What is Life-Cycle Costing?

Abstract

An evolution in public procurement is underway. One of the major novelties in the EU public procurement law is the introduction of a life-cycle costing (LCC) approach in the evaluation of the most economically advantageous tender. This novelty is not a coincidence but goes hand in hand with the rise of what is called sustainable public procurement – a broad concept that must consider the three pillars of economic (in)equality, social welfare and public health and environmental responsibility when initiating public tenders and finalizing government contacts.

This short introductory chapter attempts to answer the question of ‘What is life-cycle costing?’ We will first describe the narrative of LCA on which modern LCC is partially based. This chapter then defines LCC and discusses related and more or less similar terms such as WLC, TCO, E-LCC and S-LCC, in an attempt to standardize terminology throughout the other chapters in this edited volume. This first chapter is therefore primarily descriptive, endeavouring to create a common ground for proceeding chapters.

Keywords: life cycle costing, life cycle assessment, procurement