construction and refurbishment of earthen irrigation channel banks

InvestigationDesignConstructionOperationMaintenanceRehabilitationDisposalFigure 13-1Life cycle cost visibility13.2.2 Objective of life cycle costingThe objective of collating the total costs of an asset from its inception to the end ofits life cycle, is to demonstrate which option or alternative course of action is themost cost effective. This is used as an input to design or acquisition decisionmaking or the appraisal of maintenance, rehabilitation or replacement optionsduring the various life-cycle phases of an asset.Rather than following a set standard, it may be more cost effective in a particularsituation, to adopt a simple low initial cost solution, with higher maintenance andreduced service life. Alternatively in another situation, a sophisticated high initialcost solution may well be justified when the longer service life, and lowermaintenance and replacement costs are analysed.The risk of over-investment if future demands or circumstances change also needsto be considered, particularly with relatively long life irrigation infrastructure.The taxation regime applying to an enterprise can also mean that faced with thesame situation, public and private enterprises may make different decisions.13.2.3 Why is life-cycle costing important?The total life cycle cost of an asset can exceed its initial capital cost, and a focus oninitial costs alone does not guarantee value-for-money. If decisions are madewithout proper analysis of the life-cycle costs, the initial saving may result inincreased expenditure through out the assets life or the initial cost may be higherthan necessary to achieve the required performance or service life. Theidentification of costs enables the decision-maker to balance capital costs, operationand maintenance costs and economic lives over the total life cycle.Construction and Refurbishment of Earthen Channel Banks August 2002 - Edition 1.0 13-3