Life Cycle Costing - The Australian National Audit Office.pdf

LIFE–CYCLE COSTING BETTER PRACTICE GUIDE December 2001 Auditor-General’s Foreword This Better Practice Guide is intended to assist APS managers responsible for decisions relating to acquiring, owning, operating and using major assets or products, such as buildings, vehicles, and major plant. The guide can also assist in decision-making when multiple items of equipment of lower cost items such as IT equipment, photocopy machines and the like are under consideration. The purpose of this Guide is primarily to: • raise awareness of the need to consider future costs associated with asset or product acquisition, including maintenance, operational and energy costs associated with the acquisition’s long-term use; • complement and expand on the life-cycle costing information presented in the ANAO’s Asset Management Handbook; • assist in making decisions on acquiring an asset or product, particularly through an economic evaluation process; and • assist in assessing or auditing the decision-making process for significant acquisitions. The Guide arose from the ANAO’s 1998 report on life-cycle costing in Defence. The parliamentary Joint Committee of Public Accounts and Audit reviewed the report in 1999 and indicated its support for the recommendations. The ANAO subsequently decided to revise the guide included in the audit report and issue it as part of its series of Better Practice Guides. The ANAO appreciates the assistance of Strategic Facility Services Pty Ltd in preparing this Guide. It was completed after considering comments kindly provided by the Department of Finance and Administration, the Department of Defence, Australian Federal Police, the Institution of Engineers and Mr Roger Burritt of The Australian National University. Thanks to all tho