Life cycle cost

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Life cycle cost (LCC) calculations are used to select the design and the materials that will lead to the lowest cost over the whole life of a project, such as a building or a bridge.

The formula, in a simple form, is the following:citation needed

${\displaystyle \text{LCC}=\text{AC}+\text{IC}+\underset{n=1}{\overset{N}{\sum <!--\; \sum \; -->}}\frac{\text{OC}}{(1+i{)}^n}+\underset{n=1}{\overset{N}{\sum <!--\; \sum \; -->}}\frac{\text{LP}}{(1+i{)}^n}+\underset{n=1}{\overset{N}{\sum <!--\; \sum \; -->}}\frac{\text{RC}}{(1+i{)}^n}}$

where LCC is the overall life cycle cost, AC is the acquisition cost, IC the installation cost, OC the operating and maintenance costs, LP the cost of lost production due to downtime, and RC the replacement materials cost.

In addition, N is the planned life of the project, i the interest rate, and n the year in which a particular OC or LP or RC is taking place. The interest rate (i) is used to convert expenses from different years to their present value (a method widely used by banks and insurance companies) so they can be added and compared fairly. The usage of the sum formula ($\sum <!--\; \sum \; -->$) captures the fact that expenses over the lifetime of a project must be cumulatedclarification needed after they are corrected for interest rate.citation needed

Application of LCC in materials selection

Stainless steel used in projects often results in lower LCC values compared to other materials. The higher acquisition cost (AC) of stainless steel components are often offset by improvements in operating and maintenance costs, reduced loss of production (LP) costs, and the higher resale value of stainless steel components.citation needed

LCC calculations are usually limited to the project itself. However, there may be other costs that a project stakeholder may wish to consider:citation needed

• Utilities, such as power plants, water supply & wastewater treatment, and hospitals, cannot be shut down. Any maintenance will require extra costs associated with continuing service.
• Indirect societal costs (with possible political fallout) may be incurred in some situations such as closing or reducing traffic on bridges, creating queues, delays, loss of working hours to the people, and increased pollution by idling vehicles.