Life Cycle Costing

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Life-cycle costs and other direct costs can be defined as the total cost throughout its life including planning, design, procurement and support costs of the assets owned or used. Life cycle costing is divided into six-staged process. The first four stages which are plan life cycle costs analysis, select or develop life cycle model, apply life cycle model and documents and review life cycle results comprise the life cost planning phase. The last two stages which are preparing life cycle cost analysis and implement and monitor life cycle analysis incorporating the life cost analysis phase. Life cost analysis is used as the basis for monitoring and management of costs over an asset’s life. It makes creating, operating and disposal costs of the alternative is life, so that the monitoring of accurate and timely decision-making, in order to reduce manufacturing costs can be. The reason for using life cycle costing is to determine the sum of all the costs associated with an asset including acquisition, installation, operation, maintenance, refurbishment and disposal costs. Capital and ongoing operating and maintenance costs must be considered wherever asset management, risk management, value management and demand management decisions involving costs are made.

Case Study

Life cycle costing is currently a valuable tool in the construction industry. Selecting the materials and components of structures and pavements based on a life cycle costing can significantly decrease the lifetime cost of construction, maintenance and repair. Life-cycle cost analysis tool in engineering economic analysis more useful alternative to the road layout in the relative value of competition. This method uses a structured method of accounting for agency costs of activities and users of transport activities. By considering the useful life of assets for all expenses related to, and life cycle costing process will help transportation officials choose the lowest total cost options, and provides a means to balance and construction to restore the user's influence, and preserve the requirements of pavement itself. Pennsylvania Department of Transportation (PennDOT) has a long road selection decision-making process and successful history, the use of life-cycle cost analysis. Since the mid-80s of the 20th century, PennDOT conducted a life cycle, it is estimated more than 1 million U.S. dollars and other road projects the initial cost of more than 10 million U.S. dollars of the cost estimates the cost of all road works. PennDOT 15 to 20 projects, each of sufficient size, it is a life-cycle cost. For these projects, PennDOT cycle cost base the choice depends on its design life, including the impact of vehicle operation, the user delays and cost increases, due to the existence of a work area. Because of its life-cycle cost analysis of policy, has made significant improvement in PennDOT road projects, including improving the overall performance of the pavement in the country, the new sidewalks and rehabilitation work, with the public and the industry decided to raise the choice of pavement types can be reliability organizations reduce costs. In addition, the life-cycle cost analysis is also given to the implementation of PennDOT. PennDOT has taken its life-cycle cost analysis, and decisive implementation of top-down approach. The Department reviewed the entire pavement design and selection process. Then PennDOT Director has established a special task force to examine its applicability to the transport system, Pennsylvania's new technology. Life-cycle cost analysis method, choose a line to determine the cost of long-term agency PennDOT and user requirements. Cooperation with national experts, Pennsylvania State University and industry groups, PennDOT developed the Highway Geometric Design Manual and Pavement Policy Manual. The road design manual for all processes, including life-cycle cost analysis. To the mid-80s, these manuals are designed to use the road every PennDOT.

Life-cycle cost to provide some benefits pavement design, it is PennDOT found that life-cycle cost analysis process, improve the quality of all road design input, and lead to better. Second, PennDOT engineers are more concerned about the costs and activities of various road materials and the performance of knowledge. Life cycle cost analysis process provides the opportunity to preliminary structural design of the road after an investigation in all aspects of life. Life-cycle cost advantage under the credit. PennDOT's track record of centralized control of the process life-cycle cost analysis to improve the transparency of the road, pavement type selection, the decision to choose the road less likely to be challenged industry group. In addition, PennDOT using the life-cycle cost of consideration at the project level because many roads have been taxed on the capacity and institutional trade-off between the cost of the user cost framework analysis, PennDOT had formally recognized the work of district activities, users and other causes roadway operating costs of vehicle delay. The final advantage is that PennDOT pavement design and life cycle cost analysis of the selection process, established clear benchmarks PennDOT pavement performance. Asphalt and concrete industry has been implemented to meet the challenges of PennDOT and better products and lower costs of adaptation. In addition, the contractors have reduced their offer in order to maintain competitiveness in a standardized environment.

With a life-cycle cost analysis of the pros and cons of life cycle cost of inputs is uncertain, PennDOT has modified its corresponding road selection criteria. PennDOT to pavement design life-cycle costs through the information provided during the decision-making. However, the life-cycle costs such as agency costs and investment performance of the road, can not predict. Second, PennDOT had to rely on expert opinion and historical data to put into the development of local constituencies. PennDOT recognized as potential barriers to implementation as a lack of systematic data, and specifically decided to use the records to experts, then it has an appropriate analysis of historical data sources. At the same time, the existing database of research capabilities, to provide them with these inputs. As a data source through the development process at the same time, PennDOT for enforcing the majority of their local constituencies program and put back in it, if the process has been developed in order.

PennDOT practice continuous improvement of the selection decision-making process and the road. Although the existing method has made the road what, just 20 years ago, the department has decided to review the contract in the process is expected. The review will be independent of the sector, and experts are not employed by PennDOT road. Specifically, the review will examine the user fees and accommodation of uncertainty in the analysis of the role. While PennDOT does not expect any significant change in its method of choice is life cycle cost benefits of the program has brought more credibility, improved design, and reduce costs. Such PennDOT to ensure sustainable development.

K Amelio (2000), Life Cycle Cost Literature Survey and Database for Concrete, Journal of Structural, - United States