What is Life Cycle Costing used for?

• A. Life Cycle Costing assesses total cost of ownership over a product’s life; used to inform design, procurement, and investment decisions.
• B. Life Cycle Costing analyzes only initial purchase price.
• C. Life Cycle Costing focuses on environmental impact only.
• D. Life Cycle Costing predicts annual maintenance costs.

Answer: (B)

Life cycle costing measures the total cost of owning and using a product across its entire life, from purchase to disposal. It adds up not just the upfront price but all future costs like operation, energy use, maintenance, repairs, replacements, and end-of-life costs. By looking at the full timeline, you can compare options based on actual long-term economics rather than just the initial sticker price. This helps inform design choices, procurement decisions, and capital investments to minimize total ownership costs over the product’s life. For example, a cheaper item might incur higher energy or maintenance costs that outweigh the initial savings, making a more efficient option cheaper overall over time. It’s about long-term cost, not only the initial price or solely environmental impact or maintenance alone.