From Cost Guessing to Cost Mastery: Life Cycle Cost Analysis for Asset-Intensive Industries
Executive Summary
Equipment decisions based on purchase price alone are costing your organization millions in hidden ownership expenses.
Every year, organizations acquire assets based primarily on CAPEX comparisons, only to discover that 60–80% of total costs materialize after purchase—in maintenance, downtime, spare parts, energy consumption, and lost production. A pump that costs 15% less to buy may cost 40% more to own. A "reliable" compressor with attractive upfront pricing may hemorrhage revenue through unplanned shutdowns. These decisions aren't made by negligent people; they're made by capable professionals who lack the methodology to see the full cost picture before commitment.
The consequences compound across asset portfolios. Maintenance budgets spiral beyond forecasts. Production targets slip as equipment underperforms. Capital allocation debates become political rather than analytical. Organizations find themselves trapped in reactive cycles—fighting today's failures while unknowingly planting tomorrow's cost overruns with each new procurement decision.
This program transforms how your team evaluates, compares, and selects assets by teaching the complete ISO 15663 Life Cycle Costing methodology. Participants don't just learn concepts—they execute a full LCC analysis from scope definition through executive recommendation, building the muscle memory to apply these methods immediately upon return to work.
What makes this program different
- •Execution-based learning, not lecture-based exposure. Every concept is immediately applied through structured exercises. By Day 5, participants complete an independent capstone analysis proving they can perform LCC without instructor support.
- •Integrated RAM-to-revenue connection. Unlike generic cost estimation courses, this program teaches participants to model how reliability and availability directly translate into production loss and revenue impact—the hidden cost driver most analyses miss.
- •ISO 15663 aligned with practical adaptation. The methodology follows international standards while incorporating real-world shortcuts, data source strategies, and uncertainty handling techniques that make LCC feasible under typical project constraints.
- •Industry-specific application focus. Cases, data tables, and examples draw from oil & gas, process industries, and asset-intensive sectors where LCC delivers the greatest value—not generic textbook scenarios.
By the end of 5 days, participants will be able to
- •Define LCC analysis scope, constraints, and decision criteria aligned with organizational objectives
- •Build structured cost breakdown systems and populate them with defensible estimates from appropriate data sources
- •Execute FMECA to identify cost drivers and connect failure modes to financial consequences
- •Calculate system availability and translate downtime into revenue impact using RAM analysis
- •Construct auditable LCC models with discounting, sensitivity analysis, and uncertainty quantification
- •Present recommendations to decision-makers with clear documentation of assumptions, risks, and confidence levels
The return on 5 days
Consider a single major equipment decision—a compressor, turbine, or processing system with a $50M price tag. A 10% error in total ownership cost assessment represents $5M in misallocated capital or unexpected expenses. One properly trained analyst, applying LCC methodology to three such decisions annually, can prevent cost surprises that dwarf the training investment by orders of magnitude. Beyond individual decisions, organizations gain a repeatable capability: a common language and methodology for equipment evaluation that removes politics from procurement and replaces intuition with evidence.
This program doesn't teach you about Life Cycle Costing—it makes you someone who does Life Cycle Costing.
Program Structure: Day-by-Day
Building the Foundation (Framework & Scope)
Establish the methodology framework and define analysis boundaries that drive defensible decisions.
Value for Reliability Managers
- Receive a clear understanding of how LCC integrates with existing capital approval processes.
- Get visibility into why equipment decisions fail—and the organizational patterns that enable poor choices.
- Enable your team to challenge vendor claims with structured evaluation criteria.
- Reduce risk of post-purchase cost surprises through early scope definition discipline.
- Establish common vocabulary and decision criteria across engineering and finance functions.
Value for Reliability Practitioners
- Classify different economic evaluation methods (NPV, IRR, LCC) and select appropriate criteria for each decision type.
- Build scope definition documents that capture objectives, constraints, and assumptions.
- Identify the 'What are we looking at? Why are we looking at it?' questions that focus analysis effort.
- Execute option generation and screening using functional analysis techniques.
- Recognize the commitment curve principle: 80% of LCC is locked in during the first 20% of project life.
What Becomes Possible
By the end of Day 1, you can take any equipment evaluation request and transform it from a vague 'compare these options' assignment into a properly scoped analysis with clear objectives, documented constraints, defensible decision criteria, and a structured set of alternatives ready for detailed evaluation.
Summary of Content
Day 1 establishes why Life Cycle Costing matters and how to set up an analysis for success. Participants learn that ownership costs typically represent 60–80% of total expenditure—meaning purchase price comparisons capture only a fraction of the decision. The ISO 15663 four-step methodology (Diagnosis/Scoping → Data Collection → Analysis/Modeling → Reporting) provides the roadmap, while the commitment curve explains why early-phase decisions have disproportionate cost impact. Participants practice scope definition—articulating objectives, identifying constraints (project, technical, budgetary), selecting decision criteria, and documenting assumptions. The day concludes with option generation and screening techniques that ensure analysis effort focuses on viable alternatives rather than exhaustive enumeration.
Technical Topics
Prerequisites
Before Day 1, participants should be comfortable with:
- •Basic engineering concepts: Familiarity with equipment systems (pumps, compressors, rotating machinery) and general maintenance terminology
- •Spreadsheet proficiency: Ability to build formulas, use cell references, create charts, and navigate multiple worksheets in Excel or equivalent
- •Financial fundamentals: Understanding of concepts like interest rates, present value (conceptual), and budget structures—detailed calculation methods are taught in the program
- •Reliability awareness: Exposure to terms like failure rate, MTBF, and availability—formal reliability engineering background is helpful but not required
- •Technical reading: Ability to interpret equipment specifications, data tables, and technical documentation
- •Basic statistics: Comfort with mean, standard deviation, and probability concepts at an introductory level
Pre-program reading materials are provided two weeks before the course to refresh foundational concepts and ensure all participants start from a common baseline.
Who Should Attend
Reliability Engineers
seeking to connect technical analysis to financial decision-making and demonstrate equipment value in business terms.
Maintenance Managers
responsible for justifying maintenance budgets, spare parts investments, and equipment replacement decisions.
Project Engineers
involved in equipment specification, vendor evaluation, and procurement decisions for capital projects.
Asset Managers
accountable for total cost of ownership across equipment portfolios and seeking structured evaluation methods.
Operations Leaders
who approve capital expenditures and need to understand the full cost implications of equipment choices.
Program Materials
Comprehensive workbook
containing all module content, exercise templates, worked examples, and reference formulas.
Practice datasets
including realistic equipment reliability data, cost rate tables, and production profiles for all exercises.
LCC model templates
in Excel format with structured input/calculation/output architecture ready for workplace adaptation.
Digital reference library
with ISO 15663 excerpts, OREDA data samples, and supplementary technical readings accessible for 12 months post-program.
Delivery Options
| Format | Duration | Best For |
|---|---|---|
| Full Program | 5 days (40 hours) | Complete skill development with capstone certification |
| Intensive Program | 4 days (32 hours) | Experienced analysts needing methodology refresh; capstone condensed |
| Essentials Program | 3 days (24 hours) | Managers and stakeholders needing LCC literacy without full execution capability |
The Full Program is recommended for practitioners who will perform LCC analyses. The Intensive Program suits experienced engineers with existing RAM backgrounds who can accelerate through Day 3 content. The Essentials Program provides decision-makers with sufficient understanding to commission, review, and act on LCC analyses performed by others—without requiring independent execution capability.
"This program doesn't teach you about Life Cycle Costing—it makes you someone who does Life Cycle Costing."