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1 – 10 of over 42000
Article
Publication date: 1 April 1990

George Norman

Defines life cycle costing, which gives rise to Life Cycle Cost(LCC). Defines LCC as “The total cost of the system or productunder study over its complete life cycle or the…

5369

Abstract

Defines life cycle costing, which gives rise to Life Cycle Cost (LCC). Defines LCC as “The total cost of the system or product under study over its complete life cycle or the duration of the period of study, whichever is the shorter”. Stresses that LCC can be used at whatever level is chosen (estate or, say, a boiler). Explains the timing and mechanism of measurement. Argues that the application of LCC at an early design stage will greatly enhance system design and operation. Offers other pertinent definitions.

Details

Property Management, vol. 8 no. 4
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 6 November 2007

Anni Lindholm and Petri Suomala

The purpose of this paper is to discuss life cycle cost management and highlight the practical challenges related to collecting adequate data and practicing long‐term cost…

6640

Abstract

Purpose

The purpose of this paper is to discuss life cycle cost management and highlight the practical challenges related to collecting adequate data and practicing long‐term cost management in an uncertain environment.

Design/methodology/approach

The paper reports a case study conducted in the Finnish Defence Forces. As part of the case study, a life cycle cost model for a case product was developed.

Findings

Activity‐based life cycle cost modeling can provide relevant information for varying product management needs at different stages in the life of a product. Quantification of uncertainty is one of the elements in the modeling that can improve the feasibility of LCC both for cost estimation and tracking purposes.

Originality/value

Only a few empirical studies on life cycle costing have been reported which focus on the defence sector. The paper contributes to our understanding of how LCC can be used in a continuous manner and depicts how LCC can produce a sharpened cost image of a particular product.

Details

International Journal of Productivity and Performance Management, vol. 56 no. 8
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 31 December 2004

John R. Selman and Rich Schneider

The US National Park Service (NPS) is responsible for the management of some of the most recognisable and notable natural and cultural resources in the USA. To make the case for…

1816

Abstract

The US National Park Service (NPS) is responsible for the management of some of the most recognisable and notable natural and cultural resources in the USA. To make the case for additional maintenance funding, NPS is instituting life‐cycle cost management practices. Over the 50‐year life cycle of the Redwood Information Center at Redwood National and State Parks in Crescent City, California, custodial costs alone will sum to more than the total replacement construction cost for the entire facility. This point illustrates an important aspect regarding the true cost of operating and sustaining physical infrastructure over its life cycle. It also suggests that understanding life‐cycle costs is a critical element of effective, long‐term portfolio and asset management. Often, institutional owners of physical assets inadequately assess the true cost of building and owning facilities, typically overemphasising initial construction costs. Life‐cycle operations and maintenance (O&M) and capital renewal costs, however, almost always comprise a far greater percentage of total life‐cycle building costs. Using actual life‐cycle costs for an asset that is owned and managed by NPS, this paper explores the development of full life‐cycle costing, highlighting key life‐cycle cost drivers, of an information centre at the Redwood National and State Parks.

Details

Journal of Facilities Management, vol. 3 no. 2
Type: Research Article
ISSN: 1472-5967

Keywords

Article
Publication date: 1 February 1988

D.W. Hoar

The objective of this paper is to give a brief overview of the techniques for life‐cycle costing and attempts to make a case for the need for chartered surveyors to become more…

1073

Abstract

The objective of this paper is to give a brief overview of the techniques for life‐cycle costing and attempts to make a case for the need for chartered surveyors to become more proficient in the use of life‐cycle costing techniques. It also considers the importance of the client's role in life‐cycle costing; and discusses the assumptions that need to be made about the ‘life of the investment’. The paper also deals with the subject of discounting techniques and how they are influenced by inflation in prices, interest rates and risk. It includes discussion of the various costs and values which need to be considered in any life cycle costing study. In conclusion, there is a brief discussion of how life‐cycle costing techniques support an investment appraisal of a number of options that may be open to a client.

