Concept reference

Life-Cycle Cost

C.1Plain-language definition

Life-cycle cost puts costs occurring on different dates onto one economic basis. A larger force main may cost more now and save pump energy for decades; a cheaper pump may consume more power or require earlier renewal. The calculation informs a decision only when service, reliability and analysis period are comparable.

C.2Governing relation or decision logic

For a real discount rate r, present value is PV = C0 + Σ Ct/(1+r)t. Use nominal cash flows with a nominal discount rate or real cash flows with a real rate—never one of each. Energy cost follows annual kWh times a documented tariff/escalation scenario.

C.3The failure to name

A single distant forecast presented without sensitivity implies false precision. Omitting replacement timing, demand growth or differing residual life can reverse the apparent winner; monetising reliability weakly is not cured by adding more decimals.

C.4Field review checklist

• Use a common service requirement, analysis date, horizon and price basis.
• Include capital, energy, maintenance, renewal, downtime and residual value where material.
• Document duty cycle, growth, efficiency degradation, tariffs and discount/escalation treatment.
• Test sensitive variables and show non-cost constraints separately.

C.5Where it fits in the course

§7.5 builds the economic comparison; §7.6 applies it to pipe diameter.