Definition General Info Policies Guides Communities Training Related
DEFINITION
The objective of LCC analysis is to minimize total ownership cost (TOC) of the system while meeting all performance, logistics supportability, and schedule requirements throughout the life cycle of system, subsystems, and components.
GENERAL INFORMATION/NARRATIVE
Initially LCC activities focus on cost and performance trade-offs early in the development process. The LCC process defines an affordable system that meets required performance levels. As development continues, LCC efforts focus on identifying areas requiring corrective action to avoid excessive costs. Cost reduction techniques such as: Value Engineering (VE) or VE Change Proposals (VECP), alternative O&M Concepts, Manufacturing Methods and Technology (MM&T) programs, increased use of standardized commercial equipment, modeling and simulation (M&S), and modernization through spares are used to keep costs at or below stated "flyaway" design to unit production cost goals.
Engineers and managers must achieve a proper balance (in design to cost emphasis) between acquisition and operational support costs. To accomplish this, LCC estimates must be used to analyze cost effectiveness of trade-offs when considering acquisition versus operational or support costs, comparing competing prototypes, or comparing current versus new materiel.
POLICIES, DIRECTIVES, REGULATIONS, LAWS
AR 11-18, AR 70-1, and AR 700-127
BEST PRACTICES, LESSONS LEARNED, STORIES, GUIDES, HANDBOOKS, TEMPLATES, EXAMPLES, TOOLS
Required For: LCC analysis is required for all Army developmental systems, Army system, or equipment under consideration for product improvement when the anticipated cost of the development or improvement exceeds the Other Procurement Army (OPA) and research, development, test and evaluation (RDT&E) dollar or threshold values.
When Required: A LCC analysis is accomplished early in a systems life cycle. LCC analysis is also useful in later life-cycle phases to assess cost to baseline requirement, costs effectiveness goals, comparing current versus new material, and evaluating performance goals.
COMMUNITIES OF PRACTICE
TRAINING RESOURCES
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Definition General Info Policies Guides Communities Training Related