing/Barriers $840 Dec-2013 4 .02 .04 .03 Fencing/Barriers $840 Dec-2014 4 .02 .04 .03 Fencing/Barriers $840 Dec-2015 4 .02 .04 .03 Fencing/Barriers $840 Dec-2016 4 .02 .04 .03 Fencing/Barriers $840 Dec-2017 4 .02 .04 .03 Fencing/Barriers $840 Dec-2018 4 .02 .04 .03 Fencing/Barriers $840 Dec-2019 4 .02 .04 .03 Fencing/Barriers $840 Dec-2020 4 .02 .04 .03 Fencing/Barriers $840 Dec-2021 4 .02 .04 .03 Fencing/Barriers $840 Dec-2022 4 .02 .04 .03 Fencing/Barriers $840 Dec-2023 4 .02 .04 .03 Fencing/Barriers $840 Dec-2024 4 .02 .04 .03 Fencing/Barriers $840 Dec-2025 4 .02 .04 .03 Fencing/Barriers $840 Dec-2026 4 .02 .04 .03 Fencing/Barriers $840 Dec-2027 4 .02 .04 .03 Fencing/Barriers $840 Dec-2028 4 .02 .04 .03 Fencing/Barriers $840 Dec-2029 4 .02 .04 .03 Fencing/Barriers $840 Dec-2030 4 .02 .04 .03 Fencing/Barriers $840 Dec-2031 4 .02 .04 .03 Fencing/Barriers $840 Dec-2032 4 .02 .04 .03 Fencing/Barriers $840 Dec-2033 4 .02 .04 .03 Fencing/Barriers $840 Dec-2034 4 .21 .08 Natural Attenuation $271,562 Dec-2004 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date 

4 .21 .08 Natural Attenuation $211,217 Dec-2005 4 .21 .08 Natural Attenuation $211,217 Dec-2006 4 .21 .08 Natural Attenuation $211,217 Dec-2007 4 .21 .08 Natural Attenuation $211,217 Dec-2008 4 .21 .08 Natural Attenuation $211,217 Dec-2009 4 .21 .08 Natural Attenuation $211,217 Dec-2010 4 .21 .08 Natural Attenuation $211,217 Dec-2011 4 .21 .08 Natural Attenuation $211,217 Dec-2012 4 .21 .08 Natural Attenuation $211,217 Dec-2013 4 .21 .08 Natural Attenuation $211,217 Dec-2014 4 .21 .08 Natural Attenuation $211,217 Dec-2015 4 .21 .08 Natural Attenuation $211,217 Dec-2016 4 .21 .08 Natural Attenuation $211,217 Dec-2017 4 .21 .08 Natural Attenuation $211,217 Dec-2018 4 .21 .08 Natural Attenuation $211,217 Dec-2019 4 .21 .08 Natural Attenuation $211,217 Dec-2020 4 .21 .08 Natural Attenuation $211,217 Dec-2021 4 .21 .08 Natural Attenuation $211,217 Dec-2022 4 .21 .08 Natural Attenuation $211,217 Dec-2023 4 .21 .08 Natural Attenuation $211,217 Dec-2024 4 .21 .08 Natural Attenuation $211,217 Dec-2025 4 .21 .08 Natural Attenuation $211,217 Dec-2026 4 .21 .08 Natural Attenuation $211,217 Dec-2027 4 .21 .08 Natural Attenuation $211,217 Dec-2028 4 .21 .08 Natural Attenuation $211,217 Dec-2029 4 .21 .08 Natural Attenuation $211,217 Dec-2030 4 .21 .08 Natural Attenuation $211,217 Dec-2031 4 .21 .08 Natural Attenuation $236,917 Dec-2032 4 .21 .08 Natural Attenuation $268,219 Dec-2033 4 .21 .08 Natural Attenuation $278,926 Dec-2034 

6 .02 .01 Project Management/Support/Administration $1,424 Aug-2034 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2035 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2036 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2037 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2038 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2039 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date 

