Life Cycle Costing

Electricity routes
© Shutterstock/Nadezda Murmakova
Electricity routes as a cost factor in the energy turnaround.

Filtering out the most economical variant

Along with ecological criteria, sustainable activity in particular also extends to consideration of economic aspects in process and product development, a comparison of variants etc. Life Cycle Costing (LCC) is suited as a method of supporting sustainable decision making, since it enables the analysis of economic aspects subject to the same system limits and boundary conditions as integrated ecological analysis, i.e. Life Cycle Assessment. The life cycle is defined here using the same criteria as for Life Cycle Assessment.

The Life Cycle Costing method allows assessment of all of the costs incurred by a product or service. For this purpose, all costs arising throughout the expected life cycle are registered and evaluated in a structured manner. The results of an LCC analysis above all serve the following purposes:   

  • Assessment of different options: An LCC analysis covers all the life cycle costs of a product or service. Alternatives can be thus evaluated and compared;
  • Deeper knowledge of the economic life cycle: Application of the LCC method provides management with better knowledge of the cost drivers in the process, for example the influence of material and energy costs. Moreover, examination of the cost drivers can pinpoint areas that require action on the part of management;
  • Support in decision making: Total investment costs can already be estimated at an early stage in the design of a product by means of the LCC method.