How Important is Life Cycle Costing Assessment in Project Management?04 July 2019
Life Cycle Costing Assessment is a tool used by engineering consultants to extrapolate the incurred costs of a chosen infrastructural system over all the phases of its working existence. Using LCCA estimates, an asset controlling officer makes acquisition choices, creates capital expenditure outlay tables, and analyses system operating expenses. In effect, this finance-savvy expert uses existing process behaviour patterns to project system life cycles.
More Than a Spreadsheet Issue
A project management strategy can be fuelled for quite some time by financial numbers. The costs of equipment, the interest rates incurred during the operational lifespan of an infrastructure branch, the expenditures levied during repair/replacement activities, all of these lines of tabulated information and budgetary data collate on a lengthy spreadsheet. But there’s more to an engineering process than fiscal responsibility. A technical services agency uses the data differently. They use the maintenance and repair-collected information to extrapolate system life cycles.
LCCA Computed Life Cycle Costing
With an annual repair/replacement budget fixed, the authority in charge of a citywide wastewater system hopes there’s enough money in the city coffers to weather the coming storm. Only, that’s not a realistic way of conducting business. No, instead of the coin-toss, hit-and-hope approach, the department contacts a consulting engineer, who is equipped with a number of spreadsheet suites. Moreover, the engineering team has access to a Life Cycle Costing Assessment model. Using this tool, the service extrapolates and projects the lifespan of the various waterway components, all while simultaneously computing the costs needed to support this repair/maintenance model. For example, if a transient spike appears in the computer model, a system node is probably no longer viable. Based off of the maintenance data and repair costs, a replacement element is a more practical option.
Another advantage of LCCA modelling is the solution comparing feature. Having projected a costs life cycle with one set of constants and variables, it’s possible to reverse course and alter those functions on-the-fly. For instance, a set of pumps, a chosen concrete mix, and a designed waste capturing strategy are all priced and laid out logically on a costing chart. Now, with the extrapolation done, what if the model plugs in a different set of wastewater processing elements. Perhaps the pipe diameter widens, or maybe a pump is added at some strategically important avenue along the wastewater line. With the life cycle costing assessment model still active, the new system layout is plugged in, then the projections are run again. The new costs are added to the spreadsheet so that the customer can compare the flow and cost differences.
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