Details

Property Management, vol. 6 no. 2
Type: Research Article
ISSN: 0263-7472

Open Access
Article
Publication date: 11 October 2018

Kim Haugbølle and Lau M. Raffnsøe

Sustainable building design suffers from a lack of reliable life cycle data. The purpose of this paper is to compare life cycle costs of sustainable building projects, examine the…

4289

Abstract

Purpose

Sustainable building design suffers from a lack of reliable life cycle data. The purpose of this paper is to compare life cycle costs of sustainable building projects, examine the magnitude of various cost drivers and discuss the implications of an emerging shift in cost drivers.

Design/methodology/approach

This paper is based on data from 21 office buildings certified in Denmark according to the sustainable certification scheme DGNB.

Findings

The paper supports previous findings that construction costs and running costs each roughly make up half of the life cycle costs over a 50-year period. More surprising is the finding that the life cycle costs for cleaning are approximately twice as high as the supply costs for energy and water.

Research limitations/implications

The data set is based on actual construction costs of office buildings constructed in 2013-2017. Although all running costs are calculated rather than measured, they are based on a more detailed, specific and industry-supported set of calculation assumptions than is usual for life cycle costing studies because of extensive collaborative work in a number of concomitant national research and development projects.

Practical implications

Authorities, clients and building professionals heavily emphasise energy-saving measures in new Danish buildings. The paper suggests redirecting this effort towards other more prominent cost drivers like cleaning and technical installations.

Originality/value

This paper provides a notable contribution to the academic understanding of the significance of different cost drivers as well as the practical implementation of life cycle costing.

Details

Facilities, vol. 37 no. 9/10
Type: Research Article
ISSN: 0263-2772

Keywords

Article
Publication date: 1 March 1985

Yash Gupta and Wing Sing Chow

This article surveys the literature dealing with theory and applications of life cycle costing (LCC). It deals with the literature published in the last 25 years and provides 667…

1032

Abstract

This article surveys the literature dealing with theory and applications of life cycle costing (LCC). It deals with the literature published in the last 25 years and provides 667 references.

Details

International Journal of Quality & Reliability Management, vol. 2 no. 3
Type: Research Article
ISSN: 0265-671X

Article
Publication date: 1 October 2006

W. Seyfert, D. Rosenberg and E. Stack

New management techniques such as ‘just‐in‐time’, ‘lean manufacturing’ and ‘Six Sigma’ allow management accountants to shift their focus from the management and control of…

Abstract

New management techniques such as ‘just‐in‐time’, ‘lean manufacturing’ and ‘Six Sigma’ allow management accountants to shift their focus from the management and control of production processes to the management of strategic issues. This paradigm shift resulted from shorter product life cycles, due to technological advances and a more competitive business environment. Recent revisions to the International Accounting Standards which are particularly supportive of life cycle costing and project management are likely to increase the focus on strategic management accounting further. This article describes developments in management accounting and the recent convergence of financial reporting in terms of International Accounting Standards with strategic management accounting and project management techniques. Strategic management accounting (particularly life cycle costing) involves applying project management techniques and using the calculus of investment to manage the project as a whole. This contrasts with managing only costs and revenues during the manufacturing phase of a project. The article demonstrates that project management techniques and the calculus of investment provide the information needed to account for the value of a project in terms of IAS 38: Intangible Assets. This will ultimately give rise to both improved decision‐making and more relevant financial reporting.

Article
Publication date: 4 June 2018

Thorsten Knauer and Katja Möslang

Although life cycle costing (LCC) is well established in theory and practice, little is known about the conditions of its adoption and its impact on the achievement of…

2905

Abstract

Purpose

Although life cycle costing (LCC) is well established in theory and practice, little is known about the conditions of its adoption and its impact on the achievement of cost-management goals. Therefore, this paper aims to analyze the adoption and benefits of LCC.

Design/methodology/approach

The analyses are based on questionnaires collected from a survey of German firms.

Findings

The results demonstrate that the extent of LCC adoption is positively associated with the extent of guarantee and warranty costs, voluntary upfront and follow-up costs for ecological sustainability and the extent of target costing adoption. In contrast, the extent of LCC adoption is negatively associated with the amount of precursors and/or intermediates that are purchased. The results also demonstrate that firms perceive LCC to be beneficial for various aspects of cost management. Firms report that the greatest benefit of LCC is related to the identification of cost drivers.

Research limitations/implications

This investigation provides a starting point for future studies of the conditions of LCC adoption and the benefits of LCC. This study is subject to limitations, particularly with respect to the operationalization of our independent variables, the number of contextual variables and the general limitations of survey research.

