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Life Cycle Cost Analysis

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What is Life Cycle Costing?

Life cycle costing is a methodology for calculating the whole cost of a system from inception to disposal. The system will vary from industry to industry and could for instance be a building, a ship, a weapon system or a power station.

Whatever the system, the life cycle cost analysis technique will be the same, the major items of cost will be defined through its life. The items may be further subdivided until the cost of each element can be defined as a mathematical equation. At a simple level this may be the number of man-hours multiplied by a cost rate.

The elements of cost will then be added together to give the total cost for each item and a grand total for the system through its full life.

Using the LCC Module in Availability Workbench

The Life Cycle Cost (LCC) module of Availability Workbench allows users to build a hierarchical cost breakdown structure (CBS) through an unlimited number of indenture levels. The CBS may be directly linked to cost predictions produced by the RCMCost or AvSim modules. Other costs may be defined as time-dependent cost equations or simple numerical values. Global variables may be defined and utilized in the cost equations.

High level costs are determined either by summating the cost values for child nodes in the CBS or by applying a user-defined cost equation. The syntax of cost equations is easy to understand and the construction of cost equations is assisted by an intelligent code-recognition utility that automatically reveals global variable lists as the user types in an equation.

Phase-dependent cost equations may also be defined. Phases are shared between the LCC and AvSim modules.

In summary the LCC module allows users to define life cycle costs other than those predicted by the RCMCost and AvSim modules. These costs may be integrated with predicted costs in the LCC cost breakdown structure to provide a time-dependent analysis of a system’s whole life cycle cost process.