005-400 Lifecycle Cost

005-400 Lifecycle Cost The lifecycle cost of an information technology project means the total committed costs of the project, not just the initial or up-front costs. Lifecycle cost includes all costs associated with obtaining the item and maintaining and operating it for its projected lifecycle. Initial or one-time costs might include purchase price, freight, installation, and training. Ongoing costs include such expenses as post-warranty maintenance; support, including help desk charges, upgrade charges, and on-site vendor personnel; and any recurring usage charges. Examples: (1) An acquisition of equipment with a projected lifecycle of five years, a purchase cost of $100,000, monthly hardware maintenance of $250, and related annual software fees of $10,000 has a lifecycle cost of $165,000 (($100,000 + ($250 x 60 months) + ($10,000 x 5 years)). (2) An acquisition of software from the Microsoft Enterprise Agreement is a three-year purchase commitment. The lifecycle cost is the cost per seat times the number of seats times 3 years. (3) For a turn-key acquisition of hardware, system software, and consulting services for the development of an application system, the lifecycle costs consist of: (a) all initial fees for hardware and software, (b) hardware and software maintenance and support costs over the projected life of the hardware and system software, (c) all consulting fees, including initial development, implementation, training, data conversion, and other requested services, and (d) any applicable ongoing costs for support of the resulting application system. As part of the procurement request to ITS, the customer is asked to provide an estimate of the useful life of the acquisition prior to replacement. This estimate is used as the lifecycle term over which the lifecycle cost is computed. See the definition of "Project”, Section 005-600, for an explanation of the implications of project lifecycle costs.