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Life Cycle Cost (LCC) is the total cost of acquisition and ownership of a system over its full life, including the cost of planning, development, acquisition, operation, support, and disposal.
LCC also called Whole Life Costing is a technique to establish the total cost of ownership. It is a structured approach that addresses all the elements of this cost and can be used to produce a spend profile of the product or service over its anticipated life-span. The results of an LCC analysis can be used to assist management in the decision-making process where there is a choice of options.
There are 4 major benefits of LCC analysis:
Evaluation of competing options in purchasing;
Improved awareness of total costs;
More accurate forecasting of cost profiles; and
Performance trade-off against cost.
The cost of ownership of an asset or service is incurred throughout its whole life and does not all occur at the point of acquisition: