Life-Cycle Costing in Municipal Construction Projects

Abstract

The objective of life-cycle costing (LCC) analysis is to optimize the total cost of ownership over the life span of an asset. A survey was conducted in the early months of 1995 of the largest municipalities in the U.S. to investigate the use of LCC analysis. The survey indicated that 40% of the municipalities use LCC analysis and that some had been using it for over 20 years. The reasons why 60% of the municipalities did not use LCC analysis include the lack of formal guidelines and the difficulty of estimating future costs and incomes. Other aspects of the survey included the typical profile of the LCC analysis process including project types, work categories, and project stages. The criteria used in selecting projects for LCC implementation appear to be arbitrary. Finally, most municipalities assessed their LCC analysis process as a successful or a somewhat successful operation.