Why perform Life Cycle Cost analysis?
We are all aiming to avoid future economic surprises, to “think first” and to make wise decisions. But unfortunately, economic surprises sometimes arise. One of the main reasons for this is that when a new product or system is to be acquired, it is common to investigate only the cost for acquisition, with ownership costs frequently forgotten. Thus, just one part of the life-cycle cost is considered. This well-known problem is often visualised using the famous LCC iceberg, which shows that the acquisition cost is “merely the tip of the iceberg”, and that the ownership costs are hidden under the surface, e.g. cost for human resources, training, repair, upgrades and disposal; costs that constitute the largest part of the total life cycle cost in most scenarios.
SSPA has positive experiences from supporting clients in wise decision-making using LCC analyses as a tool. The LCC analysis is used to facilitate the understanding of the economic part of the project by building different scenarios in a structured way. The goal is increased confidence in decision-making.
Read more at “To do right from the beginning”