Life cycle costing is usually used to understand costs, but can also be used to understand the social and environmental impacts of an asset or purchase. For instance, replacing the monetary value of an asset with the carbon outputs can provide a carbon life cycle cost for the asset. The analysis is effectively the same, but conducted using emissions data.
In our example of a vehicle, we can compare the carbon emissions of different types of vehicle.
Diesel car Carbon emissions of construction: 20 tonnes Carbon emissions per year: 2.6 tonnes 5 year carbon emissions: 33 tones Electric car Carbon emissions of construction: 22 tonnes Carbon emissions per year: 0.1 tonnes 5 year carbon emissions: 22.5 tonnes
This allows buyers to compare the actual life cycle cost associated with a car, which can then be projected over time and factored into a cost benefit analysis for the purchaser.
The same analysis can be conducted with economic development, gender or any other social procurement initiative that an organization might wish to undertake. Governments have a particularly interesting opportunity to understand the full benefit of delivering an effective social value project. The creation of new jobs or equal pay may also have an effect on the social benefits and support payment being made by the government.
So giving women equal pay or a better chance to enjoy a senior position in a firm may also have an impact on the benefit payments being made to families by the state. It is reasonable in the context of life cycle costing to consider the potential savings that working with a different company might make.