SIST EN ISO 15663:2021

SLOVENSKI STANDARD
01-maj-2021
Nadomešča:
SIST EN ISO 15663-1:2007
Petrokemična industrija ter industrija za predelavo nafte in zemeljskega plina -
Stroški življenjskega cikla (ISO 15663:2021)
Petroleum, petrochemical and natural gas industries - Life cycle costing (ISO
15663:2021)
Erdöl- und Erdgasindustrie - Betriebsdauerkosten (ISO 15663:2021)
Industries du pétrole et du gaz naturel - Estimation des coûts globaux de production et
de traitement (ISO 15663:2021)
Ta slovenski standard je istoveten z: EN ISO 15663:2021
ICS:
13.020.60 Življenjski ciklusi izdelkov Product life-cycles
75.020 Pridobivanje in predelava Extraction and processing of
nafte in zemeljskega plina petroleum and natural gas
2003-01.Slovenski inštitut za standardizacijo. Razmnoževanje celote ali delov tega standarda ni dovoljeno.

EN ISO 15663
EUROPEAN STANDARD
NORME EUROPÉENNE
March 2021
EUROPÄISCHE NORM
ICS 75.020 Supersedes EN ISO 15663-1:2006
English Version
Petroleum, petrochemical and natural gas industries - Life
cycle costing (ISO 15663:2021)
Industries du pétrole et du gaz naturel - Estimation des Erdöl- und Erdgasindustrie - Betriebsdauerkosten (ISO
coûts globaux de production et de traitement (ISO 15663:2021)
15663:2021)
This European Standard was approved by CEN on 2 February 2021.

CEN members are bound to comply with the CEN/CENELEC Internal Regulations which stipulate the conditions for giving this
European Standard the status of a national standard without any alteration. Up-to-date lists and bibliographical references
concerning such national standards may be obtained on application to the CEN-CENELEC Management Centre or to any CEN
member.
This European Standard exists in three official versions (English, French, German). A version in any other language made by
translation under the responsibility of a CEN member into its own language and notified to the CEN-CENELEC Management
Centre has the same status as the official versions.

CEN members are the national standards bodies of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway,
Poland, Portugal, Republic of North Macedonia, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and
United Kingdom.
EUROPEAN COMMITTEE FOR STANDARDIZATION
COMITÉ EUROPÉEN DE NORMALISATION

EUROPÄISCHES KOMITEE FÜR NORMUNG

CEN-CENELEC Management Centre: Rue de la Science 23, B-1040 Brussels
© 2021 CEN All rights of exploitation in any form and by any means reserved Ref. No. EN ISO 15663:2021 E
worldwide for CEN national Members.

Contents Page
European foreword . 3

European foreword
This document (EN ISO 15663:2021) has been prepared by Technical Committee ISO/TC 67 "Materials,
equipment and offshore structures for petroleum, petrochemical and natural gas industries" in
collaboration with Technical Committee CEN/TC 12 “Materials, equipment and offshore structures for
petroleum, petrochemical and natural gas industries” the secretariat of which is held by NEN.
This European Standard shall be given the status of a national standard, either by publication of an
identical text or by endorsement, at the latest by September 2021, and conflicting national standards
shall be withdrawn at the latest by September 2021.
Attention is drawn to the possibility that some of the elements of this document may be the subject of
patent rights. CEN shall not be held responsible for identifying any or all such patent rights.
This document supersedes EN ISO 15663-1:2006.
According to the CEN-CENELEC Internal Regulations, the national standards organizations of the
following countries are bound to implement this European Standard: Austria, Belgium, Bulgaria,
Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Republic of
North Macedonia, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the
United Kingdom.
Endorsement notice
The text of ISO 15663:2021 has been approved by CEN as EN ISO 15663:2021 without any modification.

