Designation:E2453−19StandardPracticeforEstimatingtheLife-CycleCostofOwnershipofPropertyAssets1ThisstandardisissuedunderthefixeddesignationE2453;thenumberimmediatelyfollowingthedesignationindicatestheyearoforiginaladoptionor,inthecaseofrevision,theyearoflastrevision.Anumberinparenthesesindicatestheyearoflastreapproval.Asuperscriptepsilon(´)indicatesaneditorialchangesincethelastrevisionorreapproval.INTRODUCTIONThepurposeofthispracticeistoestablishorganizationalprocessestoachieveonhigh-valuepropertyassetstheoutcomeofreliablereportingofthelife-cyclecostofpropertyassetsforgooddecision-makingpurposes.Historically,andfrequently,thefinancialandpropertymanagementcommunitieshaveconsideredthe“cost”ofanitemorgroupofitemstobetheacquisitionvalueorhistoricalcostoftheitem(s).Unfortunately,whenonlyacquisitioncostisconsideredratherthananestimatedlife-cyclecostofownership,usersmayfindotheroperatingcostswerenotconsideredandanewitemmaybetooexpensiveorinconvenienttouse.Ifoperatingcostissubstantiallyless,managementmaytaketheopportunitytoplanandmakefurtheroperationaladjustments.Betterassetmanagementdecisionsaremadewhenestimatedlife-cyclecostsareconsideredalongwiththeacquisitioncost.However,forthepurposeofthispracticeonlife-cyclecosting(LCC),oneshouldconsiderthatinadditiontotheinitialprocurementcosts,therearemyriadcosts(actualorestimated)requiredtosupport,maintain,operate,anddisposeoftheitem(s).ThispracticeonLCCprovidesanacceptedmethodologyforcalculatingandsummingthosecostsandprovidesatruetotalcostofownershipthathelpsmanagementmakemoreinformedandbetteracquisitionsdecisions.1.Scope1.1Thispracticecoverstheestablishmentofaprocessconsensusmodelfordeterminingthelife-cyclecost(LCC)ofpropertyassetsownedorusedbyanentity.1.1.1Forbusinesses,thesepropertyassetsarerequiredtoseektoachievefinancialreturnsfromproducingandsellinggoodsorservices,orboth.1.1.2Forinstitutionsandagencies,thesepropertyassetsarerequiredtoaccomplishtheirprimarymission.1.2Realandpersonalpropertyassetsmayincludecapital(fixed)...
