when comparing investment decisions a financial analyst must look at all potential future costs not just acquisition expenses typically the focus is on the up front capital costs of creation or acquisition and many organizations fail to take into account the longer term costs of an asset without considering whole life costs it s possible that an asset s return will likely be overestimated while an asset may have low development costs its purchase may lead to high maintenance or customer service costs in the future 
while most short term costs and even depreciation can be readily measured or estimated long term costs are more difficult to estimate in addition factors such as environmental or social impact cannot be easily quantified nevertheless whole life costing may provide a more accurate picture of the true cost of an asset than most other methods the value of determining whole life cost can be demonstrated when considering the purchase of a large piece of equipment for a factory consider for example a machine that attaches nylon flock to foam rubber pads used in the construction of painting tools beyond the initial cost of purchasing and installing the flocking machine it will have any number of components requiring periodic maintenance and replacement such a machine may also present environmental hazards when cleaned or require complex disassembly in order to be disposed of the whole life cost analysis of this equipment purchase will be critical in estimating the long term financial benefit of its purchase and use 