This presentation introduces the reader to the concept of life cycle costing (LCC) and its current status and latest developments. Presented by Christine Storry - PIPEN Project Manager

1. Life Cycle Costing
Presented by
Christine Storry – PIPEN Project Manager
South West England

2. Sustainable Procurement –
to recap
Social
Workers’ rights
Ethical issues
Fair pay
Economic
Local economy
Life cycle costs
Employment
Environmental
Air quality
Water use
Energy

3. Direct LCC
Commonest LCC includes
• (a) costs, borne by the contracting
authority or other users, such as:
 (i) costs relating to acquisition,
 (ii) costs of use, such as
consumption of energy and other
resources,
 (iii) maintenance costs,
 (iv) end of life costs, such as
collection and recycling costs
(Article 68 EU Procurement Directive 2014)

4. Example of costs
Examples of costs:
• Purchase price, leasing costs
• Staff to operate machinery
• Training required
• For MFDs – inclusion of toners and
disposal of old cartridges
• Maintenance costs and requirements
can increase as a product gets older
• Spare parts – cost and availability
• End of life costs can also be positive if
there is a re-sale value

5. LCC Direct + Externalities
Clause (a) (as before)
+
(b) costs imputed to environmental
externalities linked to the product, service or
works during its life cycle, provided their
monetary value can be determined and
verified; such costs may include the cost of
emissions of greenhouse gases and of other
pollutant emissions and other climate change
mitigation
(Article 68 EU Procurement Directive 2014)

6. Mandatory common
method
• Whenever a common method for the
calculation of life-cycle costs has been
made mandatory by a legislative act of
the Union, that common method shall
be applied for the assessment of life-
cycle costs.
• Clean Vehicles Directive – currently
only mandated method
(Article 68 EU Procurement
Directive 2014)

7. Why is LCC important?
Encouraging analysis of business requirements
Making better informed decisions
Resulting in more robust contracts
Specifically allowed for in the 2014 Directive
Good financial and procurement sense to do so

8. LCC in the tender process
• Assess real cost of
alternative options
• Determining the
scope of the tender
• Needs assessment
• Market engagement
– what’s on offer
• Best options for your
organisation against
priorities
Tender Planning
• Comparing life cycle
costs on bids
• Comparing like-for-
like
Tender Evaluation

9. LCC in tendering
Various conditions are mandatory if using LCC:
In tender documents, state the LCC
methodology being used. MUST include:
– (a) be based on objectively verifiable
and non-discriminatory criteria;
– (b) be accessible to all interested
parties;
– (c) not require more than a reasonable
effort from bidders in terms of data
submission; and
– (d) follow any common, mandatory EU
method for calculating LCC which
applies in the sector

10. Choosing LCC methodology
• No methodology mandated (except
Clean Vehicles Directive)
• Various ones exist and publicly
available
• Can devise own methodology but must
ensure that:
 It is transparent
 All bidders can provide the
requested information
 The public body has the ability to
assess and verify the information
requested and received

11. Barriers
Lack of
expertise
Lack of
awareness
Too many
tools
Don’t care
Not enough
time planned
in the process
“takes too
long to do”

12. Mitigation

Don’t
reinvent the
wheel
Peer
learning
Experience
Engage
other teams
Early supply
market
engagement

13. South West England
© 2017, UWE Bristol
www.uwe.ac.uk