Life Cycle Cost Analysis
Life Cycle Cost Analysis
James Pappas
Logistics Management and Operations, TLMT 353, Spring 15
American Public University
Professor Ernest Hughes
29 June 2015
Life Cycle Cost Analysis
Life cycle cost analysis (LCCA) is a process of evaluating the costs that can be identified and quantified, to include all factors like acquisition, sustaining, maintaining and final disposition of the item, that can have an impact on the whole system cost during its life span. (Blanchard, 2004). All costs associated are required for an accurate analysis. These areas include research, design and development, production, energy costs, maintenance and support, system retirement and material recycling or disposal activities (Blanchard, 2004). This evaluation is used to make an informed decision between options; and is the application used to determine possible subjective factors such as fuel cost adjustments, component reliability, and maintenance costs are also included in sustainment of the program over its life cycle.
Once you have defined the system requirements for the LCCA, the system lifecycle and activities are captured to set the baseline for the cost breakdown structure (CBS). Next the development of the cost breakdown structure capturing all cost from initial to summarization of costs. The data inmput requirements will vary in degree depending on the particular project and level of intricacy. Each category of the CBS will have an associated cost according to the cost estimating relationships (CER). A cost model must be realted to the current project. In other words do not use a Cost model for a building project if you are working on a production project. Develop a cost profile covering the entire life cycle of the project. Next evaluate the cause and effect relationships that may require a redesign of the project or process. Evaluate the LCCA to ensure that the key areas of concern are represented and that the case is valid to the
James Pappas
Logistics Management and Operations, TLMT 353, Spring 15
American Public University
Professor Ernest Hughes
29 June 2015
Life Cycle Cost Analysis
Life cycle cost analysis (LCCA) is a process of evaluating the costs that can be identified and quantified, to include all factors like acquisition, sustaining, maintaining and final disposition of the item, that can have an impact on the whole system cost during its life span. (Blanchard, 2004). All costs associated are required for an accurate analysis. These areas include research, design and development, production, energy costs, maintenance and support, system retirement and material recycling or disposal activities (Blanchard, 2004). This evaluation is used to make an informed decision between options; and is the application used to determine possible subjective factors such as fuel cost adjustments, component reliability, and maintenance costs are also included in sustainment of the program over its life cycle.
Once you have defined the system requirements for the LCCA, the system lifecycle and activities are captured to set the baseline for the cost breakdown structure (CBS). Next the development of the cost breakdown structure capturing all cost from initial to summarization of costs. The data inmput requirements will vary in degree depending on the particular project and level of intricacy. Each category of the CBS will have an associated cost according to the cost estimating relationships (CER). A cost model must be realted to the current project. In other words do not use a Cost model for a building project if you are working on a production project. Develop a cost profile covering the entire life cycle of the project. Next evaluate the cause and effect relationships that may require a redesign of the project or process. Evaluate the LCCA to ensure that the key areas of concern are represented and that the case is valid to the
References: Blanchard, B. (2004). Logistics Engineering and Management, 6th ed. New Jersey: Pearson, Prentice Hall. What is Life Cycle Costing? (n.d.). Retrieved July 3, 2015. Retrieved from http://simple.werf.org/simple/media/LCCT/index.html