Life cycle costing. Advantages disadvantages and criticism of this procedure

Seminar paper from the year 2008 in the subject Business economics - Accounting and Taxes grade: 20 University of Glamorgan language: English abstract: Sustainability is developing in as important target for an increasing number of industries and governments. Especially in a faster moving world which is determined by quarterly period reports a long term orientation can be a competitive advantage for unlisted companies. In the 1960´s the US Department of Defense began to develop a tool to handle increasing costs. They recognized that the purchase price was not the only important criteria. Training or maintaining costs had to be considered for the total cost calculation too. However several definitions of Life cycle costing (LCC) exist that tend to be similar: 'monitoring the cost incurred throughout a product's life cycle' (Woodward 1997) or 'LCC is the sum of all costs incurred during the life cycle of a building system or product. It includes the costs of the project development and acquisition operation conservation and maintenance and salvage value if it exists.' (Goralczyk and Kulczycka 2005). In the following essay several functions of life cycle costing will be drawn up. Furthermore advantages disadvantages and criticism of this procedure will be analyzed.