How do you calculate the Total Cost of Ownership (TCO) in construction?

The Total Cost of Ownership (TCO) in construction is best calculated by summing direct and indirect costs, which includes not only the initial purchase price but also the ongoing operational and maintenance expenses throughout the life cycle of the asset. This comprehensive approach ensures that all relevant costs, such as utilities, repairs, and any other recurring expenditures, are accounted for, providing a true reflection of what owning and operating the asset will cost over time.

Calculating TCO helps stakeholders make more informed decisions by understanding the long-term financial implications beyond just the capital investment. This method can reveal savings opportunities in operational efficiencies and maintenance strategies that might not be visible when only considering initial costs. By implementing this holistic view, project managers and estimators can better strategize resources and budgets, ultimately leading to improved financial performance on construction projects.