Life Cycle Cost Analysis (LCCA) in Municipal Organizations

Abstract

The study reported in this paper has been conducted to shed light on the use of life cycle cost analysis (LCCA) in municipal organizations. The major objectives of the study are to identify the sources of data used in LCCA, examine how cities assign values to the main parameters used in their calculations, explore the possible relationships between LCCA and value engineering, investigate the use of LCCA in the bidding and construction phases of a project, investigate the possible ways of improving the efficiency of LCCA, and define the major factors considered in assessing success in LCCA implementation. The findings indicate, among other things, that major sources of data include archives, computerized databases, and data obtained from other cities. The major criteria that cities consider when assessing the rate of success in LCCA implementation include the extent to which LCCA helps to optimize the total cost of owning and operating the physical assets, achieve lower maintenance costs, allow longer useful life, overcome the problem of limited funds, and achieve lower initial costs. For more successful LCCA implementation, cities are demanding formal guidelines that describe the method of utilization, published values for the different parameters used in LCCA, and the development of standard software.