LCC- Life Cycle Cost and RAMS. Strategies for decision-making


LCC is the set of studies evaluating the TOTAL cost of a product, system or installation, taking into account not only its purchase value (CAPEX, Capital Expenditures), but also its total cost to be used (OPEX, Operating Expenses): cost of its maintenance, cost of its spare parts, cost of dismantling, cost of keeping the installation in degraded mode of operation, penalties for having the system out of service, etc. Thus, LCC and RAMS allow the REAL evaluation of the acquisition of an asset.

To this day, reality is that total cost of life cycle is rarely used to make corporate decisions, this type of information is not used (neither requested by the client nor calculated by the supplier). Also, even in companies or sectors where RAMS engineering is actively managed, it is easy that LCC is not used under no circumstances.

The objective of the LCC is to allow a rigorous and objective decision-making: comparing the total cost of different investment alternatives, identifying the real cost drivers and being able to evaluate optimizations or improvements that will maximize the impact on the company's operating account.

The experience of Leedeo is that, in fact, a better technical solution will usually present a larger initial investment, but it will significantly reduce operational costs. In this way, the decision-making being based solely on the initial investment will be incorrect in many cases.

Leedeo Engineering offers its customers knowledge, services and tools/ calculation templates related to the rigorous calculation of LCC - life-cycle cost of its products, systems or facilities.