ASTM E2453-19
(Practice)Standard Practice for Estimating the Life-Cycle Cost of Ownership of Property Assets
Standard Practice for Estimating the Life-Cycle Cost of Ownership of Property Assets
SIGNIFICANCE AND USE
5.1 For agencies and institutions, measuring and managing the LCC of ownership of property may directly result in improved accountability, in the form of cost savings, increased asset utilization, extended asset life, and increased mission effectiveness.
5.2 For companies, measuring and managing the LCC of ownership of property may directly result in cost savings, increased asset utilization, and, therefore, improved profit margins.
5.3 Including LCC in the three stages is consistent with Practice E2279 under the reporting principle.
SCOPE
1.1 This practice covers the establishment of a process consensus model for determining the life-cycle cost (LCC) of property assets owned or used by an entity.
1.1.1 For businesses, these property assets are required to seek to achieve financial returns from producing and selling goods or services, or both.
1.1.2 For institutions and agencies, these property assets are required to accomplish their primary mission.
1.2 Real and personal property assets may include capital (fixed) assets and movable assets including customer-supplied assets, rental/leased assets, contract/project direct-purchased assets, or expense items.
1.3 Asset service lives can be divided into three distinct stages, each with several separate yet interrelated substages: acquisition, utilization, and disposition. These primary stages are not intended to be all-encompassing but are offered as the basis for establishing LCC.
1.4 This practice is expected to be primarily used for considering the life-cycle cost of personal property, however, the concept can and should be used for various types of assets including personal, real, tangible, and intangible.
1.5 This practice does not supersede applicable generally accepted accounting principles but is intended to be consistent with the accounting principles particularly in the area of internal controls (see the GAO Green Book) and processes and requirements for estimating. Some life-cycle cost estimating may be required for accounting purposes. (See AS 2501.)
1.6 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and to determine the applicability of regulatory limitations prior to use.
1.7 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
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This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the
Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
Designation: E2453 − 19
Standard Practice for
Estimating the Life-Cycle Cost of Ownership of Property
1
Assets
This standard is issued under the fixed designation E2453; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
INTRODUCTION
The purpose of this practice is to establish organizational processes to achieve on high-value
property assets the outcome of reliable reporting of the life-cycle cost of property assets for good
decision-making purposes. Historically, and frequently, the financial and property management
communities have considered the “cost” of an item or group of items to be the acquisition value or
historical cost of the item(s). Unfortunately, when only acquisition cost is considered rather than an
estimated life-cycle cost of ownership, users may find other operating costs were not considered and
a new item may be too expensive or inconvenient to use. If operating cost is substantially less,
management may take the opportunity to plan and make further operational adjustments. Better asset
management decisions are made when estimated life-cycle costs are considered along with the
acquisition cost. However, for the purpose of this practice on life-cycle costing (LCC), one should
consider that in addition to the initial procurement costs, there are myriad costs (actual or estimated)
required to support, maintain, operate, and dispose of the item(s). This practice on LCC provides an
accepted methodology for calculating and summing those costs and provides a true total cost of
ownership that helps management make more informed and better acquisitions decisions.
1. Scope are not intended to be all-encompassing but are offered as the
basis for establishing LCC.
1.1 This practice covers the establishment of a process
consensus model for determining the life-cycle cost (LCC) of
1.4 This practice is expected to be primarily used for
property assets owned or used by an entity.
considering the life-cycle cost of personal property, however,
1.1.1 For businesses, these property assets are required to
the concept can and should be used for various types of assets
seek to achieve financial returns from producing and selling
including personal, real, tangible, and intangible.
goods or services, or both.
1.5 This practice does not supersede applicable generally
1.1.2 For institutions and agencies, these property assets are
accepted accounting principles but is intended to be consistent
required to accomplish their primary mission.
with the accounting principles particularly in the area of
1.2 Real and personal property assets may include capital
internal controls (see the GAO Green Book) and processes and
(fixed) assets and movable assets including customer-supplied
requirements for estimating. Some life-cycle cost estimating
assets, rental/leased assets, contract/project direct-purchased
may be required for accounting purposes. (See AS 2501.)
assets, or expense items.
