Life-cycle cost analysis (LCCA) is a method for assessing the total cost of a project or process. An LCCA allows a company to consider all options and compare both capital and operational costs to maximise net savings over the lifetime of the project.
Life-cycle cost analysis evaluates the costs of the project design which will provide the lowest overall cost of ownership consistent with quality and function.
When conducting an LCCA, the economic effects of alternative designs must be identified and quantified.
In accounting terms this is known as “Yield to Break Even,”:
- How long will it take before that energy gets paid back? Is investment paid back within in the product life expectancy?
Conducting an LCCA greatly increases the chances of choosing a project that saves money in the longer term.
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