LIFE CYCLE COSTING

Stephen J. Kirk & Alphonse J. Dell I'sola defines Life Cycle Costing (LCC) as an economic assessment of an item, area, system or facility that considers all the significant costs of ownership over its economic life, expressed in terms of equivalent dollars.

This LCC approach is effective in the decision making process in four main ways:

·	It identifies the total cost undertaken in the acquisition of an asset.
·	It facilitates an effective choice between alternative methods by taking account of various options which display differing capital and running costs
·	LCC is a management tool that details all costs of capital, running and replacement cost associated with either a total building or components within that building

The true cost of an item is not just the amount of money that you pay when you buy it. Much more is involved. When you buy something, you also buy its long-term effects. The initial costs plus these long-term costs are called life-cycle costs. This includes things like the time involved to get the project done, the people needed (number, expertise and so on), the degree of difficulty involved, availability of money or other resources, the amount of maintenance needed, and the money that must be expended and kept in reserve

The primary focus of life cycle costing is to determine which of several courses of action would be least costly over a specified period of time. VE can be used to complement a life cycle analyses when selected LCC alternatives cannot be adopted without exceeding the project budget. VE can be utilized to reduce initial costs of design features other than those under study in an LCC analyses.