{"id":6849,"date":"2021-03-11T15:27:10","date_gmt":"2021-03-11T15:27:10","guid":{"rendered":"https:\/\/swefc.unm.edu\/iamf\/?page_id=6849"},"modified":"2026-05-01T19:45:29","modified_gmt":"2026-05-01T19:45:29","slug":"life-cycle-costing","status":"publish","type":"page","link":"https:\/\/swefc.unm.edu\/iamf\/life-cycle-costing\/","title":{"rendered":"Life Cycle Costing"},"content":{"rendered":"

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Life Cycle Costing<\/h2>\n

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\"\"Life\u00a0Cycle\u00a0Cost is defined in the\u00a0American Water Works Association<\/span> (AWWA)\u00a0Asset Management Definitions Guidebook as\u00a0\u201cA methodology\u00a0that provides an estimate of the total capital,\u00a0operating, and maintenance costs of an\u00a0asset over its operating life. Relevant costs include planning, design, acquisition, installation, maintenance,\u00a0rehabilitation, financing, retirement\/ decommissioning\/\u00a0disposal\u00a0and any other costs directly attributable to\u00a0operating\u00a0or using an Asset.\u201d<\/span>\u00a0<\/span><\/p>\n

Life Cycle Costing is where strategic asset management \u2013 making decisions about the collective set of assets \u2013 meets managing assets \u2013 making individual decisions about each asset. Both aspects are important to a well-run, efficient, and effective system, and it is important to understand the\u00a0<\/span>difference between them<\/span>.\u00a0This\u00a0component\u00a0of Asset Management\u00a0requires strategically managing the entire system while also considering the most effective and efficient management for each individual asset as it\u00a0proceeds\u00a0through its life.\u00a0It is critically important during this\u00a0component\u00a0of asset management to examine the overall life of the asset and the costs associated with each\u00a0part\u00a0of that asset\u2019s life. It is also important to understand the assets\u2019 role as a part of the\u00a0larger processes and the treatment process in its entirety.\u00a0<\/span>\u00a0<\/span><\/p>\n

Optimal asset\u00a0Life Cycle Costing\u202frequires\u00a0the use of\u202fhistorical data such as\u202fcondition, performance, maintenance, risk, and cost. Therefore, data must be collected and\u00a0utilized\u00a0to drive the decision making of the system. Think about where existing data can be found and where future records should be kept.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

The phases of an asset\u2019s life cycle include\u00a0all the\u00a0decisions\u00a0or expenditures\u00a0that\u00a0are\u00a0\u00a0made\u00a0related to the asset. Therefore, it is important to recognize that an asset\u2019s life starts long before it is put into operation.\u00a0There are\u00a0phases in the life of an asset. These will be explained further in\u00a0subsequent\u00a0chapters.<\/span>\u00a0<\/span><\/p>\n

Life Cycle Phases<\/span><\/b>\u00a0<\/span><\/p>\n