Life-cycle cost analysis (LCCA) is an economic analysis tool to determine the most
cost-effective
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of different courses of action. Cost-effectiveness analysis is distinct from cost–benefit analysis, which assigns a monetar ...
option to purchase, run, sustain or dispose of an object or process. The method is popular in helping managers determine
economic sustainability by figuring out the life cycle of a product or process.
Definition
The term differs slightly from
Total cost of ownership
Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or service. It is a management accounting concept that can be used in full cost accounting or even eco ...
analysis (TCOA). LCCA determines the most
cost-effective
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of different courses of action. Cost-effectiveness analysis is distinct from cost–benefit analysis, which assigns a monetar ...
option to purchase, run, sustain or dispose of an object or process, and TCOA is used by managers or buyers to analyze and determine the direct and indirect cost of an item.
The term is used in the study of
Industrial ecology
Industrial ecology (IE) is the study of material and energy flows through industrial systems. The global industrial economy can be modelled as a network of industrial processes that extract resources from the Earth and transform those resource ...
(IE). The purpose of IE is to help managers make informed decisions by tracking and analyzing products, resources and wastes.
Green Design and Building Economics
In
Green design Managers add their
operating cost
Operating costs or operational costs, are the expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility. They are the cost of resources used by an organization just to mai ...
s and
capital
Capital and its variations may refer to:
Common uses
* Capital city, a municipality of primary status
** Capital region, a metropolitan region containing the capital
** List of national capitals
* Capital letter, an upper-case letter
Econom ...
to help decide the effect of an investment.
The method also allows managers to determine if more investments may be needed for
green building
Green building (also known as green construction, sustainable building, or eco-friendly building) refers to both a structure and the application of processes that are environmentally responsible and resource-efficient throughout a building's li ...
s.
See also
*
Cost–benefit analysis
Cost–benefit analysis (CBA), sometimes also called benefit–cost analysis, is a systematic approach to estimating the strengths and weaknesses of alternatives. It is used to determine options which provide the best approach to achieving benefits ...
*
Invitation to negotiate
*
Request for proposal
References
Business economics
Cost engineering
Civil engineering
Project management techniques
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