Lifecycle Cost Analysis

Lifecycle Cost Analysis is a method of assessing which asset option, will be the most economical over an extended period of time.

International Infrastructure Management Manual

The International Infrastructure Management Manual defines Lifecycle Cost Analysis as any technique which allows assessment of a given solution, or choice from among alternative solutions, on the basis of all relevant economic consequences over the service life of the asset.

Methodology

To calculate the Lifecycle Cost of an asset all cashflows, both positive (inflows) and negative (outflows) need to be identified for each year of the useful life of the asset.
Cashflows should be stated in actual cash terms, that is all costs and incomes are at the levels expected in that year. No allowance should be made for inflation.

Outflows

There are probably 4 main outflows to consider:

Cost of Construction
Maintenance Expenditure
Operational Expenditure
Cost of Disposal

The above costs will vary greatly depending on the type of asset being considered.

The table below shows typical annual maintenance & operational costs expressed as a percentage of the capital cost of a range of asset types.

Type of Asset		Average Annual Maintenance Cost	Average Annual Operational Cost
Bridges		0.1% - 0.5% ^*
●	Major Culverts
●	Pedestrian Bridges
●	Road Bridges
Buildings		0.7% - 4% ^*	0.3%
●	Administration Buildings
●	Aquatic Centres	1.1%	13.9%
●	Kindergartens
●	Halls
●	Museums	0.6%	9.7%
●	Sports Pavilions
●	Theatres	0.2%	10.5%
●	Toilet Blocks
Car Parks		0.2%-2.5%	5%
Drainage		0.10% - 0.4% ^*	1%
●	Retention Basins
●	Stormwater Drains	0.8%
●	WSUD Assets	0.5%-20%
Footpaths		0.1% - 1% ^*
●	Asphalt Footpaths
●	Concrete Footpaths
Parks and Open Space		5%-10% ^*	4%
●	Barbecues	22.5%	22.5%
●	Playgrounds
Roads		0.5%-0.6% ^*	0.7%
●	Rural Sealed Roads
●	Urban Sealed Roads
●	Unsealed Roads

Notes:

For the moment the table is based on very limited data and should be referred to with caution, but it could eventually become a good starting point for anyone looking at lifecycle costs for the first time, provided a few councils start contributing data to it.
Annual building maintenance & operational costs may be a function of a building's NABERS rating.

Collaborators

The following people have indicated (via the Local Government Collaboration Topics Survey) that they have an interest and/or expertise in the topic of 'Lifecycle Cost Analysis' and are willing to collaborate with their peers at other councils to identify challenges and resources relating to the topic and to look for ways to work together to overcome any challenges that are identified.

Brent Heitbaum (Gannawarra Shire) ^E
Chris Saunders (Glenelg Shire)
Darren Dumesny (Moyne Shire)
David Goldie (City of Greater Geelong) ^EL
David Gyford (West Wimmera Shire)
Indivar Dhakal (Loddon Shire)
James Meakes (City of Busselton) ^E
Johnathon Roach (Open Spatial) ^EL
Kamal Ranaweera (City of Logan)
Kylie Sergi (Rural City of Mildura)
Michael Constantinou (Banyule City Council) ^EL
Mohammad Rashid (City of Banyule)
Robert Powell (Banyule City Council) ^E
Will Repic (City of Maribyrnong)

Contributors

The following site members have contributed to this page:

Wayne Eddy

External Links & References

LGAM Knowledge Base

Local Government Knowledge Sharing