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| |  | | | Home Page | | Life Cycle Cost (LCC) |
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| | | | Definition:
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Life Cycle Cost (LCC) is the total cost of acquisition and ownership of a system over its full life, including the cost of planning, development, acquisition, operation, support, and disposal.
LCC also called Whole Life Costing is a technique to establish the total cost of ownership. It is a structured approach that addresses all the elements of this cost and can be used to produce a spend profile of the product or service over its anticipated life-span. The results of an LCC analysis can be used to assist management in the decision-making process where there is a choice of options.
There are 4 major benefits of LCC analysis:
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Evaluation of competing options in purchasing;
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Improved awareness of total costs;
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More accurate forecasting of cost profiles; and
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Performance trade-off against cost.
The cost of ownership of an asset or service is incurred throughout its whole life and does not all occur at the point of acquisition:
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Acquisition costs are those incurred between the decision to proceed with the
procurement and the entry of the goods or services to operational use
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Operational costs are those incurred during the operational life of the asset or service
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End life costs are those associated with the disposal, termination or replacement of the asset or service. In the case of assets, disposal cost can be negative because the asset has a resale value.
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RAMCRAFT LCC services:
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Definition of Alternatives (such as maintenance concepts)
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Construction of CBS - Cost Breakdown Structure (cost elements)
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Creating the LCC Model for the LCC calculation
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Sensitivity analysis for major cost elements
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Comparison analysis for existing alternatives
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Preparation of LCC report |
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