LCC Analyses are economic analyses used to evaluate the total cost of ownership of an asset, including cost of installation, operation, maintenance, conversion, and decommission, through applying different operating scenarios to a model.
Managers are able to use analyses to understand the cost of ownership of Assets or fleets of Assets over defined accounting periods or planned asset life. By comparing scenarios, LCC Analyses provide information to inform choices to optimize costs over the period defined in the Analysis. Cost information is presented in a range of categories to help managers determine which assets to buy, what maintenance strategies are most cost effective, and when replacement is necessary. Informed decisions can be based on a range of financial criteria for all scenarios in the analysis, presented in a chart format. Examples include Capital Costs, Operating Costs and Cashflow.
For Example, as a transportation manager, I would like to evaluate the costs of owning a fleet of trucks. Using an LCC Analysis, the company will keep a log of the use and maintenance of each truck in the fleet in order to determine the exact cost of each truck in the fleet and to know when replacement or decommission should occur.
Copyright © 2018 General Electric Company. All rights reserved.