what is life cycle cost?

Question

Building Economics

Answer 1

I have a lifecycle and it cost about a 1000 but it's just the consumer model, and type you use in the gym cost alot more. I wish I could get a stairmaster but that's a real expensive piece of equipment. A treadwall would be awesome but I dont have the room for it.

Answer 2

History of life cycle cost analysis
Life cycle cost analysis became popular in the 1960s when the concept was taken up by U.S. government agencies as an instrument to improve the cost effectiveness of equipment procurement. From that point, the concept has spread to the business sector, and is used there in new product development studies, project evaluations and management accounting. As there is high interest in life cycle cost analysis in maintenance, the International Electrotechnical Commission published a standard (IEC 60300) in 1996, which lies in the field of dependability management and gives recommendations how to carry out life cycle costing. This standard was renewed in July 2004.

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Realization of a life cycle cost analysis
A life cycle cost analysis calculates the cost of a system or product over its entire life span.

The analysis of a typical system could include costs for:

planning,
research and development,
production,
operation,
maintenance,
Cost of replacement,
disposal or salvage.
This cost analysis depends on values calculated from other reliability analyses like failure rate, cost of spares, repair times, and component costs.

Sometimes called a "cradle-to-grave analysis", or "Womb-to-Tomb"

A life cycle cost analysis is important for cost accounting purposes. In deciding to produce or purchase a product or service, a timetable of life cycle costs helps show what costs need to be allocated to a product so that an organization can recover its costs. If all costs can not be recovered, it would not be wise to produce the product or service.

It reinforces the importance of locked-in costs, such as R&D.

It offers three important benefits:
- All costs associated with a project/product become visible, especially: upstream, R&D; downstream, customer service.
- It allows an analysis of business function interrelationships. Low R&D costs may lead to high customer service costs in the future.
- Differences in early stage expenditure are highlighted, enabling managers to develop accurate revenue predictions.


A typical quantitative analysis would involve the use of a statement where an easy comparison of costs can be seen by having the different products a company produces next to each other.

Answer 3

Life cycle cost is all the costs that something will have in its life time, ie breakdown the costs right back to individual raw materials their transport to the factpry to create whatever you have, packaging and transport to the shop, packaging and transport to the customer and all maintenance until the thing fails, then add on costs for disposal of the goods.

Answer 4

If you buy a machine for £10k, it breaks down the life cycle costs like this...
Machines expected to run for 10 years say so per annum you lose £1000 therefore 10 years ar £1000 = £10k (total cost of machine). Also you need to add in all running costs of the machine and expected maintenance and PPM.
Add this together to make a per annum cost.

Answer 5

Sue N has it exactly.

For products already in production you can look at actual costs. You also need to look at things like like recall costs if you are trying to get an estimate of total economic impact.

For products in design its more of an estimation exercise.

Answer 6

the costs related to the lifecycle of a product.
for instance the reverse logistics costs