1.6 This standard does not purport to address all of the
1.3 Asset service lives can be divided into three distinct
safety concerns, if any, associated with its use. It is the
stages, each with several separate yet interrelated substages:
responsibility of the user of this standard to establish appro-
acquisition, utilization, and disposition. These primary stages
priate safety, health, and environmental practices and to
determine the applicability of regulatory limitations prior to
1
This practice is under the jurisdiction of ASTM Committee E53 on Asset
use.
Management and is the direct responsibility of Subcommittee E53.03 on Financial
Management.
1.7 This international standard was developed in accor-
Current edition approved May 1, 2019. Published June 2019. Originally
dance with internationally recognized principles on standard-
approved in 2005. Last previous edition approved in 2013 as E2453–13. DOI:
10.1520/E2453–19. ization established in the Decision on Principles for the
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
1
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E2453 − 19
Development of International Standards, Guides and Recom- procedures and use in processes and practices the appropriate
mendations issued by the World Trade Organization Technical uses of the term “asset.”
Barriers to Trade (TBT) Committee.
3.1.2 life-cycle cost (LCC), n—the sum of all known mate-
rial costs associated with
...
This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E2453 − 13 E2453 − 19
Standard Practice for
DeterminingEstimating the Life-Cycle Cost of Ownership of
1
Personal PropertyProperty Assets
This standard is issued under the fixed designation E2453; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
INTRODUCTION
Historically, The purpose of this practice is to establish organizational processes to achieve on
high-value property assets the outcome of reliable reporting of the life-cycle cost of property assets
for good decision-making purposes. Historically, and frequently, the financial and property manage-
ment communities have considered the “cost” of an item or group of items to be the acquisition value
of the item(s), that is, the value/cost of an item is generally based upon the amount of money paid for
the item, irrespective of the many and varied costs associated with the full life cycle. There are more
appropriate models than the historical model for valuing property. or historical cost of the item(s).
Unfortunately, when only acquisition cost is considered rather than an estimated life-cycle cost of
ownership, users may find other operating costs were not considered and a new item may be too
expensive or inconvenient to use. If operating cost is substantially less, management may take the
opportunity to plan and make further operational adjustments. Better asset management decisions are
made when estimated life-cycle costs are considered along with the acquisition cost. However, for the
purpose of this practice on life-cycle costing (LCC), one should consider that in addition to the initial
procurement costs, there are myriad costs (actual or estimated) required to support, maintain, operate,
and dispose of the item(s). This practice on LCC provides an accepted methodology for calculating
and summing those costs and provides a true total cost of ownership that helps management make
more informed and better acquisitions decisions.
1. Scope
1.1 This practice covers the establishment of a process consensus model for determining the life-cycle cost (LCC) of personal
property assets owned or used by an entity.
1.1.1 For businesses, these personal property assets are required to seek to achieve financial returns from producing and selling
goods or services, or both.
1.1.2 For institutions and agencies, these personal property assets are required to accomplish their primary mission.
1.2 Real and personal property assets may include capital (fixed) assets and movable, durable movable assets including:in-
cluding customer-supplied assets, rental/leased assets, contract/project direct-purchased assets, or expense items.
1.3 Asset service lives can be divided into three distinct stages, each with several separate yet interrelated substages: acquisition,
utilization, and disposition. These primary stages are not intended to be all encompassing, all-encompassing but are offered as the
basis for establishing LCC.
1.4 This practice is expected to be primarily used for considering the life-cycle cost of personal property, however, the concept
can and should be used for various types of assets including personal, real, tangible, and intangible.
1.5 This practice does not supersede applicable generally accepted accounting principles but is intended to be consistent with
the accounting principles particularly in the area of internal controls (see the GAO Green Book) and processes and requirements
for estimating. Some life-cycle cost estimating may be required for accounting purposes. (See AS 2501.)
1.6 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility
of the user of this standard to establish appropriate safety safety, health, and healthenvironmental practices and to determine the
applicability of regulatory limitations prior to use.
1
This practice is under the jurisdiction of ASTM Committee E53 on Asset Management and is the direct responsibility of Subcommittee E53.03 on Financial Management.
Current edition approved July 15, 2013May 1, 2019. Published July 2013June 2019. Originally approved in 2005. Last previous edition approved in 20052013 as
E2453–05.–13. DOI: 10.1520/E2453–13.10.1520/E2453–19.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. Uni
...
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