Life Cycle Costing (LCC)
Life Cycle Costing is a process which aims to assess the total cost of an
asset over its entire lifespan. It considers the initial capital outlay, the
cost of owning / operating and maintaining the facility together with disposal
cost at life expiry, which is discounted to present day levels.
Whilst LCC analysis are primarily adopted on new build projects for examples
PFI constructed schools, it can be applied to existing property stock although
the property condition needs to be assessed with this application. In addition,
commercial judgement is required as refurbishment components are not always
replaced on a 'like-for-like' basis as specification upgrading may be required
to current standards. The terms of any leases in place also need to be assessed
having regard to service charge recoverability.
LCC is an extremely useful tool in the decision making process and may impact
on future investment strategies as comparisons between the life cycle cost of
different sites or buildings is inevitable.
Planned Preventative Maintenance reports can also be carried out in
conjunction with a Life Cycle Cost Analysis.
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