Life Cycle Costs

Life Cycle Costs are defined as the sum of the fees and indirect costs in the purchase of a commodity, service or technology. Life Cycle Costing is used for procurements that involve the expenditure of funds for both the fees associated with the services to be procured (price) and costs associated with the introduction of the services into the environment (indirect costs). An example of the application of the Life Cycle Cost evaluation is the sum cost of the acquisition of a new computer environment (offer price) and the cost of a systems conversion necessitated by the installation of a new computer environment (indirect costs). These are also sometimes referred to as Total Cost of Ownership.