IFE CYCLE COSTING

PRESENTED BY SIBA NARAYAN PATRA- 1226110235 SUBRATA BHOWMICK-1226110239

LIFE CYCLE COSTING ?

WHAT IS LIFE CYCLE COSTING ?

the cost of an asset, or its parts throughout its life cycl while fulfilling the performance requirements methodology for systematic economic evaluation of life

cy

costs over a period of analysis as defined in the agreed scope

Life cycle costing is therefore

An economic evaluation method That accounts for all relevant costs Over the investors time horizon Adjusting for the time value of money where appropriate

WHY LIFE CYCLE COSTING?

Evaluation of competing options in purchasing Improved awareness of total costs More accurate forecasting of cost profiles Performance trade-off against cost

How LCC works ?

LCC asks these simple questions:

What do one need now and how much will it cost me? What will one need to do in the future because they have and how much will that cost? How long is the future? How does one evaluate future costs v current costs?

done it

LIFE CYCLE COSTING

PROCESS OF LIFE CYCLE COSTING

PLAN ANALYSIS SELECT / DEVELOP MODEL APPLY MODEL DOCUMENT & REVIEW RESULT PREPARE LIFE COST ANALYSIS

IMPLEMENT

& MONITER LIFE COST ANALY

Constituents of LCC

One off cost Purchase; Installation and commissioning; Initial training; Documentation; and

Recurring costs Retraining; Operating costs; Spares; Maintenance and repair and Transportation and handling.

Facilities.

METHODOLOGY OF LIFE CYCLE COSTING ?

COST BREAKDOWN STRUCTURE COST ESTIMATING DISCOUNTING INFLATION

Any questions

What are the requirements of LCC?

Three requirements:

1. Relevant costs 2. Time horizon 3. Discount rate

What to include?
Construction costs (year zero costs)
Construction, fees, decanting etc

Maintenance costs and cycles

Major replacement, minor replacement, redecorations etc

Operation costs and cycles

Cleaning, energy, administration etc

Occupancy costs
Reception, catering, occupants security etc

End of life costs

Disposal, reinstatement, continued value etc

What to exclude?

Externalities ie Other peoples costs eg Occupiers costs if the client is a developer

Intangibles ie Other impacts that do not have a directly measurable cost eg Carbon emissions or Quality of life

The LCC may well form part of a larger study that will incorporate these things but the LCC should represent the cost to the investor only.

Net Present Value

Externalities ie Other peoples costs eg Occupiers costs if the client is a developer

Intangibles ie Other impacts that do not have a directly measurable cost eg Carbon emissions or Quality of life

The LCC may well form part of a larger study that will incorporate these things but the LCC should represent the cost to the investor only.

Present Value Formula

If

A = P (1 + i )
then

A P= n (1 + i )