What is included in life cycle cost?
Life cycle cost (LCC) is an approach that assesses the total cost of an asset over its life cycle including initial capital costs, maintenance costs, operating costs and the asset’s residual value at the end of its life.
What is the difference between life cycle cost and total cost of ownership?
Life Cycle Costing (LCC) is a technique to establish the total cost of ownership. It is a structured approach that can assist management in the selection process. It can take into account any costs that the selection team feels are appropriate.
What is not included in life cycle cost?
Life cycle costing is a method of adding up all the costs associated with an asset starting from its initial cost to its end of life. It does not take into account the salvage value or residual value of the asset.
How do you calculate life cycle costing?
LCC = C+PV Recurring – PV Residual Value
- LCC is the life cycle cost.
- C is the 0-year construction cost.
- PV recurring is the present value of all recurring cost.
- PV residual value is the present value of residual value.
Do life cycle costs include total ownership costs?
Total ownership cost includes the elements of life-cycle cost as well as other infrastructure or business process costs not normally attributed to the program.
What are the benefit of life cycle costing?
Primary benefits of life cycle cost analysis It provides a mechanism for identifying and addressing issues with the original design. An LCC’s lifetime perspective results in better durability, less maintenance, fewer risks, and lower operational spending and can even lead to an increased building lifespan.
What is life cycle costing and whole life costing (WLC)?
1.1 Introduction This guidance note summarises what is meant by a life cycle costing (LCC) and whole life costing (WLC) service for both new construction works and for the refurbishment of existing assets. The guidance follows the guiding principles outlined in the BCIS/BSI publication PD15686-5
What costs are included in a whole life cost evaluation?
If a whole life cost evaluation is to be done, the following may also be included: WLC costs 6. Non-construction costs(land acquisition, fees, rental costs, relevant tax liabilities, etc.). 7. Income. 8. Externalities– costs associated with an asset but not reflected in the transaction costs of the acquisition.
Why is whole life costing important in construction?
With more and more emphasis on sustainability and cost reduction, whole life costing is critical at every stage of a construction project. Whole life costing techniques look at the big picture of expenditure and longevity of the building. They can be used to evaluate options at all stages and are influential in external and internal design.
How do designers use life cycle costing in design?
Many designers and clients apply life cycle costing intuitively when making choices about materials and structure of a building. They are planning for cost efficiency over the life of the building rather than short term cost savings. Information on life cycle cost models and calculating life cycle costs is also included.