INTERNATIONAL ISO
STANDARD 15663
First edition
2021-02
Petroleum, petrochemical and natural
gas industries — Life cycle costing
Industries du pétrole et du gaz naturel — Estimation des coûts
globaux de production et de traitement
Reference number
ISO 15663:2021(E)
©
ISO 2021
ISO 15663:2021(E)
© ISO 2021
All rights reserved. Unless otherwise specified, or required in the context of its implementation, no part of this publication may
be reproduced or utilized otherwise in any form or by any means, electronic or mechanical, including photocopying, or posting
on the internet or an intranet, without prior written permission. Permission can be requested from either ISO at the address
below or ISO’s member body in the country of the requester.
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CH-1214 Vernier, Geneva
Phone: +41 22 749 01 11
Email: copyright@iso.org
Website: www.iso.org
Published in Switzerland
ii © ISO 2021 – All rights reserved

ISO 15663:2021(E)
Contents Page
Foreword .v
Introduction .vi
1 Scope . 1
2 Normative references . 1
3 Terms, definitions and abbreviated terms . 1
3.1 Terms and definitions . 1
3.2 Abbreviated terms . 8
4 Application . 8
4.1 Users of this document . 8
4.2 Framework conditions . 9
4.3 Limitations .10
4.3.1 General.10
4.3.2 HSE considerations .11
4.3.3 Sustainability and climate change considerations .11
4.4 Benefits of life cycle costing .12
4.5 Life cycle costing within the life cycle phases .13
4.6 Life cycle costing subject matters .15
4.7 Technology development .16
5 Management of life cycle costing .16
5.1 General .16
5.2 Objectives for management of life cycle costing .17
5.3 Roles and responsibilities .18
5.4 Strategy and planning – life cycle costing management plan .19
5.4.1 Life cycle costing management plan .19
5.4.2 Life cycle costing process .19
5.5 Contractual strategies .20
5.6 Assessment and feedback .20
5.7 Training and competence .21
6 Methodology .21
6.1 General .21
6.2 Step 1 — Scoping .21
6.2.1 Objective . .21
6.2.2 Define scope and measures .22
6.2.3 Identify potential options.24
6.2.4 Define options .24
6.3 Step 2 — Cost drivers and data collection .24
6.3.1 Objective . .24
6.3.2 Identify potential cost drivers .25
6.3.3 Define cost elements .26
6.3.4 Identify and collect data .26
6.4 Step 3 — Modelling and analysis .26
6.4.1 Objective . .26
6.4.2 Develop model .26
6.4.3 Analyse and assess .27
6.4.4 Consider uncertainties and sensitivities .27
6.5 Step 4 — Reporting and decision-making .28
6.5.1 Objective . .28
6.5.2 Report and recommend .28
6.5.3 Decide and implement .28
6.5.4 Capture lessons learned .29
Annex A (informative) Life cycle costing implementation .30
ISO 15663:2021(E)
Annex B (informative) Life cycle phases .50
Annex C (normative) Life cycle costing techniques .58
Annex D (informative) Data input .79
Annex E (informative) Examples.87
Annex F (informative) Assessment and feedback .100
Bibliography .102
iv © ISO 2021 – All rights reserved

ISO 15663:2021(E)
Foreword
ISO (the International Organization for Standardization) is a worldwide federation of national standards
bodies (ISO member bodies). The work of preparing International Standards is normally carried out
through ISO technical committees. Each member body interested in a subject for which a technical
committee has been established has the right to be represented on that committee. International
organizations, governmental and non-governmental, in liaison with ISO, also take part in the work.
ISO collaborates closely with the International Electrotechnical Commission (IEC) on all matters of
electrotechnical standardization.
The procedures used to develop this document and those intended for its further maintenance are
described in the ISO/IEC Directives, Part 1. In particular, the different approval criteria needed for the
different types of ISO documents should be noted. This document was drafted in accordance with the
editorial rules of the ISO/IEC Directives, Part 2 (see www .iso .org/ directives).
Attention is drawn to the possibility that some of the elements of this document may be the subject of
patent rights. ISO shall not be held responsible for identifying any or all such patent rights. Details of
any patent rights identified during the development of the document will be in the Introduction and/or
on the ISO list of patent declarations received (see www .iso .org/ patents).
Any trade name used in this document is information given for the convenience of users and does not
constitute an endorsement.
For an explanation of the voluntary nature of standards, the meaning of ISO specific terms and
expressions related to conformity assessment, as well as information about ISO's adherence to the
World Trade Organization (WTO) principles in the Technical Barriers to Trade (TBT), see www .iso .org/
iso/ foreword .html.
This document was prepared by Technical Committee ISO/TC 67, Materials, equipment and offshore
structures for petroleum, petrochemical and natural gas industries, in collaboration with the European
Committee for Standardization (CEN) Technical Committee CEN/TC 12, Materials, equipment and
offshore structures for petroleum, petrochemical and natural gas industries, in accordance with the
Agreement on technical cooperation between ISO and CEN (Vienna Agreement)
This first edition cancels and replaces ISO 15663-1:2000, ISO 15663-2:2001 and ISO 15663-3:2001,
which have been technically revised. The main changes compared to the previous editions are as
follows:
— Clause 3: several new terms, definitions, symbols and abbreviations;
— Clause 4: a new clause has been introduced;
— Clause 5 and Clause 6: new clauses describing life cycle costing management and methodology
which have been restructured from previous editions;
— Annex A: contains restructured text from ISO 15663-3:2001;
— Annex C: new annex describing life cycle costing techniques which also includes text from
ISO 15663-2:2001;
— Annex B, Annex D, Annex E and Annex F are new annexes, but contain also some elements from the
previous editions.
Any feedback or questions on this document should be directed to the user’s national standards body. A
complete listing of these bodies can be found at www .iso .org/ members .html.
ISO 15663:2021(E)
Introduction
Cost management within the petroleum, petrochemical and natural gas industries is important and
will benefit from the adoption of a common and consistent approach to life cycle costing.
Life cycle costing is the systematic consideration of costs and revenues associated with alternative
options required to fulfil the objectives of the business. It is an iterative process of planning, estimating
and monitoring costs and revenue differences throughout an asset's life. It is used to support the
decision-making process by evaluating alternative options and performing trade-off studies. While the
largest benefits are typically achieved in the early life cycle phases, it is equally applicable to all life
cycle phases and at many levels of detail.
The petroleum, petrochemical and natural gas industries have historically assessed the financial
viability of project options based on minimum capital expenditure and achieving project schedule,
whilst operating expenditures and lost revenue have received less focus in the decision-making process.
This has ignored potentially large cost factors and has in some cases resulted in selecting non-optimal
solutions.
Recognizing this situation, life cycle costing is increasingly being applied by a variety of organizations
within the industry. All participants in the process — operators, contractors and vendors — can have a
substantial impact on the life cycle cost, and it is not until all are involved that the benefits sought from
the use of life cycle costing will be realized.
vi © ISO 2021 – All rights reserved

