Training Life Cycle Costing (LCC)
TRAINING INTRODUCTION :
Life Cycle Costing (LCC) also called Whole Life Costing is an economic assessment of an item, system or facility, considering all the significant costs of ownership over its economic life, expressed in terms of equivalent dollars/euros. LCC is important because the visible costs of any acquisition/purchase represent only a small proportion of the total cost of ownership. Another important reason for LCC is due to a strong relationship between operation and maintenance costs and the functionality and reliability of the item. Therefore, the application of LCC requires a sufficient engineering knowledge.
LCC itself is a structured approach that addresses all elements of ownership costs in relation with the functionality and reliability performance of the item. The results of an LCC analysis, one of them is a cost profile of the product or service over its anticipated life-span, can be used to assist management in the decision-making process where some options exist. Major area of LCC applications are in hardware acquisition process, modification of hardware and software, and in reduction of operation and maintenance costs.
LCC consists of Life Cycle Costing model development and the Life Cycle Costing model application for each option. The primary activities of the Life Cycle Cost model development are the Cost Breakdown Structure (CBS) development and the selection of cost component estimation method. The output of LCC is a Life Cycle Cost estimate, including its distribution on a time scale, cost drivers, sensitivity of the estimate to particular parameters and the risk due to uncertainty of design parameters.
HOW YOU CAN BENEFIT FROM THIS TRAINING :
- To improve costs awareness. Application of LCC will improve awareness of the management and engineers on the factors that drive cost and the resources required by the item, so that cost reduction program is possible.
- Whole life costs evaluation. LCC allow evaluation of competing options on the basis of whole life costs.
- Trade-off performance against cost. When assessing options, cost is not the only factor to be considered. There are other factors such as the compliance to the specified performances and the levels of service to be provided.
- Maximize revenue. By applying LCC, the operation and maintenance costs are reduced without sacrifying the performance of the production equipment through analysis of the performance parameters and cost drivers.
- Specific for engineers, this course will describe the relationship between the functional and reliability performances and costs. This makes possible to identify specifications which resulting in high Life Cycle Costing.
- Understand the procedure to implement LCC including the development of Life Cycle Cost model for various applications.
- Understand the theoretical background of time value of money and risk analysis as well as their impact on decision making process.
WHO SHOULD ATTEND THIS TRAINING ?
- Engineers (Engineering, Reliability, Maintenance)
- Purchasing engineer/manager
- Project Engineer
- Process & Manufacturing Engineer
- Maintenance Manager/ Supervisor
- Other professional who wants to have a better understanding and take advantage from the course.
TRAINING MATERIAL OUTLINE :
- Why Life Cycle Costing (LCC) ?
- LCC and system effectiveness.
- Various economic evaluation.
- LCC procedure.
- Cost Breakdown Structure (CBS)
- Cost Estimation Methods.
- Time value of money
- Risk analysis
- Cost drivers identification
- Area of LCC applications.
- LCC model development.
- LCC for hardware acquisition.
- LCC for hardware modification.
- LCC for maintenance optimization.
- Interactive discussion
Dr. Ir. Edy Suwondo is a lecturer at the Aerospace Engineering Department, Institute Technology of Bandung (ITB) and a member of the Aircraft Design, Operation and Maintenance Research Group, ITB. He has been working in the area of maintenance since 1992. His expertise is in Reliability Centered Maintenance, Reliability Control Program, Maintenance Planning and Life Cycle Costing. He has conducted various research in those area at GMF AeroAsia, Royal Dutch Airlines (KLM), Nusantara Turbine and Propulsion (PT NTP) and Indonesian Aerospace Company (IAe). He involves also in various projects in his research group. Mr. Edy Suwondo received his bachelor degree from the Aerospace Engineering ITB and his doctor degree from Aerospace Engineering, Delft University of Technology (TU Delft), The Netherlands. His doctor research was in the applications of Life Cycle Costing in maintenance area.
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