TABLE OF CONTENTS The prediction of the total costs that will be incurred throughout the life of a system, or any other equipment, procured serves an important role in the acquisition process. It is a valuable aid in making decisions about different options or alternatives related to the design characteristics of the system, the support infrastructure to support the system, and the physical resources required to operate and maintain the system. The concept of cost of ownership is used to project the future financial obligations and liabilities that will be necessary to own the system. The use of cost of ownership during acquisition focuses on total costs over the life of the system rather than just purchase price. Supportability engineering uses various methods to predict cost of ownership during acquisition to identify significant issues that cause costs to rise so that these costs, and the factors that contribute to them, can be analyzed for determination of ways in which they can be reduced without lowering performance or operational availability.
Cost of Ownership. The total of all costs incurred to own and use a capability including research and development costs, acquisition costs, operating costs, support costs, and disposal costs.
There are three basic concepts used by supportability engineering to estimate cost of ownership: life cycle cost (LCC), through life cost (TLC), and whole life cost (WLC). Each of these methods have different purposes and applications during acquisition.
Life Cycle Cost (LCC). A technical process which compares the costs of...