INTERNATIONAL STANDARD ISO 15663:2021(E)
Petroleum, petrochemical and natural gas industries —
Life cycle costing
1 Scope
This document specifies requirements for and gives guidance on the application of life cycle costing
to create value for the development activities and operations associated with drilling, exploitation,
processing and transport of petroleum, petrochemical and natural gas resources. This document
covers facilities and associated activities within different business categories (upstream, midstream,
downstream and petrochemical).
The life cycle costing process as described in this document is applicable when making decisions
between competing options that are differentiated by cost and/or economic value. This document is not
concerned with decision-making related to the economic performance of individual options or options
differentiated by factors other than cost or economic value.
Guidance is provided on the management methodology and application of life cycle costing in support
of decision-making across life cycle phases. The extent of planning and management depends on the
magnitude of the costs involved, the potential value that can be created and the life cycle phase. It also
provides the means of identifying cost drivers and provides a cost-control framework for these cost
drivers, allowing effective cost control and optimization over the entire life of an asset.
2 Normative references
The following documents are referred to in the text in such a way that some or all of their content
constitutes requirements of this document. For dated references, only the edition cited applies. For
undated references, the latest edition of the referenced document (including any amendments) applies.
ISO 14224:2016, Petroleum, petrochemical and natural gas industries — Collection and exchange of
reliability and maintenance data for equipment
ISO 19008:2016, Standard cost coding system for oil and gas production and processing facilities
ISO 20815:2018, Petroleum, petrochemical and natural gas industries — Production assurance and
reliability management
3 Terms, definitions and abbreviated terms
For the purposes of this document, the following terms and definitions apply.
ISO and IEC maintain terminological databases for use in standardization at the following addresses:
— ISO Online browsing platform: available at https:// www .iso .org/ obp
— IEC Electropedia: available at http:// www .electropedia .org/
3.1 Terms and definitions
3.1.1
abatement cost
cost generated for the removal or reduction of an undesirable item
Note 1 to entry: An item can be several types of avoided emissions, e.g. emissions to air and water, but most
commonly used for CO emission reductions. See further information in Clause C.7.
ISO 15663:2021(E)
Note 2 to entry: Abatement cost can be both CAPEX and OPEX cost elements.
3.1.2
asset
item, thing or entity that has potential or actual value to an organization
Note 1 to entry: Physical assets usually refer to equipment, inventory and properties owned by the organization.
Physical assets are the opposite of intangible assets, which are non-physical assets such as leases, brands, digital
assets, licenses, intellectual property rights, reputation or agreements.
Note 2 to entry: A grouping of assets referred to as an asset system (see ISO 55000:2014, 3.2.5) could also be
considered as an asset.
[SOURCE: ISO 55000:2014, 3.2.1, modified — Note 1 to entry not included.]
3.1.3
best available techniques
BAT
latest stage of development (state of the art) of processes, of facilities or of methods of operation which
indicates the practical suitability of a particular measure for limiting discharges, emissions and waste
[SOURCE: OSPAR Convention: 1992, Appendix 1]
3.1.4
break-even price
U
PV
price which applied flat to the production sold gives N =0
PV
Note 1 to entry: The production can be related to material such as oil, equipment or services. See further
information in C.6.3.8.
3.1.5
break-even volume
volume where a stream of revenues and cost balance results in N =0
PV
Note 1 to entry: The volume can be related to material such as oil, equipment or services that generates income.
See further information in C.6.3.7.
3.1.6
capital efficiency index
CEI
I
CE
NPV of a project after tax divided by the absolute value of the NPV of cash flow after tax up to a defined
end point
Note 1 to entry: The capital efficiency index illustrates value creation relative to capital exposure. See further
information in C.6.3.9.
Note 2 to entry: The absolute value of the net present value of cash flow after tax applies until the point where
annual cash flow becomes positive [see Formula (C.8)].
3.1.7
capital expenditure
CAPEX
investment used to purchase, install and commission an asset
Note 1 to entry: See further information regarding estimation of CAPEX in Clause C.2.
2 © ISO 2021 – All rights reserved

ISO 15663:2021(E)
3.1.8
code of resource
COR
hierarchical structure of SCCS that classifies all project resources according to the type of contract/
resource that is involved in the activity and has an associated set of rates
Note 1 to entry: Specific code of resource structure exist, i.e. SCCS is described in ISO 19008:2016. COR codes can
be found at https:// standards .iso .org/ iso/ 19008.
[SOURCE: ISO 19008:2016, 2.1]
3.1.9
committed costs
fixed costs that cannot be eliminated or even cut back without having a major effect on profits or on the
organization's objectives
3.1.10
constraint
limit imposed externally or internally by the project that rules out the selection of an option if the limit
is exceeded
3.1.11
cost breakdown structure
structure related to the methods that an organization employs to record and report costs
Note 1 to entry: Specific cost breakdown structure exists, i.e. SCCS is described in ISO 19008:2016. See https://
standards .iso .org/ iso/ 19008.
3.1.12
cost data
cost information associated with a defined cost element
Note 1 to entry: Cost data can be qualitative or quantitative cost information.
3.1.13
cost driver
major cost element which, if changed, will have a major impact on the life cycle cost of an option
3.1.14
cost element
subset at any level of the total cost for a cost breakdown structure
Note 1 to entry: The cost of an object/item, resource, activity or a combination of those.
Note 2 to entry: Specific cost element exists when ISO 19008:2016 is applied, i.e. the term ‘cost item’ as defined
in 3.1.16.
3.1.15
cost issue
cost element which, if changed, will not have a major impact on the life cycle cost of an option
3.1.16
cost item
particular part/level that is coded/classified using the SCCS
[SOURCE: ISO 19008:2016, 2.2]
ISO 15663:2021(E)
3.1.17
discount rate
d
rate of return used in determining the net present value of future cash flow
Note 1 to entry: The discount rate is normally given on an annual basis, but can also be given based on another
time period, e.g. a monthly or quarterly basis.
Note 2 to entry: See further information in C.6.2.
3.1.18
economic evaluation measure
quantitative measure used to quantify economic characteristics
Note 1 to entry: Economic evaluation measures may apply for the economic comparison where only subsets of
costs are needed (e.g. subset of CAPEX, OPEX and revenue factors).
Note 2 to entry: See further information in C.6.3.
3.1.19
fixed cost
cost that does not vary with production volume or with the level of activity
Note 1 to entry: Fixed cost is not necessarily constant throughout all life cycle phases of an asset or an activity.
Note 2 to entry: Both CAPEX and OPEX can have fixed cost items.
3.1.20
initial investment
first investment for a project
Note 1 to entry: Initial investment is a part of the overall CAPEX or the overall CAPEX for the project itself and
will depend on the type of project. The timing of initial investment can vary and is important to describe in the
LCC calculations in a given project.
3.1.21
internal rate of return
IRR
d
R
rate of return of future net cash flow that gives N =0
PV
Note 1 to entry: See further information in C.6.3.4.
3.1.22
item
subject being considered
Note 1 to entry: The item can be an individual part, component, subunit, equipment, system, plant or installation.
[SOURCE: IEC 60050-192:2015, 192-01-01, modified — Note 1 to entry has been adjusted.]
3.1.23
life cycle
series of identifiable stages through which an item goes, from its conception to disposal
Note 1 to entry: The identified stages are defined as life cycle phases (3.1.28).
[SOURCE: IEC 60050-192:2015, 192-01-09, modified — Note 1 to entry has been added.]
4 © ISO 2021 – All rights reserved

ISO 15663:2021(E)
3.1.24
life cycle cost
LCC
L
CC
total cost incurred during the life cycle
Note 1 to entry: LCC is the discounted sum of CAPEX, OPEX and LOSTREV, see C.6.3.3.
Note 2 to entry: Total cost of ownership is sometimes used in preference to LCC when explaining the application
of life cycle costing (i.e. the methodology) but it is not used in this document. See further information in 4.2.
[SOURCE: IEC 60050-192:2015, 192-01-10, modified — Notes 1 and 2 to entry have been added.]
3.1.25
life cycle cost analysis
LCC analysis
systematic evaluations and calculations carried out to assess competing options using economic
evaluation measures of as part of life cycle costing
Note 1 to entry: The economic evaluation measures are described in C.6.3.
3.1.26
life cycle cost model
LCC model
mathematical relationship between cost elements and life cycle cost differences
Note 1 to entry: The LCC model will contain different economic evaluation measures as described in C.6.3.
3.1.27
life cycle costing
process of evaluating the difference between the life cycle cost of two or more alternative options
Note 1 to entry: Life cycle costing can involve quantitative and/or qualitative assessment.
3.1.28
life cycle phase
discrete stage in the life cycle with a specified purpose
Note 1 to entry: The different life cycle phases are further described in 4.5.
3.1.29
lost revenue
LOSTREV
income loss that occurs when generated income are less than expected due to external or internal factors
Note 1 to entry: When the generated income is related to production, ISO 20815:2018, 3.1.25 defines lost revenue
as: Total cost of lost or deferred production due to down time. Production and time loss categories are defined in
ISO 20815:2018, Clause G.3.
Note 2 to entry: See further information regarding estimation of lost revenue in Clause C.4, and see also
[1]
ISO/TS 3250:— .
3.1.30
net present value
NPV
N
PV
present value that is calculated by discounting the future net cash flow with the required rate of return
as the discount rate
Note 1 to entry: In this document, the term net present value is used, even though the industry sometimes uses
also the term present value reflecting the same discounted value. See further information in C.6.3.2.
ISO 15663:2021(E)
3.1.31
operating expenditure
OPEX
expenses used for operation and maintenance, including associated costs such as logistics and spares
Note 1 to entry: See further information regarding estimation of OPEX in Clause C.3.
3.1.32
payback period
Y
PB
period after which the initial investment has been paid back by the accumulated net revenue counted
from the first income
Note 1 to entry: The payback period is also sometimes called pay-out time. See further information in C.6.3.6.
Note 2 to entry: When the payback period is calculated, it is important to state whether it is based on the
summation of nominal values or based on discounted values where the latter can lead to a somewhat longer
payback period.
3.1.33
physical breakdown structure
PBS
hierarchical structure of SCCS that defines the types of physical asset components of field installations
being delivered by the activity
Note 1 to entry: Specific physical breakdown structure exists, i.e. SCCS is described in ISO 19008:2016. PBS codes
can be found at https:// standards .iso .org/ iso/ 19008.
[SOURCE: ISO 19008:2016, 2.6, modified — Note 1 to entry has been added.]
3.1.34
production availability
ratio of production to planned production, or any other reference level, over a specified period of time
Note 1 to entry: This measure is used in conjunction with analysis of delimited systems without compensating
elements such as substitution from other producers and downstream buffer storage. Battery limits need to be
defined in each case.
Note 2 to entry: See further information in ISO 20815:2018.
[SOURCE: ISO 20815:2018, 3.1.46, modified — Notes 1, 3, 4 and 5 to entry have not been included, new
Note 2 to entry has been added.]
3.1.35
profitability index
PI
I
P
ratio of NPV of the project divided by the discounted CAPEX
Note 1 to entry: See further information in C.6.3.5.
3.1.36
required rate of return
discount rate requirement by the decision-maker for minimum profit for the investment project
3.1.37
revenue
income generated from normal business activities
3.1.38
revenue gain
generated income that is higher than expected due to external or internal factors
6 © ISO 2021 – All rights reserved

ISO 15663:2021(E)
3.1.39
risk
combination of the probability of an event and the consequences of the event
Note 1 to entry: This definition is based on ISO/IEC Guide 51:2014, 3.9 that defines risk as combination of the
probability of occurrence of harm and the severity of that harm, where the probability of occurrence includes
the exposure to a hazardous situation, the occurrence of a hazardous event and the possibility to avoid or limit
the harm. “Harm” has been replaced by “event” in the definition to cope with production assurance purpose.
It is also similar to the definition of the “level of risk” given in ISO Guide 73:2009, 3.6.1.8 (i.e. “combination of
consequences and their likelihood”).
[SOURCE: ISO 20815:2018, 3.1.54, modified — Note 2 to entry not included.]
3.1.40
standard activity breakdown structure
SAB
hierarchical structure of SCCS that defines the type of activity that is being performed
Note 1 to entry: Specific standard activity breakdown structure exists, i.e. SCCS is described in ISO 19008:2016.
SAB codes can be found at https:// standards .iso .org/ iso/ 19008.
[SOURCE: ISO 19008:2016, 2.8, modified — Note 1 to entry has been added.]
3.1.41
standard cost coding system
SCCS
standard system for classification and coding cost estimates, monitoring and final quantities and cost data
Note 1 to entry: The SCCS code comprises three individual hierarchical coding structures named PBS, SAB and
COR, each based upon a different aspect/facet of the scope of work.
Note 2 to entry: In this document, SCCS means the use of ISO 19008:2016.
[SOURCE: ISO 19008:2016, 2.7, modified — Note 2 to entry has been added.]
3.1.42
sustainability
state of the global system, including environmental, social and economic aspects, in which the needs
of the present are met without compromising the ability of future generations to meet their own needs
[SOURCE: ISO Guide 82:2019, 3.1, modified — Notes to entry not included.]
3.1.43
uncertainty
inability to determine accurately what is or will be the true value of a quantity
Note 1 to entry: Uncertainty can have different meanings. It can be used as a measure of variability within a
population, which is a type of uncertainty often referred to as stochastic (or aleatory) uncertainty. Uncertainty
can also have a subjective meaning (epistemic uncertainties).
Note 2 to entry: Uncertainty of input data is particularly important for life cycle costing. See further information
in 6.4.4 and D.5.
Note 3 to entry: Uncertainty is the state, even partial, of deficiency of information related to, understanding or
knowledge of, an event, its consequences, or likelihood.
[SOURCE: ISO 14224:2016, 3.95, modified — Note 1 to entry has been adjusted, and Notes 2 and 3 to
entry have been added.]
ISO 15663:2021(E)
3.1.44
variability
variations in performance measures for different time periods under defined framework conditions
[SOURCE: ISO 20815:2018, 3.1.62, modified — Note 1 to entry not included.]
3.1.45
weighted average cost of capital
WACC
average after-tax cost of a company’s various capital sources, including stocks and interest-bearing debt
Note 1 to entry: WACC is the average rate a company expects to pay to finance its assets. See further information
in C.6.3.2.
3.2 Abbreviated terms
DRILLEX drilling expenditures
EPC engineering procurement and construction
EPCI engineering procurement construction and installation
EPIC engineering procurement installation and commissioning
FEED front-end engineering design
FID final investment decision
FPSO floating production storage and offloading
HSE health safety and environment
LCCMP life cycle costing management plan
LNG liquefied natural gas
MU monetary units
4 Application
4.1 Users of this document
This document is intended for users responsible or involved in life cycle costing and associated activities
such as:
— Installation/plant/facility: Operating facility, e.g. HSE, engineering, construction, installation,
operation and maintenance personnel.
— Operator/owner/company: Project management and control, technology development, technology
qualification, concept and system design, HSE, integrity management, maintenance management,
production assurance, etc.
— Contractor: Main contractor for engineering, procurement, construction, drilling, installation,
operation, maintenance services, etc.
— Vendor/manufacturer/supplier: Technology development, technology qualification, system design
to ensure product quality and improvements, etc.
— Authority/regulatory body: Regulatory requirements that can refer to this document to enhance
HSE, production availability, system availability, operability, maintenance and resource utilization.
8 © ISO 2021 – All rights reserved

ISO 15663:2021(E)
— Consultant: Consultancy services for supporting system design, production assurance and reliability
management, technical safety, etc.
— Industry: Any other user involved in life cycle costing activities in the industry.
4.2 Framework conditions
The objective associated with life cycle costing is to provide decision support for selecting between
alternative options (e.g. technical and operational items), which are aligned with overall corporate
business objectives. Figure 1 illustrates that this is different from company economics and project
economics.
The following applies as part of defining the framework:
— when establishing a consistent cost breakdown structure for the competing options, ISO 19008:2016,
related to cost coding, shall be evaluated for use (see 6.3.1 and Annex C);
— when establishing qualified data input and calculation of operating expenditures, revenue and lost
revenue, ISO 14224:2016 and ISO 20815:2018, related to reliability data, production assurance and
reliability management, shall be used (see Annex C);
— consideration should be given to quality management, for which ISO 9000:2015, ISO 9001:2015 or
ISO 29001:2020 can be used;
— consideration can be given to social responsibility, for which ISO 26000:2010 can be used.
The LCC model is the quantitative model used when comparing competing options. This LCC model
can be different from economic models used by the operator for other purposes. In such specific cases,
explanation of essential differences should be given.
In the majority of cases, a spreadsheet model represents the most cost efficient and flexible solution for
an LCC model for comparison of options (see 6.4.2). The LCC model developed should be simple enough
to be transparent to the user, but accurate enough to represent the difference between options.
Life cycle cost is defined as the total cost incurred during the life cycle. As indicated in Figure 1, life cycle
cost is derived numerically. This numerical output is sometimes referred to as the total cost of ownership
rather than LCC, to provide distinction between life cycle costing as an activity and LCC as an output.
While LCC and total cost of ownership can be considered numerically equivalent, LCC is used in this
document. Total cost of ownership is not used to prevent possible confusion of with so-called “ownership
cost”, which can exclude cost elements and cost drivers that are included in LCC. Similarly, ownership cost
may include costs relating to project economics (e.g. depreciation) that do not form part of LCC.
IEC 60300-3-3:2017 provides a general introduction to the concept of life cycle costing and covers all
industry applications.
ISO 15663:2021(E)
Figure 1 — Framework conditions for life cycle costing
4.3 Limitations
4.3.1 General
This document specifies requirements and provides guidance for application and implementation for
undertaking life cycle costing. Some limitations are described below.
— This document focuses on life cycle cost comparison between competing options for a subject
matter (see also 4.6). This document is not intended for the entire project economy evaluation of
field development projects or investment appraisals, for which all cost issues need to be covered.
Comparative life cycle costing will include only the relevant cost elements. Thus, this document also
provides guidance for use in the selection of the relevant cost elements to ensure cost-effective life
cycle costing.
— The detailed analyses required to accurately predict life cycle cost will, in many cases, require input
data and information derived from other efforts, such as reliability modelling, maintenance analysis,
logistic, material and spares studies or other techniques that help develop individual cost element
estimates. This document will not address in detail how to apply these specialist techniques. These
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