LCC is a method of evaluating all the costs associated with acquisition, construction and operation of a project. LCC was designed to minimize costs of major projects, not only in consideration of acquisition and construction, but especially to emphasize the reduction of operation and manitenance costs during the project life.
Many authors devote less than one page to the subject.
The reason for this is that LCC has some major drawbacks. The first of these is that costs over the life of the project must be estimated based on some forecast, and forecasts have been proven to be highly variable and frequently inaccurate. The longer the life cycle, the more inaccurate annual costs become becuaseof the inability to forecast accurately. This chapter on engineering cost analysis is designed to provide a basic understanding and the elementary skills to complete a preliminary LCC analysis of a proposed project. The time value of money is discussed and mathematical formulas for dealing with the cash flows of a project are derived.