ASTM_E_2453_-_13.pdf

Designation:E245313Standard Practice forDetermining the Life-Cycle Cost of Ownership of PersonalProperty1This standard is issued under the fixed designation E2453;the number immediately following the designation indicates the year oforiginal adoption or,in the case of revision,the year of last revision.A number in parentheses indicates the year of last reapproval.Asuperscript epsilon()indicates an editorial change since the last revision or reapproval.INTRODUCTIONHistorically,the financial and property management communities have considered the“cost”of anitem or group of items to be the acquisition value of the item(s),that is,the value/cost of an item isgenerally based upon the amount of money paid for the item,irrespective of the many and varied costsassociated with the full life cycle.There are more appropriate models than the historical model forvaluing property.However,for the purpose of this practice on life-cycle costing(LCC),one shouldconsider that in addition to the initial procurement costs,there are myriad costs required to support,maintain,operate,and dispose of the item(s).This practice on LCC provides an accepted methodologyfor calculating and summing those costs and provides a true total cost of ownership that helpsmanagement make more informed and better acquisitions decisions.1.Scope1.1 This practice covers the establishment of a processconsensus model for determining the life-cycle cost(LCC)ofpersonal property assets owned or used by an entity.1.1.1 For businesses,these personal property assets arerequired to achieve financial returns from producing andselling goods or services,or both.1.1.2 For institutions and agencies,these personal propertyassets are required to accomplish their primary mission.1.2 Real and personal property assets may include capital(fixed)assets and movable,durable assets including:customer-supplied assets,rental/leased assets,contract/project direct-purchased assets,or expense items.1.3 Asset service lives can be divided into three distinctstages,each with several separate yet interrelated substages:acquisition,utilization,and disposition.These primary stagesare not intended to be all encompassing,but are offered as thebasis for establishing LCC.1.4 This standard does not purport to address all of thesafety concerns,if any,associated with its use.It is theresponsibility of the user of this standard to establish appro-priate safety and health practices and to determine theapplicability of regulatory limitations prior to use.2.Referenced Documents2.1 ASTM Standards:2E2135 Terminology for Property and Asset ManagementE2279 Practice for Establishing the Guiding Principles ofProperty Management3.Terminology3.1 Definitions:3.1.1 calibration,nact of standardizing or determining thedeviation from a standard so as to ascertain the propercorrection factors.3.1.2 life-cycle cost(LCC),nsum of all known materialcosts associated with an item or group of items and these costsinclude not only the acquisition value,but also activitiesrelated to an item from acquisition through utilization anddisposition.Sometimes referred to as TCO(see 3.1.6).3.1.3 personal property,ntangible property other thanland;3in law,the tangible,movable property of an individual,exclusive of land and including items such as automotivevehicles,boats,and money.3.1.3.1 DiscussionSoftware(intellectual property)is con-sidered personal property.1This practice is under the jurisdiction of ASTM Committee E53 on AssetManagement and is the direct responsibility of Subcommittee E53.03 on FinancialManagement.Current edition approved July 15,2013.Published July 2013.Originallyapproved in 2005.Last previous edition approved in 2005 as E245305.DOI:10.1520/E245313.2For referenced ASTM standards,visit the ASTM website,www.astm.org,orcontact ASTM Customer Service at serviceastm.org.For Annual Book of ASTMStandards volume information,refer to the standards Document Summary page onthe ASTM website.3Definition from Encarta World English Dictionary(North American Edition),Microsoft Corp.,2004.Copyright ASTM International,100 Barr Harbor Drive,PO Box C700,West Conshohocken,PA 19428-2959.United States1 3.1.4 preventative maintenance,nregularly scheduled pe-riodic maintenance activities on selected equipment that typi-cally includes inspection,lubrication,and minor adjustment.3.1.5 property,nsomething or a number of things in whichone has the rights and interests subject to ownership includingboth tangible and intangible property(see TerminologyE2135).3.1.5.1 DiscussionFor the purposes of this practice,prop-erty includes,but is not limited to,capital(fixed)assets,customer-supplied assets,rental/leased assets,contract/projectdirect-purchased assets,or expense items.Generally,propertydoes not include finished goods,products,or services marketedor sold or intangible property(such as intellectual property,patents,and so forth).3.1.6 total cost of ownership(TCO),nanalogous to LCC;for clarity and consistency,this practice will use LCC exc