LCC is defined as the total cost of owning and operating an asset over its entire life, including costs of planning, design, acquisition, operation, maintenance, and disposal. There are three main stages of life cycle costing: initial costs, operation and maintenance costs, and disposal costs. The purpose of LCC is to choose between assets, determine their total benefits, and create accurate budgets by profiling costs over the entire life of a product or asset. The basic LCC calculation is the initial construction cost plus the present value of all recurring costs minus the present value of the residual value.

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 3Initial 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)
 PVRECURRING is the present value of all recurring cost (utilities,
maintenance, replacement, services etc.)
 PVRESIDUAL VALUE is the present value of the residual value at the
end of study life
Formula for basic LCC calculation
LCC=C+PVRECURING -PVRESIDUAL VALUE

7. 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