Life Cycle Costing (LCC) or Whole Life Costing (WLC) is a discipline that aims to identify and manage the costs of a product or service by taking into account all cashflows throughout its life. Costs are typically grouped into capital and operational costs, meaning those that are incurred before an asset is operational (typically design and construction costs) and those that are incurred during its operating life (typically in use, maintenance and repair). In reality, there are a wide spectrum of costs of differing magnitudes, timings, recurrence and uncertainty, and investment and management decisions can be taken that affect all these variables.
The diagram below in Fig.1 visualises how costs can vary throughout an asset’s life. However, all assets will have different life cycle cost profiles, depending on how use and maintenance is planned and managed.
Fig 1. Typical Life Cycle Cost profile