6 .02 .01 Project Management/Support/Administration $1,424 Aug-2040 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2041 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2042 6 .02 .01 Project Management/Support/Administration $1,424 Aug-2043 6 .02 .04 .04 Land Record Management $1,650 Aug-2034 6 .02 .04 .04 Land Record Management $1,650 Aug-2035 6 .02 .04 .04 Land Record Management $1,650 Aug-2036 6 .02 .04 .04 Land Record Management $1,650 Aug-2037 6 .02 .04 .04 Land Record Management $1,650 Aug-2038 6 .02 .04 .04 Land Record Management $1,650 Aug-2039 6 .02 .04 .04 Land Record Management $1,650 Aug-2040 6 .02 .04 .04 Land Record Management $1,650 Aug-2041 6 .02 .04 .04 Land Record Management $1,650 Aug-2042 6 .02 .04 .04 Land Record Management $1,650 Aug-2043 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2034 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2035 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2036 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2037 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2038 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2039 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2040 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2041 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2042 6 .02 .04 .05 Transferred Property Restriction $1,584 Aug-2043 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2034 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2035 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2036 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2037 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2038 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2039 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2040 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2041 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2042 6 .02 .18 .03 Electronic Records Management $6,258 Aug-2043 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2034 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2035 
Guide to Computing and Reporting the LCC of EM Projects 

Phase 2nd 3rd 4th 5th Description Cost Date 

6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2036 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2037 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2038 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2039 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2040 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2041 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2042 6 .07 .08 Air Monitoring and Sampling $4,752 Aug-2043 

Tota
Guide to Computing and Reporting the LCC of EM Projects 53 

Appendix D: Derivation of the Equation for Discounting Monthly Costs 

The monthly discounting method allows for more accurate timing of expenditures. 

However, the method assumes that interest is compounded monthly. The discount rates 

calculated by the OMB and DOE represent annual rates of return on investment and 

cannot be directly used for monthly discounting. The standard equation for finding the 

present value of a future expenditure using monthly discounting is: 

1 *

(1 /12)mon P F

i = +

The monthly compounding of interest in this equation has the consequence of substituting 

a higher effective discount rate than the annual discount rates published by OMB and 

DOE. 

For example, assume the interest rate is 6 %. With the monthly discounting method, the 

monthly interest rate will be 6 %/12, or .5 %. The return on the investment at the end of 

the year includes the compounding of interest and is calculated by (1.005)12=1.0617. The 

6.17 % rate of return is higher than the annual interest rate of 6 %. Using this monthly 

discount rate will underestimate the present value of expenditures. 

Because the discount rates used are intended for annual calculations, the monthly 

compounding of interest will calculate an inaccurate present value. To take advantage of 

the improved timing accuracy of monthly discounting, an alternative method must be 

used. The correct monthly interest rate to use is the rate that, when compounded, will 

result in the annual discount rate. Assume that moni is the monthly discount rate: 

12

1/12

(1 ) (1 )

(1 ) 1

moni i

moni i

+ =+

=+ − (2) 

(1) 
Guide to Computing and Reporting the LCC of EM Projects 54 

Using the example above, where the annual interest rate is 6 %, the equivalent monthly 

discount rate will be 0.00487. This is lower than the 0.005 monthly rate calculated in 

Equation (1) by simply dividing the annual rate by 12. 

Equation (2) can be entered into the present value formula in place of the traditional 

monthly discount rate, i/12. 

( )

( )

1/12

/12

1 *

1 (1 ) 1

1 *

1

mon

mon

P F

i

P F

i

=

++ −

= +

Equation (3) here, is identical to Equation (3) in Section 5. This version of the present 

value equation allows for monthly timing, without incorrectly compounding interest. 

Thus, we have the benefit of more accurate monthly timing, while preserving the annual 

compounding appropriate to the OMB and DOE annual discount rates. 

(3) 
Guide to Computing and Reporting the LCC of EM Projects 55 

Appendix E: Blank Report Forms 

2. LCC Parameters 

Study Period (Years): Discount Rate:

Date of Study: Base Date: 

1. Project Definition 

Project Title: 

Location (City / ST / Zip): 

Project Type (Circle One): RCRA CERCLA X WM D&D 

Record of Decision Date: 

Analyst: Phone: Email: 

Project Description: 

 Number of Alternatives: 

List of Alternatives: 

 Short Name Description

 Alternative A 

Alternative B 
Guide to Computing and Reporting the LCC of EM Projects 56 

3. Life-Cycle Costs by Phase and Alternative 

Phase Alternative A Alternative B

Assessment

Studies

Design

Construction

O&M

SLTM

Total LCC

4. Summary Table of Life-Cycle Costs by Alternative 

Alternative Total LCC Credit Adjusted Total LCC

Alternative A 

Alternative B