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Revision Date: February 03, 2011
Updated On: February 07, 2011
LCC analysis is an economic method for evaluating alternatives that are characterized by differing cash flows over the designated project design life. The method entails calculating the LCC of each alternate capable of satisfying the functional requirement of the project and comparing them to determine which has (have) the lowest estimated LCC over the project design life.
The LCC method is particularly suitable for determining whether the higher initial cost of an alternative is economically justified by reductions in future costs (for example, rehabilitation, or replacement) when compared to an alternative with lower initial costs but higher future costs. If a design alternative has both a lower initial cost and lower future costs than other alternatives, an LCC analysis is not necessary to show that the former is the economically preferable choice.
1.1 This practice covers a procedure for using life-cycle cost (LCC) analysis techniques to evaluate alternative corrosion protection system designs that satisfy the same functional requirements.
1.2 The LCC technique measures the present value of all relevant costs of producing and rehabilitating alternative corrosion protection systems, such as surface preparation, application, construction, rehabilitation, or replacement, over a specified period of time.
1.3 Using the results of the LCC analysis, the decision maker can then identify the alternative(s) with the lowest estimated total cost based on the present value of all costs.