OVERVIEW

The prediction of the total costs that will be incurred throughout the life of a system 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 to determine 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.

Three basic concepts are 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 has a different purpose and application during acquisition.

Life-cycle cost (LCC) A technical process that compares the costs of the relative merits of two or more options.

Through-life cost (TLC)