What can I do with 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 summated to give the total cost for each item and a grand total for the system through its full life.

The Cost Breakdown Structure

The division of the total cost into sub-categories is known as the Cost Breakdown Structure (CBS). The CBS is represented in lccWare in the form of a tree. The nodes on the tree represent the life cycle cost elements in the CBS.

LccWare™ allows you to build the tree interactively and create your own CBS.

Life Cycle Cost Functions

LccWare™ allows you to create life cycle cost functions that will be used to calculate the value of a cost category. These cost functions can range from simple equations to more complex calculations based on Visual Basic compatible coding. You can easily assign the cost functions to the nodes on the cost tree so that lccWare can calculate the individual cost values.

The life cycle cost function equations use the lccWare global or local variables in mathematical expressions in order to generate the cost. Global variables apply to all cost functions whereas local variables only apply to the cost functions where they are defined. The values for the local variables are then entered in the cost nodes where the corresponding cost functions are applied.

The costs are calculated at user defined time points within the life cycle of the system. Each set of time points is called a time sequence and has a unique name. LccWare™ allows you to define more than one set of time points so that you can investigate the effects of variations in the time point dates and the values of variables at those times.

The latest version of LccWare™ also includes part trees. Part trees provide the user with a convenient method of assigning the costs associated with a frequently used piece of equipment (and its constituent parts) to a cost function.

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