Life Cycle Costing (LCC) - Business modeling the whole life cycle of products and services
Life Cycle Costing (LCC) is an accounting approach, which addresses the the cost implications of a service or asset in a broad sense. The cost modelling is done in phases, which normally stretch from the idea to start the venture until its shutdown or decommissioning of the assets. Because of this complete life cycle thinking, LCC is also referred to as "womb to tomb" or "cradle to grave" approach.Typical phases to be considered are: research and design phase, production phase, implementation and deployment phase, operation phase and decommissioning phase.
A fundamental principle in this life cycle modelling approach is the observation, that most follow-up cost are hardly to be changed, once the initial design choices and investment decisions have been made. Thus, LCC is often performed beforehand in order to estimate the total cost of ownership of several alternative solutions before irreversible decisions have been taken and the venture is progressed to far to be reverted.
The following figure roughly depicts the fundamental concept of life cycle thinking in LCC modelling and shows how the cost appointment vs. ability to change the cost incurred are inversely proportional.
If you do need help in performing Life-cycle cost (LCC) calculations, do not hesitate to contact us. This is particularly true for whole-life cost and profit calculations - including incentive and tariff design - for communication networks such as Mobile networks (2G, 3G, HSPA, HSPA+ and 4G LTE/LTE Advanced) and Fixed networks (DSL, fibre optical lines (FTTx, GPON) and MPLS-TP transport platforms).
