Life-cycle cost is the cost arising from a machine, whether directly or indirectly, whether in the past or the present — together with all other costs arising from its design, its development, its manufacture, its use, its maintenance and its support.
LCC analysis
LCC analysis is deciding systematically on the purchase, the installation or the manufacture of a machine, a piece of equipment or a production process, so as to arrive at the choice that gives the best value and is the most economical.
- Step 1: Understand the need and the purpose behind buying or installing the machine
- Step 2: Gather the alternatives that could meet that purpose
- Step 3: Calculate the LCC of each alternative, taking the whole life cycle into account
- Step 4: Assess which alternative is the most economical, and conclude
- Step 5: Write the report of the LCC analysis
An example: a conveyor system
In choosing a conveyor system, the first thing is to understand the real need and purpose behind installing it — whether for the sake of moving material, or for the sake of controlling the balance of the line. Those two purposes lead to different conveyor systems.
Then gather the alternatives — which kinds of conveyor could meet that purpose — and take those alternatives to an LCC calculation, considering the cost of installation, the staff who will look after the system, maintaining it, its working life, the price of spares and so on. Then choose the system with the lowest LCC.
Considering maintenance from the design stage means considering the product, the machine and the process — with MP design as the principle for designing, and LCC as the criterion for deciding.