White Paper · Economics

For each material option, list every cost C_t incurred in year t over the service life N, then discount it back to present value:

NPV = Σ  C_t / (1 + r)^t        t = 0 … N

where
  C_t = total cash flow in year t  (purchase, install, maintain, replace, downtime)
  r   = discount rate (real, after inflation)  — typically 4–8% for industrial projects
  N   = analysis period (years), e.g. 25

Decision rule: choose the material with the LOWER NPV.
Payback year = the first year in which cumulative FRP savings exceed the FRP price premium.

Use a real discount rate (net of inflation) when costs are stated in today's dollars. For a project-level analysis, the company's weighted average cost of capital (WACC) minus inflation is the usual choice; for a conservative comparison, 5% is a defensible planning value.

A defensible LCC model breaks the cash flow into six components. Treat each as a separate line so you can challenge or replace it:

Most purchaser quotes capture only components 1 and 2. The recurring and downtime components — 3, 4 and 5 — are where the material decision is actually made.

The FRP price premium over steel is recovered by avoiding the first recurring cost. With a steel recoat cycle every 5 years costing ~$35/m², the payback year is approximately:

Premium = FRP price − Steel price
        = $155 − $100 = $55/m² (base case)

Annualized recurring saving (steel recoat avoided):
        Saving/yr ≈ $35 / 5 = $7/m²·yr  (before discounting)

Simple payback ≈ Premium / Saving-per-year
              ≈ $55 / $7 ≈ 7–8 years
(With downtime included in the saving, payback shortens to year 5–6.)

This is why the earlier corrosion paper quotes payback in year 5–8: the premium is large, but the steel recoat clock starts immediately. In dry, non-corrosive service there is no recoat to avoid, so payback never happens — and steel should be chosen.

A common objection is that discounting shrinks future savings — so why use it? Because it also shrinks future costs. The recurring recoat and downtime costs of steel are pushed out to years 5, 10, 15 and 20; discounting them is exactly what makes the comparison fair rather than biased toward whichever material spends today. If the project cannot identify its discount rate, 5% real is a defensible planning default, and the sensitivity run at 4% and 8% brackets the answer. A conclusion that survives a four-point swing in the discount rate is robust; one that does not needs more data, not more optimism.

Lifecycle cost analysis converts a grating purchase into a 25-year decision. Build the year-by-year cash flow, discount at a stated real rate (5% default), and rank options by NPV. FRP rarely wins on year-0 price; it wins by avoiding the recoat cycle, corrosion replacement and shutdown downtime that steel and aluminum impose. Always run sensitivity on discount rate and downtime — those two assumptions, more than purchase price, decide the outcome.