The life cycle costing (LCC) approach: a conceptual discussion of its usefulness for environmental decision-making

Journal article, 2004

Ten LCC-oriented environmental accounting tools suggested as useful in environmental decision-making have been identified. However, their implementation in the building industry seems to be limited, which opens up for a conceptual discussion. The purpose of this article is to discuss theoretical assumptions and the practical usefulness of the LCC approach in making environmentally responsible investment decisions. LCC’s monetary unit and extended scope may speak in favour of using LCC but LCC fails to handle irreversible decisions, neglects items that have no owner and does not consider costs to future generations. Moreover, LCC does not take into account the decision makers’ limited ability to make rational decisions under uncertainty. LCC’s practical usefulness is constrained by its oversimplification to a monetary unit, the lack of reliable data, complexity of the building process, and conceptual confusions. To handle these inconsistencies in future development of environmental decision support tools three research solutions are proposed.