Life Cycle Cost Analysis a Guide for Engineers

Life Cycle Costing, combining capital and multi year operating costs into a holistic measure of cash flow, is well known but it is often seen as a complex, difficult to apply financial analysis tool. Yet in most cases, a simple LCC model, taking under an hour to complete, will be sufficient to widen the basis of decision making leading to improved performance of both current and future assets.

This article explains how Life Cycle Cost principles can be applied in a simple but practical way to guide decision making about how to:

  • Deliver the full potential of current/legacy assets;
  • Make informed decisions that reduce Life Cycle Costs even when individual asset cost data are not available;
  • Guide the development and implementation of working methods to deliver the full potential of assets or enhance value added from new assets prior to day one operation;
  • Begin conversations about the impact future challenges to encourage innovation, engagement and a proactive improvement culture.