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Guide: Life-Cycle Cost Analysis - PMBOK Guide Seventh Edition

What is it:
Life-Cycle Cost Analysis (LCCA) is a method to calculate the total cost of ownership of a project's output. It includes costs from the initial acquisition or development, through the operation, maintenance, and finally, disposition.

Why it is important:
Understanding LCCA is crucial in order to make effective project decisions from a financial perspective. It helps in identifying the most cost-effective option among different competing alternatives to purchase, own, operate, maintain and, finally, dispose of an object or process.

How it works:
LCCA uses several steps: Identify cost analysis goal, define the scope, identify costs, calculate life cycle costs, and analyze the data. LCCA will consider all applicable costs over the life of the product, project, or system.

Exam Tips - Answering Questions on Life-Cycle Cost Analysis:
1. Understand that LCCA is not just about up-front expenditure, it includes costs over the entire project or system life.
2. Remember that the scope of LCCA includes initial development, operation, maintenance, and disposition.
3. Familiarize yourself with the steps involved in conducting an LCCA - particularly identifying cost analysis goal, defining the scope, identifying costs, calculating life cycle costs and analyzing data.
4. Be clear that LCCA helps in decision making by identifying the most cost-effective options.
Remember that the key to successfully answering exam questions on Life-Cycle Cost Analysis is understanding, not memorization.

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Life-Cycle Cost Analysis practice test

Life-cycle cost analysis is a comprehensive approach to evaluating the total costs associated with a project or product throughout its entire life cycle, from inception to disposal. This includes costs for planning, design, construction, operation, maintenance, and disposal. By considering the full spectrum of costs associated with a project, life-cycle cost analysis aids in selecting the most cost-effective alternatives during the decision-making process. It helps to identify areas where resources can be better utilized and optimize the project's financial performance through various stages. Moreover, life-cycle cost analysis supports sustainable project management by promoting consideration of environmental, social, and economic factors in project decisions.

Time: 5 minutes   Questions: 5

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  • Earn 35 PDUs needed for your PMP certification
  • 12955 Superior-grade Project Management Professional practice questions.
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  • Unlock Effortless PMP preparation: 5 full exams.
  • 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
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  • Risk-Free Decision: Start with a 7-day free trial - get premium features at no cost!