What does Life Cycle Costing assess?

What does Life Cycle Costing assess?

• A. The costs of acquiring land only
• B. The total cost of ownership over a project’s lifespan
• C. The maintenance costs after project completion
• D. The legal fees associated with project procurement

Answer: (B)

Life Cycle Costing assesses the total cost of ownership over a project’s lifespan, which encompasses all costs associated with the project from inception to decommissioning. This includes not only the initial costs of design and construction but also ongoing operational costs, maintenance, and eventual disposal or decommissioning costs. By evaluating these comprehensive costs, Life Cycle Costing enables better financial planning and decision-making, ensuring that project stakeholders understand the full financial implications of their investments over time. This approach is crucial for identifying the most cost-effective options and optimizing resource allocation throughout the duration of the project's life. The focus on total costs rather than just initial expenditures helps avoid underestimating long-term financial commitments that may arise after project completion.

Life Cycle Costing assesses the total cost of ownership over a project’s lifespan, which encompasses all costs associated with the project from inception to decommissioning. This includes not only the initial costs of design and construction but also ongoing operational costs, maintenance, and eventual disposal or decommissioning costs.

By evaluating these comprehensive costs, Life Cycle Costing enables better financial planning and decision-making, ensuring that project stakeholders understand the full financial implications of their investments over time. This approach is crucial for identifying the most cost-effective options and optimizing resource allocation throughout the duration of the project's life.

The focus on total costs rather than just initial expenditures helps avoid underestimating long-term financial commitments that may arise after project completion.