Life Cycle Costing: Promoting Long-Term Thinking and Equitable Distribution of Resources in Asset Maintenance

The acquisition cost of an asset is just a portion of the total cost of owning it. Ongoing maintenance significantly adds to that cost; and for a long-lived asset, that cost can be much greater than the initial design, construction, and installation cost. Life cycle cost analysis considers the entire cost of owning the asset over its useful life. One of the primary benefits of life cycle costing for capital assets is that during initial asset acquisition, the analysis shows which asset is the most cost effective over the long term, not just which is the cheapest to acquire. In addition, after the asset has been acquired, life cycle cost analysis can be used to budget and plan for the most cost-effective maintenance strategies. This report looks at how San Francisco, California utilized life cycle cost analysis on pavement, and describes lessons learned from the city’s experience.