Financial-and-Managerial-chp-19-about-life-cycle-costing

In 100 words or more reply to statement below about life cycle costing

  • Life Cycle Costing is a method of economic analysis for all costs related to building, operating, and maintaining an energy conservation measure (ECM) project over a defined period of time. Assumed escalation rates are used to account for increases in utility costs over time. Future costs are expressed in present day dollars by applying a discount rate that reflects the value of money invested elsewhere. All costs and savings can then be directly compared and fully-informed decisions can be made.Decisions made to cut costs in the capital budget up-front can easily lead to greatly increased maintenance and utility costs, burdening for years and years to come.