Why: The first cost for capital equipment (acquisition) is between ½ and 1/20 of the total life time cost! The first cost, acquisition cost, is usually definable by a firm quotation and sustaining costs must be estimated and put into the appropriate time slots for discounting to obtain the NPV for the project life. Typical values used in industry for LCC are: discount rate = 12%, tax rate = 38%, and project life is usually between 10 and 20 years.

When: Life cycle cost is usually calculated as an up-front decision making effort either for projects or for cost reduction efforts. I does not work well for doing the analysis after the project is underway.

Where: LCC is the business of investing money to make changes occur. The NPV values add the voice of investments to technical decisions to work for the lowest long term cost of ownership.

These definitions are written by H. Paul Barringer and are also posted on his web site at www.barringer1.com

Return to Reliability Tools

Upcoming Events

August 9 - August 11 2022

MaximoWorld 2022

View all Events
banner
80% of Reliabilityweb.com newsletter subscribers report finding something used to improve their jobs on a regular basis.
Subscribers get exclusive content. Just released...MRO Best Practices Special Report - a $399 value!
DOWNLOAD NOW
The Three Laws of Preventive Maintenance

The Three Laws of Preventive Maintenance

Each preventive maintenance task in an Uptime Elements developed Reliability Strategy is generated for an identifiable and explicit reason

Digital Built America: Smarter, More Sustainable and Resilient

Digital Built America: Smarter, More Sustainable and Resilient

Building back better means transitioning the current infrastructure to smarter, more sustainable forms of development to safeguard the country’s future.

DIPF Curve and RCM Failure Patterns

Predictive Maintenance Deja Vu All Over Again

Compared to total asset failures, what percentage of asset failures can be "reliably predicted" with predictive maintenance?