Costing

Only available on StudyMode
  • Download(s) : 130
  • Published : December 15, 2012
Open Document
Text Preview
TOTAL ASSET MANAGEMENT

Life Cycle Costing
Guideline

September 2004

TAM04-10

Life Cycle Costing Guideline
September 2004
TAM04-10

ISBN 0 7313 3325 X (set)
ISBN 0 7313 3272 5

1.
2.
3.
I.

Asset management – New South Wales.
Capital Investment.
Public administration – New South Wales
Title. (Series : TAM 2004)

 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the NSW Treasury. Requests and inquiries concerning reproduction and rights should be addressed to: NSW Treasury

The Executive Officer, Level 27 Governor Macquarie Tower 1 Farrer Place Sydney NSW 2000 General inquiries concerning this document should be initially directed to: Arthur Megaloconomos (Tel: 9228 4402 or E-mail: Arthur.megaloconomos@mail.treasury.nsw.gov.au) of NSW Treasury.

This publication can be accessed from the Treasury’s Office of Financial Management Internet site [http://www.treasury.nsw.gov.au/].
For printed copies contact the Publications Officer on Tel: 9228 4426. Set consists of:
ISBN 0 7313 3254 7
ISBN 0 7313 3260 1
ISBN 0 7313 3266 0
ISBN 0 7313 3272 5
ISBN 0 7313 3278 4
ISBN 0 7313 32849
ISBN 0 7313 32903
ISBN 0 7313 32962

Asset Information Guideline TAM04-7
Demand Management Guideline TAM04-8
Heritage Asset Management Guideline TAM04-9
Life Cycle Costing Guideline TAM04-10
Post Implementation Review Guideline TAM04-11
Risk Management Guideline TAM04-12
Sustainable Development Guideline TAM04-13
Value Management Guideline TAM04-14

Further publications are also available in this series on the following topics: ISBN 07313 33314
ISBN 07313 33373
ISBN 07313 3230X
ISBN 07313 32369
ISBN 07313 32423
ISBN 07313 32482

Asset Strategy Planning TAM04-1
Capital Investment Strategic Planning TAM04-2
Asset Maintenance Strategic Planning TAM04-3
Asset Disposal Strategic Planning TAM04-4
Office Accommodation Strategic Planning TAM04-5
Total Asset Management Template TAM04-6

Additional publications also available in this series on the following topics:

ISBN 07313 3302 0
ISBN 07313 3308 X
ISBN 07313 3314 4
ISBN 07313c3320 9

Total Asset Management Capability Tool TAM04-15
Total Asset Management Capability Tool - Snapshot Capability Review TAM04-16
Total Asset Management Capability Tool - The Guide to Conducting a Full Capability Review TAM04-17
Total Asset Management Capability Tool- The Capability Review Report Kit TAM04-18

TABLE OF CONTENTS
1.

Introduction

1

1.1

Why use Life Cycle Costing

1

1.2

What is Life Cycle Costing

1

1.3

Distribution of assets over the asset life cycle

2

1.4

Linkages with Total Asset Management

3

2.

Modelling life cycle costs

4

2.1

Life Cycle Costing models

4

2.2

Life Cycle Costing breakdown into asset cost elements

4

2.3

Estimating asset cost elements

4

3.

The Life Cycle Costing process
3.1

Overview

Appendix A

The concept of discounting and its application

TAM – Life Cycle Costing Guideline

6
6
13

i

LIFE CYCLE COSTING - GUIDELINE
1

Introduction

1.1

Why use Life Cycle Costing?

The determination of costs is an integral part of the asset management process and is a common element of many of the asset manager’s tools, particularly Economic Appraisal, Financial Appraisal, Value Management, Risk Management and Demand Management.

In the past, comparisons of asset alternatives, whether at the concept or detailed design level, have been based mainly on initial capital costs.
Growing pressure to achieve better outcomes from assets means that ongoing operating and maintenance costs must be considered as they consume more resources over the asset’s service life. For example, the operating costs of a hospital consume an equivalent of the capital cost every two to three years and can continue to do so for forty years or more. The...
tracking img