Asset Lifecycle Management vs Asset Lifecycle Costing

We often hear Asset Lifecycle Costing and Asset Lifecycle Management used interchangeably. While both are important in a holistic approach to asset management, they are two distinct practices.

Fundamentally, Asset Lifecycle Management and Asset Lifecycle Costing are two different activities. Both rely on data to support cost-effective decision-making, and both are an essential part of an asset managers toolkit.

Asset Lifecycle Management

Asset Lifecycle Management is a management/engineering discipline that aims to improve the return on asset investment.

By utilising management, planning and analytical techniques, Asset Lifecycle Management involves considering implications over the life of an asset. From planning, acquiring, designing, constructing, operating and maintaining, all the way to disposal of an asset.

Asset Lifecycle Management considers the costs and resource requirements of an asset over its entire lifecycle. The goal being to look at the value that asset creates over that lifecycle and comparing this to the total cost of the asset.

Asset Lifecycle Costing

Asset Lifecycle Costing is a technique used to support the decision-making process when presented with multiple options.

Typically, Asset Lifecycle Costing is used during the design and construction phases of an asset’s life. Essentially, Asset Lifecycle Costing is about evaluating the costs of multiple options during the relevant asset acquisition phase.

Asset Lifecycle Costing helps to make an informed decision at a specific point in time, when presented with multiple options. Asset Lifecycle Management, on the other hand, doesn’t need to consider the options left on the table, and evaluates the return on the option taken.