LCC (Life Cycle Cost)

Definition

The economic assessment of a system or facility considering the lifetime ownership costs over an item's economic life.

Purpose

LCC analysis helps in making informed decisions by evaluating the total cost of ownership, including initial costs, operation, maintenance, and disposal. It is used to determine the most cost-effective option over the long term.

Examples of Use

• Building construction: Evaluating the long-term costs of different building materials and systems to choose the most economical option.
• Infrastructure projects: Assessing the life cycle costs of bridges, roads, and other infrastructure to ensure sustainable investment.
• Product development: Determining the total cost of producing, operating, and disposing of a product to optimize design and materials.

Related Terms

• Initial Cost: The upfront expenditure required to acquire or construct a system or facility.
• Operational Cost: The expenses associated with the day-to-day functioning of a system or facility.
• Maintenance Cost: The costs incurred for upkeep and repairs to ensure the system or facility remains operational.

Notes

• LCC analysis is crucial for sustainable and economical decision-making in both public and private sectors.
• It requires comprehensive data collection and analysis to accurately estimate costs over the system's life span.
• Incorporating LCC into the planning process can lead to significant cost savings and improved asset management.