LIFE CYCLE COSTING

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The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff

• LIFE CYCLE COSTING
• A Tool for Energy Efficient Procurement

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Overview
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff

• What is Life Cycle Costing?
• Why should my Local Authority use it?
• How can my Local Authority use it?
• What are its limitations?
• Where can I find out more?

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What is Life Cycle Costing?
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff

• Life Cycle Costing (LCC) is a methodology that
  enables
• you to incorporate costs and benefits that occur
  over
• the lifetime of a product into your procurement
• decisions rather than considering the initial
  capital
• cost of a product only.
• Costs and benefits e.g. energy consumption,
• replacement of equipment or parts, consumables
  and
• disposal they all affect the ultimate price,
  yet are rarely
• considered when selecting a product!

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Why should my Local Authority use it?
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff

• There are many benefits for Local Authorities in
  using Life
• Cycle Costing on a systematic basis
• It can save you money
• It can reduce the time and effort involved in
  frequently replacing equipment
• It supports the purchase of better quality
  equipment
• It encourages more logical decision-making
• It supports local sustainable development
• In summary, life cycle costing supports your
  responsibility to the community to use public
  funds wisely and sustainably

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Example 1 energy efficient lighting
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff
Standard 60W 0.50 X10 5
Energy efficient 12 W 1 x 10 10
Energy efficient 20 W 5 x 10 50
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Results NPV, Energy CO2
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff
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The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff
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How can my Local Authority use Life Cycle
Costing?
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff

• Identify types of procurement for which LCC is
  appropriate (e.g. buildings, energy and water
  using equipment).
• Identify staff responsible for procurement of
  equipment where LCC can be applied.
• Incorporate a requirement for LCC into your
  procurement policy so that it becomes a
  systematic part of the procurement process.
• Provide training in use and benefits of Life
  Cycle Costing.
• Gain experience in using LCC, and adapt it for
  your needs.

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Limitations
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff

• LCCA only takes account of the costs and benefits
  that accrue during
• Your ownership of the equipment, unlike Whole
  Life Costing / Life Cycle
• Impact Assessment in which the social and
  economic benefits
• related to its entire life-time are considered,
  e.g.

Typical coverage of life-cycle cost analysis

• Source http//www.dk-teknik.dk/ydelser/miljo/LCA
  20guide/3rd_ed/faq5.htm

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How can I find out more?
The DEEP Toolkit. TOOL 2.c. Life Cycle Costing
Guide for Senior LA Staff
DEEP http//www.iclei-europe.org/deep

• Contains
• Life Cycle Cost
• Analysis Tool
• Training materials for Procurement Staff
• Information on Procura Campaign you can join!
• Plus
• Other tools to support energy efficient public
  procurement

The sole responsibility for the content of this
publication lies with the authors. It does not
necessarily reflect the opinion of the European
Communities. The European Commission is not
responsible for any use that may be made of the
information contained therein