If RCM and RAM analysis are done properly, the resulting recommendations are based on lifecycle analysis. In addition to using a streamlined version of lifecycle analysis as a part of those comprehensive studies, there are always occasions when a detailed, stand-alone lifecycle analysis is needed to evaluate several different alternatives.

As the name implied, lifecycle analysis is a comparison of costs over the entire usable life of a system. Depending on the type of system or device, the expected life may be thirty years or it may be as little as ten years. The starting point of the lifecycle analysis is to determine the usable life over which the comparison will be made.

There are two principles that must be accepted to apply lifecycle analysis:

1. The amortized value of future spending has current value.

2. Risk equals money.

If you exist in a culture that considers the value of current spending only, lifecycle analysis will have little value for you. Your organization needs to believe that the cost of future expenses, when reduced by the amount of intervening interest is the same as current dollars. You might be saying to yourself, "Everybody knows that!" Well, everyone doesn't act as if they knew that. Most people make choices based on first cost only. This is often true even of people who are viewed as sophisticated thinkers.

Another principle that is critical to lifecycle analysis is that "risk equals money". Many individuals are successful in temporarily avoiding the cost of risks...