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Life-cycle Cost Approach - Module 1
Life-cycle costs refers to all the costs required to ensuring indefinite WASH services to a specific population in a determined geographical area. These costs include the construction and maintenance of systems in the short and longer term, taking into account the need for hardware and software, operation and maintenance, capital maintenance, the cost of capital, source protection and the need for direct and indirect support, including training, planning and institutional pro-poor support. But it is not enough to only think about parts and labour. It is also important to ensure that financial systems are in place so that infrastructure can be replaced and can respond to increases in demand.
Applying life-cycle costs to your service delivery planning requires that all aspects of services are taken into consideration, including: operation, rehabilitation and replacement. Maintaining adequate service levels also depends on the competence and resources of providers. Costs for learning and capacity building must also be taken into account. Once you take into account all of the costs combined, then you have the summation of the total cost of providing a sustainable level of service.
Life-cycle costs approach - Module 2
Module 2 of the Costing Sustainable Services Training package gives ideas and tools on how life-cycle costing can be integrated into your own work and organisation. It discusses:
- How to develop a plan to introduce and integrate life-cycle costing into your own work or organisation to improve sustainability of WASH services
- How to prepare for the collection of life-cycle costs and service level data; selecting life-cycle cost indicators useful to your programme, creating your own life-cycle costs approach questionnaires, and developing a life-cycle cost data collection plan
- How to get more out of the life-cycle costs approach; increasing the level of detail for more complex analysis; using a life-cycle costs approach for poverty and affordability analysis; and using geographical information systems (GIS) in a life-cycle costs approach.
Life-cycle Cost Approach - Module 3
Module 3 of the Costing Sustainable Services Training package enables users to analyse life-cycle costs and service levels for water and sanitation. It discusses:
- What are my life-cycle costs? Determine how life-cycle costs impact on overall expenditure in the next 20 years. Which life-cycle cost components are most significant, such as capital expenditure or operational expenditure? What is the impact of rehabilitation and renewal of WASH infrastructure? What is the overall cost of the loan that was taken out?
- Forecasting expenditure: who pays for what? Over the 20 years following an intervention who will pay for which life-cycle cost components? What is the potential impact of inflation and population growth?
- Comparing sustainability risks with expenditure. Modelling shortfall in expenditure based on breakdown rates and renewal costs and some typical operational costs. Comparing whether the expenditure expected is going to be enough to ensure the sustainability of the service delivery model.
- Comparing WASH service levels received by users across projects, districts, regions or countries. Identifying gaps between 'designed for' and 'received' services.Comparing how services differ across population groups.
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