Practical implications

The results inform practitioners of the situations in which it is most appropriate to adopt LCC. In addition, this study identifies various cost-management goals that are supported by the use of LCC.

Originality/value

This study provides the first comprehensive analysis of the conditions of LCC adoption and advances the literature regarding the impact of LCC on the achievement of cost-management goals. Furthermore, this study provides a starting point for future research into the implementation of LCC and the effects of LCC on management accounting practices.

Details

Journal of Accounting & Organizational Change, vol. 14 no. 2
Type: Research Article
ISSN: 1832-5912

Keywords

Article
Publication date: 1 August 2001

D. Senthil Kumaran, S.K. Ong, Reginald B.H. Tan and A.Y.C. Nee

The objective of this life cycle environmental cost analysis (LCECA) model is to include eco‐costs into the total cost of the products. Eco‐costs are both the direct and indirect…

7121

Abstract

The objective of this life cycle environmental cost analysis (LCECA) model is to include eco‐costs into the total cost of the products. Eco‐costs are both the direct and indirect costs of the environmental impacts caused by the product in its entire life cycle. Subsequently, this LCECA model identifies the feasible alternatives for cost‐effective, eco‐friendly parts/products. This attempts to incorporate costing into the life cycle assessment (LCA) practice. Ultimately, it aims to reduce the total cost with the help of green or eco‐friendly alternatives in all the stages of the life cycle of any product. The new category of eco‐costs of the cost breakdown structure includes eight eco‐costs, namely cost of effluent/waste treatment, cost of effluent/waste control, cost of waste disposal, cost of implementation of environmental management systems, costs of eco‐taxes, costs of rehabilitation (in case of environmental accidents), cost savings of renewable energy utilization, and cost savings of recycling and reuse strategies. Development of a suitable cost model and the identification of the feasible alternatives are performed simultaneously. Various checklists based on multiple environmental criteria will be used to ensure the eco‐friendly nature of the alternatives. On the basis of the calculated environmental impact indices (EII), priorities will be made for the selection of suitable alternatives. The mathematical model of LCECA aims to define the relationships between the total cost of products and the various eco‐costs concerned with the life cycle of the products, and determine quantitative expressions between the above‐said costs. A computational LCECA model has been developed to compare the eco‐costs of the alternatives. This model will include a break‐even analysis to evaluate the alternatives, and sensitivity analysis and risk analysis modules. This model aims at a cost‐effective, eco‐friendly product as an end result. This LCECA model will be compatible with the existing LCA software tools.

Details

Environmental Management and Health, vol. 12 no. 3
Type: Research Article
ISSN: 0956-6163

Keywords

Article
Publication date: 21 March 2008

Eric Korpi and Timo Ala‐Risku

Despite existing life cycle costing (LCC) method descriptions and practicable suggestions for conducting LCC analyses, no systematic analyses on actual implementations of LCC…

10742

Abstract

Purpose

Despite existing life cycle costing (LCC) method descriptions and practicable suggestions for conducting LCC analyses, no systematic analyses on actual implementations of LCC methods exist. This paper aims to review reports on LCC applications to provide an overview of LCC uses and implementation feasibility.

Design/methodology/approach

A review of LCC cases reported in academic and practitioner literature. Case reports were compared against one another and against the defining articles in the field.

Findings

Most of the reported LCC applications were far from ideal. Compared to the methods suggested in the literature many of the case study applications: covered fewer parts of the whole life cycle, estimated the costs on a lower level of detail, used cost estimation methods based on expert opinion rather than statistical methods, and were content with deterministic estimates of life cycle costs instead of using sensitivity analyses.

Research limitations/implications

This review is limited to reported LCC applications only. Further research is encouraged in the form of a field‐based multiple‐case study to reveal context‐specific dimensions of LCC analysis and implementation challenges in more detail.

Practical implications

This review highlights the difficulty of conducting a reliable LCC analysis, and points out typical problems that should be carefully considered before drawing conclusions from the LCC analysis.

Originality/value

First systematic analysis of LCC applications that gives directions for further research on the LCC concept.

Details

Managerial Auditing Journal, vol. 23 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

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