Life Cycle Costing : Concepts, Problems, Structures and Data Bases 861786

Life Cycle Costing needs to be related to sound economic principles if it is to be useful. In Defence, output cannot be measured in money and balanced in a profit and loss account. Cost models are, therefore, more often used in conjunction with models predicting Operational performance, than in isolation. Although cost and operational analysts may simultaneously be making predicitons about the same project, they go about their tasks in quite different ways using quite different techniques. The question of why this should be so and whether it is desirable will be raised. There seems, to the author, to be some confusion about what constitutes a life cycle cost ‘model’ and a simple classification and modelling structure will be described to clarify matters within the defence context. Finally, five particular problems will be discussed ranging from problems in estimating costs in high technology areas, through problems of application in the public sector, to problems in assessing and presenting risk and uncertainty.