Having broken down the assets into appropriate components, it is necessary to determine the life of each component or treatment. As indicated above, useful lives also determine whether or not it is appropriate to group components.
Assets and components fall into one of two categories: (1) those with a finite life, at the end of which they will need to be replaced, typically 20–40 years, although some assets will have considerably shorter or longer lives, and (2) those that, given the necessary capital expenditure, will have an indefinite life. Indefinite life components can be further subdivided into those that require capital maintenance to allow them to achieve their expected life and those that do not.
For a finite life asset or component, the lifecycle period will be the whole of the anticipated life. For an indefinite life component, the period will be based on the life of any capital treatments necessary to keep it in use. Judgement needs to be applied here. If, for example, over time an asset would receive a number of cheaper, shorter-lasting treatments plus a single major, long lasting treatment, then the lifecycle should be based on the latter to ensure that the activities and costs captured are fully representative over the longer term.
If, exceptionally, a component that had been categorized as not requiring any treatments to maintain its life indefinitely does experience deterioration (for example, due to inadequate maintenance of surface layers), then it will need to be re-categorized and an appropriate lifecycle plan developed.
It is essential that assumptions about the remaining life of an asset, component, or treatment are reviewed annually and revised when necessary.