Carnegie Mellon University
OP-16: Life Cycle Cost Analysis

Carnegie Mellon University encourages Life Cycle Cost Analysis to determine the most cost-effective solution. When selecting a partner for a good or service we must understand alternatives to purchase, own, operate, maintain and, finally, dispose of an object or process. During our financial analysis we look to the future to understand the total cost options over the life of a product or service. We ask our vendors and stakeholders questions to allow them to think through the whole scope of the solution. The low cost alternative is not always in the best interest of the institution and we encourage partnership with our outside vendors to guide us through our decision making. Example: During our Janitorial Services selection we broke down the long term implications of choosing a partner. We are expanding our campus and what are the best solutions moving forward that will allow our facilities to be of the highest standards in the future. Should we explore automated devices in our restrooms? Should we explore alternative cleaning products that cut down on chemical usage? Does the vendor have other solutions that would constitute a partnership in other categories? We wanted to understand how adding square footage would affect pricing in the future. We needed to understand how advanced in Green technology would cut down on harmful chemicals and reduce costs. We needed to create a pricing template the would break out labor, management, and supplies over the lifetime of the contract. By getting to the root of these questions and possible solutions, we became very educated on the total cost of the entire operation as it stand now and for the lifetime of the contract as campus expanded.