Three Ways to Evaluate Life-Cycle Costs

You can evaluate life-cycle costs in three ways:

1. Cost comparison is that the present value for various alternatives. This comparison is predicated on net-present-value and appears at costs throughout the lifetime of each alternative.
2. Cost-effectiveness looks at each alternative choice on a cost-reduction basis, payback period, or per-use rate.
3. Cost/Benefit looks at each alternative choice, its initial costs and also the potential benefit to the organization, like downtime reduction, maintenance utilization, and proactive maintenance hours versus reactive maintenance hours.