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Guide to Life Cycle Costing - PMBOK Guide Seventh Edition

Life Cycle Costing is a fundamental concept within the field of Project Cost Management, which includes the analysis and estimation of the total cost incurred during the entire life cycle of a product or a project. This involves considering all the relevant stages from inception to disposal.
Why is it important?
Life Cycle Costing is key to making informed decisions during the procurement and operational phases of a project. It helps you to select the most cost-effective options based on understanding the full cost implications over a product’s lifetime.
How does it work?
Life Cycle Costing works by considering the total cost of ownership. This includes acquisition, operation, maintenance, renovation, or disposal costs, offering a big picture of the financial impact over the entire life span of the product or project. It's an in-depth and long-term view of cost management.
How to answer questions regarding Life Cycle Costing in an exam?
For answering questions about Life Cycle Costing, it's essential to understand its components like, initial cost, operational costs, maintenance and support costs, and disposal costs. Real-world examples might be used to explain the concept clearly.
Exam Tips: Answering Questions on Life Cycle Costing
1. Remember, Life Cycle Costing isn’t just about the upfront costs. Consider all costs from initiation to disposal.
2. Focus on understanding the concept of 'Total Cost of Ownership'.
3. Practice with real-world questions or scenarios related to Life Cycle Costing.
4. Don’t rush in selecting options while answering, a lower initial cost doesn’t mean lower Life Cycle Cost.

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Life Cycle Costing practice test

Life cycle costing evaluates the total cost of a project over its entire life span, including project development, construction, operation, maintenance, and disposal. It considers all direct and indirect costs during the life of a project, including costs beyond the actual project completion date. This approach allows decision-makers to assess the long-term implications and potential value-for-money in different project options. Life cycle costing ensures a broader perspective on project costs and helps organizations identify the most cost-effective solutions, considering not only short-term but also long-term implications.

Time: 5 minutes   Questions: 5

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Project Management Professional Preparation Package (2024)

  • Earn 35 PDUs needed for your PMP certification
  • 12955 Superior-grade Project Management Professional practice questions.
  • Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
  • Unlock Effortless PMP preparation: 5 full exams.
  • 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
  • Bonus: If you upgrade now you get upgraded access to all courses
  • Risk-Free Decision: Start with a 7-day free trial - get premium features at no cost!