Life Cycle Costing and the Effect of Ownership Costs.
Abstract
The purpose of this study was to examine life cycle costing (LCC) and to determine the effect of ownership (i.e., operating and support) costs on the life cycle cost of a weapon system. Most of the discussion deals with the application of LCC to major system acquisition. This report focuses on the collecting and reporting of ownership costs as well as addressing problems encountered by DOD in collecting ownership cost data and in applying LCC. Despite the significant cost savings demonstrated by LCC procurements, its use has been limited because of the uncertainity of the legal validity of LCC; insufficient emphasis by DOD in training personnel; lack of a reporting system within DOD; and the increased work required in some LCC contracts. Utilizing LCC for estimating the total cost of a weapon system has had even less application because of the inconsistency of lie cycle cost estimates and a lack of cost data by weapon system. While progress has been made in improving cost estimates, collection of ownership costs by weapon system has moved slowly because of the multitude of data systems required and the lack of standard definitions of cost elements.
Document Details
- Document Type
- Technical Report
- Publication Date
- Nov 01, 1975
- Accession Number
- ADA027288
Entities
People
- William J. Schumacher
Organizations
- Defense Systems Management College