usage. Therefore, these costs are of interest from a life cycle perspective.
alternative courses of actions with the objective of choosing the best way to employ scarce resources.”
The accomplishment of a LCCA includes all costs of an item from the first consideration of its acquisition to the end of its disposal. Therefore, the costs of producers, suppliers, customers (user), maintainer and related costs need to be regarded.
Several different models of LCCA have been worked out and
successfully implemented. As the underlying
motivation of their development differs, their objectives vary from each other. It is not feasible to develop a unique LCCA model, which will suit all requirements. A review of some of the more common ones is described in [1] and referenced here [3-10].
Figure 1 Example of cost categorisation (stages of life cycle costs) [3]
Since only costs and no operational revenues are taken into consideration during the LCCA, the same in-service conditions in terms of payload, range and speed are chosen to enable a comparison. This means that the engine power can be reduced for the lightweight structure ship and the fuel consumption can be decreased.
As input for the LCCA for the steel version the existing ship’s data and also the data from its operation are partly used. For the investigation of the aluminium craft, an existing preliminary design of Aker Finnyards is used. The composite preliminary design is based on the existing concept of the aluminium ship. The costs during the life cycle including design, production, operation, maintenance and disposal are mainly based on the experience of the two shipyards.
3. THEORY
Current trends show that, in general, the complexity of systems and products is increasing while the time to market needs to be reduced. At the same
time,
technology in almost every industrial sector is changing rapidly. These factors can lead to project cost growth. This combined with inflation makes it essential to optimise the value for money. Herein, optimising does not mean minimise the acquisition costs as a short-term objective but rather to focus on the overall cost in the meaning of a long-term strategy. A life cycle cost analysis aims to uncover any “hidden” costs of the entire life cycle of a system or product, and as a consequence minimise them. Naturally, there exists more than a single definition for life cycle cost analysis, but Kumaran provides one that suits well [5]:
“Life cycle cost analysis may be defined as a systematic analytical process for evaluating various designs or
The LCCA model used herein is based on the principles suggested by Woodward [4]. The model of Woodward is intended to be implemented for the
planning of
investments rather than a recurring evaluation at diverse stages of a product’s life cycle.
The methodology is formulated in the following eight steps:
1. Establish the operation profile 2. Establish the utilisation factors 3. Identify all the cost elements 4. Determine the critical cost parameters 5. Calculate all costs at current prices 6. Escalate current prices at assumed inflation rates 7. Discount all costs to the base period 8. Sum discounted costs to establish the net present value
This model enables the evaluation of investment options on a more accurate cost calculation rather than only on the initial capital costs.
Figure 2. Trade-off between purchase and acquisition cost and operating cost
In addition, Woodward suggests the LCC procedure to be followed by an analysis of different cost areas and examining trade-offs between them. As a consequence thereof,
total costs of products or systems may be optimised. Figure 2. illustrates the convenience of the B-2 ©2008: Royal Institution of Naval Architects
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