Life cycle costing

most comprehensive notes on life cycle costing.

1. Life cycle costing By: Maria lazar

2. LCC is defined as the total cost throughout its life including planning, design, acquisition, and support cost and any other cost directly attributable to owing/using the asset Definition

3. 1 2 3 Stages of life cycle costing 1 2 3 Initial cost Disposal cost Operation and maintenance cost

4. Life cycle costing Research and development Design Production Marketing Distribution

5. Choose between two or more assets Determine the asset’s benefits Create accurate budget Purpose of LCC

6. Where: LCC is the lifecycle cost C is the year 0 construction cost (hard and soft cost) PV RECURRING is the present value of all recurring cost (utilities, maintenance, replacement, services etc .) PV RESIDUAL VALUE is the present value of the residual value at the end of study life Calculating the total life cycle cost Formula for basic LCC calculation LCC=C+PV RECURING -PV RESIDUAL VALUE

7. Advantages of LCC Profile cost over product’s life Track actual cost and revenue from start to finish Price based in total lie cycle cost rather than current period Timetable of cost helps to show what cost needed to be recovered over product’s lifecycle Traces cost such as R&D, marketing to individual products