Rules of Implementation of LCCA Methodology in the Financial Analysis of Rolling Stock Purchase Projects

The subject of the considerations presented in the article are the rules of implementation of the Life Cycle Cost Analysis (LCCA) methodology in the financial analysis of investment projects in the scope of purchase or modernisation of the railway rolling stock, cars, locomotives, trainsets. Currently, application of LCCA has become common in the EU Member States as, on the one hand, the Member States have established their internal standards determining application of this type of analysis and, on the other, laws recommending application of LCCA in certain procedures have been adopted at the EU level. The objective of the article is presentation of the method of incorporation of LCCA in the financial analysis of the projects of purchase or modernisation of the rolling stock with use of the discounted cash flow (DCF) method. The main part of the article discusses the calculation of life cycle costs of the rolling stock according to the general rules of this method as well as the laws of the European Union, comprising: 1) costs related to vehicle purchase, 2) costs of use, such as consumption of energy and other resources, 3) costs of vehicle maintenance, 4) costs related to retiring from service, such as disassembly, disposal or recycling. The final part presents formulas enabling implementation of the life cycle costs (LCC) in the financial analysis of rolling stock purchase projects by means of the discounted cash flow (DCF) method.