What is the term used to describe the financial evaluation of the cost of a building component over its useful life?

The term that describes the financial evaluation of the cost of a building component over its useful life is life cycle costing. This approach assesses not only the initial purchase price but also factors in costs incurred throughout the item's life, including maintenance, operation, and disposal costs. By analyzing these expenses, life cycle costing helps stakeholders make informed decisions that reflect the total economic impact of a building component beyond its initial investment.

Utilizing life cycle costing can lead to more sustainable and economical choices, as it encourages selecting materials and systems that might have higher upfront costs but ultimately lead to savings through durability and lower operational needs. This comprehensive financial analysis is vital for budgeting and resource allocation in construction projects.