Whole Life Costing
Whole Life Costing
Background Information
Whole life costing (WLC) takes account of the total cost of a product or service from its production or creation through to the end of its “life cycle.”
These costs can be as detailed as required and can include one or all of the following stages:
Pre-Acquisition (e.g. market research, production method)
Acquisition (e.g. delivery costs, installation and commissioning costs)
Operation (e.g. energy, spares and costs of maintenance)
End of life (e.g. de-commissioning and removal costs)
When planning a purchase, use WLC to consider different aspects of a product or service “life cycle” and ensure that all aspects of the cost of an item or service are included. If objective and transparent methods are used, buyers can include WLC, when they compare the total cost of different bids, rather than just the simple price as offered by a supplier. Alternatively, where WLC may not be appropriate, these life cycle impacts may still be considered as Qualitative criteria when selecting the most appropriate supplier.
Benefits of WLC:
- Better evaluation of competing options
- Improved awareness of total costs
- Better forecasting and budget planning
- Better understanding of performance trade-offs against costs
- Further integrates sustainability into commercial decisions
What do I do?
If you would like to learn more about WLC or Sustainable Procurement at the University of Edinburgh, please contact the Procurement Office:
Non-Exhaustive list of potential WLC considerations:
Pre-acquisition costs[1] / Acquisition costs• market place research
• specification and design
• budget allocation
• preparation and issuing of invitation to tenders
• cost of tender evaluation
• cost of letting contract
• preparation for receipt of the requirement
• professional external advice (eg. legal) / • purchase price
• delivery charge
• insurance and taxes (inc. import duties, etc)
• installation and commissioning
• training and support
• internal costs associated with changing from the incumbent supplier (which should be identified prior to tenders being received)
• integration of systems
• storage requirements
Operating costs / Maintenance costs
• labour
• materials
• consumables
• energy supply and consumption
• contract and supplier management
• transaction costs
• environmental costs
• cost of change, for instance, a decision to use alternative materials / • specialist labour
• specialist tooling
• spare and replacement parts
• reduced output with age
• frequency of maintenance and recommended downtimes
• servicing and inspection regimes
Downtime costs / End of life costs
• lost profits
• extra costs of overtime or sub-contracting
• costs associated with breakdown of equipment
• claims resulting from non-performance / • safe disposal
• re-sale
• ongoing liabilities
• decommissioning
• removal for sale or scrap
• re-instatement of land or buildings for alternative use
[1] Sourced from: