Normally the cost of a project is considered only from the beginning of the project to its end. This is reasonable because the project team is formed to carry out the work of creating the project, deliver the deliverables, and do it within the schedule and cost goals of the project. This is really a narrow view because there are many costs that may occur for the stakeholders as the result of decisions made within the project but occurring after the project has been completed. Life cycle cost considers all these costs.

For example, the project team is able to reduce cost by limiting the number of design reviews. The result of this may be that the design is compromised. The compromised, nonoptimal design may cost the stakeholders many times the money saved by limiting the design reviews. The cost of this will not necessarily occur until the project is delivered and the project team disbanded. Life cycle cost would include this cost.

Life cycle cost is quite important in the justification of projects. The total cost of a project should be considered over the entire life of the project and not just within a fixed period of time.