Life Cycle Costing in physical Asset Management: a multiple case study

Life Cycle Costing (LCC) is a powerful instrument in the Asset Management (AM) of physical systems. It is a valuable tool that can be used to support rational decision making and provide transparency and accountability about various operational, tactical and strategic AM decisions and their expected consequences. However, the application of LCC may not always be straightforward. In order to effectively use LCC in this context, it is important to further the understanding of the main challenges that practitioners face during the application of LCC in AM decision making. This publication summarizes the main descriptions and assumptions found in the literature on LCC into five postulates. These postulates are subsequently compared with empirical findings from four practical case studies within a Dutch utility provider on the use of LCC in AM decision making. Whereas some empirical findings agreed with the postulates, other findings were at least partially in disagreement, indicating inconsistencies between the theory of LCC and the practice of AM. The results suggest fundamental challenges in the use of LCC in AM, specifically regarding the objectives of using LCC and the scope of what is included in the assessment. Practitioners can use this article to avoid the pitfalls of using LCC in the context of AM and researchers can use the findings to guide further work on developing methods and tools that support AM