In this example the value of the data you can gather directly corresponds to the quality of the analysis you are able to undertake. Better data will give you better analysis and more control over the pricing and valuation of future contracts.
To build a lifecycle cost you will need to be able to estimate costs, make projections and to conduct analysis over time. Below we outline an example of life cycle costing using multiple contracts.
The first part of any life cycle costing analysis requires an understanding of what to include in the costing analysis. Your goal is to be able to ascertain the total cost of purchasing and running an asset, so that you can compare the cost of making different choices. For instance, if you are costing the life cycle of a vehicle, you may wish to include the cost of fuel or you may decide that this cost is relatively constant regardless of the type of vehicle being purchased and exclude it.
The life cycle costing for a car might include the following:
Before you purchase a vehicle you may not have a list of payments for running an equivalent vehicle, so you can use estimates based on estimates.
Year one costs
Initial price = €60,000
Service costs = €2,000
Parts = €500
Fuel = €6,000
Road tax = €2,500
Insurance = €3,000
Estimated year one costs = €74,000