Development of a life cycle cost model as a decision support tool

Abstract

This report presents an abrupt outcome of Life Cycle Cost (LCC) analysis, in particular LCC analysis in the Defence industry, which is based on a detailed literature study, internet web browsing and interviews with experts such as Defence Analysts. The main objective of the LCC analysis is to appraise the total cost of ownership of a product throughout its full life cycle which includes research and development, construction, operation and maintenance and disposal. The estimated LCC is useful for decision making in scheduled maintenance or in planning upgrading. This report presents a LCC procedure which consists of six steps which are “Problem Definition”, “Cost Elements Definition”, ”System Modelling”, “Data Collection”, “Cost Profile Development” and “Evaluation” [12]. This report will also present a conclusion and recommendations as it will be conducted over a period of ten months. The implementation of this model will benefit Armscor by: Identifying the most cost effective alternative for that application (This is generally the application with the lowest LCC).