MAF 635 LCC Report
HISTORY AND BACKGROUND OF LIFE CYCLE COSTING (LCC)
The history of LCC began in the US Department of Defence in the mid-1960s. In the mid-1980s attempts were made to adapt LCC to building investments. Recently several research projects have been carried out aimed at developing the LCC methodology for the construction industry and placing LCC in an environmental context.
There are some examples shows the LCC approach. Firstly, Abraham and Dickinson’s study of the disposal of a building in which LCC calculation is used to quantify disposal costs. Secondly, Sterner developed a model for the evaluation of tenders, where she uses LCC methodology to calculate the total energy costs for buildings. Thirdly, Aye et al. used LCC to analyse a range of property and construction options for a building. Lastly, BogenstGatter advocate the usability of performing an LCC calculation in the early design phase. He developed a model using specific characteristic values of LCC, i.e. standardised typological figures. He suggests defined specifications from similar buildings as key solutions to the usability problem.
LCC concepts is helps the management to understand the cost consequence of developing and making a products and to identify areas which cost reduction efforts are likely to be most effective. The process of LCC fundamentally involves in assessing cost arising from an assets over its life cycle and evaluating alternatives that have impact on this cost ownership. LCC is usually useful to apply to low technology issues, such as repair and versus replace decisions.
DEFINITION OF LIFE CYCLE COSTING
Life cycle costing is a cost management approach which includes all costs and ensures that all costs are managed over the life cycle of the product. Product life cycle begins from conception of the product until its abandonment which can be referred as ‘from a cradle to grave’.
Product life cycle has four stages:
1. Product planning and initial concept design
2.
The history of LCC began in the US Department of Defence in the mid-1960s. In the mid-1980s attempts were made to adapt LCC to building investments. Recently several research projects have been carried out aimed at developing the LCC methodology for the construction industry and placing LCC in an environmental context.
There are some examples shows the LCC approach. Firstly, Abraham and Dickinson’s study of the disposal of a building in which LCC calculation is used to quantify disposal costs. Secondly, Sterner developed a model for the evaluation of tenders, where she uses LCC methodology to calculate the total energy costs for buildings. Thirdly, Aye et al. used LCC to analyse a range of property and construction options for a building. Lastly, BogenstGatter advocate the usability of performing an LCC calculation in the early design phase. He developed a model using specific characteristic values of LCC, i.e. standardised typological figures. He suggests defined specifications from similar buildings as key solutions to the usability problem.
LCC concepts is helps the management to understand the cost consequence of developing and making a products and to identify areas which cost reduction efforts are likely to be most effective. The process of LCC fundamentally involves in assessing cost arising from an assets over its life cycle and evaluating alternatives that have impact on this cost ownership. LCC is usually useful to apply to low technology issues, such as repair and versus replace decisions.
DEFINITION OF LIFE CYCLE COSTING
Life cycle costing is a cost management approach which includes all costs and ensures that all costs are managed over the life cycle of the product. Product life cycle begins from conception of the product until its abandonment which can be referred as ‘from a cradle to grave’.
Product life cycle has four stages:
1. Product planning and initial concept design
2.
References: 1) http://simple.werf.org/simple/media/LCCT/index.html 2) http://www.accaglobal.com/uk/en/student/acca-qual-student-journey/qual-resource/acca-qualification/f5/technical-articles/target-lifestyle.html