Business Assets · Lifecycle · Component
The lifecycle cost model
What an asset costs across its whole life, which is usually several times its purchase price.
The deliverable
What it is
Purchase price is the most visible cost and frequently a minority of the total. Maintenance, licensing, energy, training and disposal arrive afterwards, when the decision is already made.
Costing the whole life at the point of purchase changes the ranking of options often enough to justify the effort every time.
One level in
What it is made of
Each element is a constituent part of the component. Follow one to see the attributes it carries.
The acquisition cost
Everything spent to get the asset working.
3 attributes: Purchase price · Implementation · Time to productive use
LearnThe running cost
What the asset consumes per period once in service.
3 attributes: Annual running cost · Cost driver · Annual escalation
LearnThe end cost
What it costs to stop using the asset, net of anything recovered.
3 attributes: Disposal cost · Residual value · Exit time
Learn
Cost the exit at the point of purchase. Migration cost is why organisations keep systems well past their useful life.
The other components in lifecycle
The replacement schedule
When each asset is expected to be replaced, set at acquisition so that replacement is planned rather than triggered by failure.
LearnThe disposal procedure
What happens when an asset leaves — data, regulation, contracts and record, in an order that does not depend on who is doing it.
Learn