Understanding the Basics of Life-Cycle Costing

Understanding the Basics of Life-Cycle Costing

Life-cycle costing helps determine the true cost of an expenditure over time. The basic premise of the formula is that a product's cost encompasses more than the initial expense. It is actually the initial price plus the cost to use and maintain the product divided by the number of years used. Maintenance, equipment, cleaning compounds, repairs, and labor are factors that affect a floor covering cost over its lifetime.

Here's the formula for life-cycle costing:

Initial cost + Removal costs in renovation + Cost of maintenance = Life-cycle cost
Years of use

Assign Values to the Formula

The price of carpet for a new building includes the initial carpet cost and the installation costs.
In a renovation, removing existing carpet should be included.
Maintenance costs include an estimate for time, labor, materials and equipment repairs a school district incurs while performing its routine program.
"Years of use" is calculated by determining how many years the carpet will be on the floor.