Experience has shown that the costs of both future maintenance and associated downtime can far outweigh the initial material costs.
Life Cycle Costing (LCC) is a technique developed for identifying and quantifying all costs, initial and ongoing, associated with a project or installation over a given period.
The full cost of a project includes projections of future interest and inflation rates, maintenance intervals and costs, and the desired service life.
Material costs are assessed taking into consideration such long and short-term factors as initial outlay, maintenance and its frequency, downtime effects, production losses, repair, replacement, and other operationally related costs such as manpower and energy consumption.
LCC uses the standard accounting principle of discounted cash flow, so that total costs incurred during a life cycle period are reduced to present day values. This allows a realistic comparison to be made of the options available in choosing the most cost effective material.
Experience has shown that the costs of both future maintenance and associated downtime can far outweigh the initial material costs.
A full life cycle cost analysis enables the materials specifier to consider the full implications of future costs over the life of the project both in terms of actual monetary value and inconvenience of future maintenance and replacements. The cost of alternate materials substantially increases over time while the cost of stainless steel usually remains constant.
Corrosion of metals costs the United States economy over $300 billion annually. It is estimated that about one-third of this cost ($100 billion) is avoidable by use of the best known technology. This begins with design, selection of anti-corrosion materials like stainless steel, and quantifying initial and future costs including maintenance by LCC techniques.
LLC = AC + IC + OC + LP + RC
LLC = Life Cycle Costing
AC = Initial material acquisition costs
IC = Initial installation and fabrication costs
OC = Operating and maintenance costs during the desired service life
LP = Lost production costs during downtime
RC = Replacement materials costs
This would be done comparing stainless steel to other material options like carbon steel. Below is an example of LCC for a Bus Frame.
