ABSTRACT
EU Public Procurement law has introduced a life-cycle costing (LCC) approach into the evaluation of the most economically advantageous tender in an attempt to promote sustainable public procurement – a broad concept that must consider the three pillars of economic (in)equality, social welfare and public health and environmental responsibility when initiating public tenders and finalizing government contacts. Purchase price only reflects a narrow range of product information and final costs for consumers and society. Prices fail to incorporate indirect supply chain costs (environmental and social externalities) and benefits (positive eco-system services). To go beyond price, methodologies are necessary to take into account a broader range of costs and benefits related to product production, acquisition and use. This brings us to the contemporary and ever-evolving concept LCC. Most simply, LCC can be seen as a tool that provides a structured approach that can assist procuring entities in their selection and decision-making process when comparing projects for works, goods or services. LCC, in its fullest and purest form, attempts to measure and monetize the total cost of a product throughout its entire life cycle (extraction, production/manufacturing, packaging, distribution and disposal), though methodologies, scoping and terminology remain diffuse and in their infancy. This short introductory chapter attempts to answer the question of ‘What is life-cycle costing?’ We will first describe the narrative of LCA on which modern LCC is partially based. This chapter then defines LCC and discusses related and more or less similar terms such as WLC, TCO, E-LCC and S-LCC, in an attempt to standardize terminology throughout the other chapters in this edited volume. This chapter is therefore primarily descriptive, endeavouring to create a common ground for proceeding chapters.
