Training overview

Life cycle costing answers a question that a purchase price cannot: what an asset, a contract, or a decision will actually cost over its whole life. This program builds that capability end to end — setting the boundary and analysis period, assembling the cost breakdown structure, discounting correctly, testing what the answer depends on, and reporting a recommendation in a form the organisation can act on.

The emphasis throughout is on the work as it is actually done. Most studies fail long before the arithmetic: the wrong question framed, alternatives that were never comparable, the deciding figure taken from a supplier submission and never substantiated. The program treats those as the substance rather than as caveats.

Target audience

The program suits professionals who build, review, or act on whole-life cost figures:

• Cost and project engineers
• Asset management and reliability engineers
• Procurement and category managers running whole-life evaluations
• Financial analysts and business case owners
• Maintenance and operations managers
• Sustainability professionals connecting environmental and cost analysis

What participants will be able to do

• Set a perspective, boundary, functional unit, and analysis period, and state which costs belong to whom
• Build a cost breakdown structure and a total cost of ownership taxonomy that survives review
• Discount correctly — real against nominal, differential escalation, mid-year against end-of-year convention
• Compute and interpret net present cost, equivalent annual cost, IRR, MIRR, and payback, and know where each fails
• Determine economic replacement age from the equivalent annual cost curve
• Plan data collection by influence on the answer rather than by ease of access, and grade the evidence behind each line
• Normalise supplier scopes and publish an evaluated cost formula before bids are opened
• Run one-way and two-way sensitivity, build a tornado on the decision margin, and report switching values
• Distinguish risk, uncertainty, and ignorance, and select a treatment that matches
• Write a recommendation that leads with the finding, states its dependency, and converts residual doubt into an action

Program structure — thirteen parts

The curriculum runs from method through mathematics to application. Each part builds on the one before it, and the industry parts apply the whole to a sector.

1. Part I Foundations of life cycle costing What LCC is and is not; perspective, boundary, and the costs that belong to you; life cycle stages and the cost breakdown structure; the functional unit and the analysis period; standards and methodological families and where they disagree; LCC set against accounting, budgeting, and project controls.
2. Part II Total cost of ownership What TCO means and how it differs from LCC at the boundaries; building a TCO cost taxonomy; the ownership cost elements in full across eight element groups, each with its estimating basis and its characteristic trap; normalising alternatives so a comparison is fair; TCO metrics and decision rules; a complete multi-year TCO case.
3. Part III Engineering economics Time value of money and factor notation; real against nominal analysis; differential escalation; annuities and gradients as special cases of one relation; equivalent annual cost and economic replacement age; NPV, IRR, MIRR, and payback compared, with the failure modes of each.
4. Part IV Financial mathematics Summation notation and the full model equation, nested over alternatives, assets, categories, cost lines, and periods; index sets defined precisely enough that two people implement them identically; elasticities and contribution analysis; the mathematics of replacement and economic life.
5. Part V Financial data and evidence Planning data collection in order of influence rather than convenience; the placeholder first pass; evidence grades A to D and proportionate targets per line; supplier figures and the systematic corrections applied to them; currency, indices, and cross-border data without embedding an exchange-rate bet in the model.
6. Part VI Procurement and supplier decisions Publishing the evaluation method before prices are seen; the evaluated cost formula and which parameters the buyer sets; scope normalisation; pricing service, warranty, and support differences as cost lines rather than scoring-matrix points; handling missing, non-compliant, and qualified figures.
7. Part VII Decision analysis Framing the decision and generating alternatives — where the largest errors occur, before any arithmetic; decision statements that name a person, a choice, a deadline, and a constraint; multi-criteria methods and the conditions they impose; keeping commercial and sustainability criteria distinct rather than blended into one score.
8. Part VIII Risk, uncertainty, sensitivity, and scenarios Classifying an unknown as risk, uncertainty, or ignorance, and selecting a treatment that matches; one-way and two-way sensitivity; tornado diagrams built on the decision margin rather than the total; switching values; expected value of information; scenario construction; communicating uncertainty without false precision or uselessness.
9. Part IX Asset management and reliability economics Cost as a consequence of reliability, maintainability, and supportability; maintenance interval optimisation; spares, inventory, and obsolescence — the hold-or-not calculation and full carrying cost; availability and downtime valuation; decommissioning, disposal, and residual value kept as two gross lines rather than one netted figure.
10. Part X Implementation and governance Why technically sound studies go unused; implementation barriers and how they are removed; renewal planning and capital programme decisions across a portfolio; benefits realisation and post-implementation review; feeding realised outcomes back into estimating assumptions.
11. Part XI Reporting and communication Recommendation first, basis second, robustness third, conditions fourth — the reverse of the order the work was done in; one study with three front pages for engineering, finance, and executive readers; reporting to the precision the inputs support; the four predictable challenges and their prepared answers.
12. Part XII Industry applications The method applied by sector, including oil and gas, petrochemicals, manufacturing and production lines, buildings and facilities, and energy and power generation — levelised cost of energy with a correctly discounted denominator, capacity factor, degradation, and fuel and carbon exposure.
13. Part XIII Case studies Five complete studies worked end to end, including a refinery heat exchanger case — framing, alternatives, data collection, model, sensitivity, recommendation, and what each case teaches about where studies actually fail.

Training benefits

• Expert instructors — trainers with a working command of LCC principles and their practical application
• Tailored curriculum — the program is built around the specific needs of your organisation and industry
• Worked exercises throughout — 101 exercises with worked answers, applied to participants’ own projects where possible
• Sector case studies — real cases from oil and gas, petrochemicals, manufacturing, buildings, and power generation
• Continuing support — guidance from the DEISO team after the training ends