THE PRINCIPLES OF LIFE CYCLE COSTING OF THE ASSETS OF THE DEFENCE FORCES
DOI:
https://doi.org/10.15157/st.vi19.24131Keywords:
life cycle costing, life cycle cost estimation, cost breakdown structure (CBS), cost element, product tree, resources; cost of ownership (COO), total ownership cost (TOC), indirect cost, variable costAbstract
Life cycle cost estimation enables decision-makers to have an overview of all costs related to a procured asset item during its service life and helps to make an optimal decision based on the total cost of a tender. Usually, armament or a weapon system is purchased with the lowest possible price. Ignorance in calculating the expenses that accompany the use of a purchased item will result in a situation where there are no budget resources left for maintenance. Without regular maintenance and updating, however, a purchased item will become unserviceable. This article1 gives a short overview of the historic development of life cycle costing, describes the life cycle stages of an item, and introduces a method for analysing the costs related to owning an item.
