ASTM_E_2453_-_19.pdf

Designation:E245319Standard Practice forEstimating the Life-Cycle Cost of Ownership of PropertyAssets1This 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.INTRODUCTIONThe purpose of this practice is to establish organizational processes to achieve on high-valueproperty assets the outcome of reliable reporting of the life-cycle cost of property assets for gooddecision-making purposes.Historically,and frequently,the financial and property managementcommunities have considered the“cost”of an item or group of items to be the acquisition value orhistorical cost of the item(s).Unfortunately,when only acquisition cost is considered rather than anestimated life-cycle cost of ownership,users may find other operating costs were not considered anda new item may be too expensive or inconvenient to use.If operating cost is substantially less,management may take the opportunity to plan and make further operational adjustments.Better assetmanagement decisions are made when estimated life-cycle costs are considered along with theacquisition cost.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(actual or estimated)required to support,maintain,operate,and dispose of the item(s).This practice on LCC provides anaccepted methodology for calculating and summing those costs and provides a true total cost ofownership that helps management 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)ofproperty assets owned or used by an entity.1.1.1 For businesses,these property assets are required toseek to achieve financial returns from producing and sellinggoods or services,or both.1.1.2 For institutions and agencies,these property assets arerequired to accomplish their primary mission.1.2 Real and personal property assets may include capital(fixed)assets and movable assets including customer-suppliedassets,rental/leased assets,contract/project direct-purchasedassets,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 practice is expected to be primarily used forconsidering the life-cycle cost of personal property,however,the concept can and should be used for various types of assetsincluding personal,real,tangible,and intangible.1.5 This practice does not supersede applicable generallyaccepted accounting principles but is intended to be consistentwith the accounting principles particularly in the area ofinternal controls(see the GAO Green Book)and processes andrequirements for estimating.Some life-cycle cost estimatingmay be required for accounting purposes.(See AS 2501.)1.6 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,health,and environmental practices and todetermine the applicability of regulatory limitations prior touse.1.7 This international standard was developed in accor-dance with internationally recognized principles on standard-ization established in the Decision on Principles for the1This 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 May 1,2019.Published June 2019.Originallyapproved in 2005.Last previous edition approved in 2013 as E245313.DOI:10.1520/E245319.Copyright ASTM International,100 Barr Harbor Drive,PO Box C700,West Conshohocken,PA 19428-2959.United StatesThis international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for theDevelopment of International Standards,Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade(TBT)Committee.1 Development of International Standards,Guides and Recom-mendations issued by the World Trade Organization TechnicalBarriers to Trade(TBT)Committee.2.Referenced Documents2.1 ASTM Standards:2E2135 Terminology for Property and Asset ManagementE2279 Practice for Establishing the Guiding Principles ofProperty Asset Management2.2 Other Documents:ASC 410 Asset Retirement and Environmental Obligation3AS 2501 Auditing Accounting Estimates4GAO-14-704G Standards for Internal Control in the FederalGovernment(the“Green Book”),20145ISO 55000 Ass