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Assignment 3: Life Cycle Cost Analysis

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57 views

Assignment 3: Life Cycle Cost Analysis

Uploaded by

dua maqsood
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment 3

Learning outcomes:

After completing this assignment students should be able to describe life cycle cost.

Early knowledge of outcomes enables project teams to address project


performance proactively to reduce cost.

Ability to influence total cost over the project lifecycle

Influence
Influence over project cost vs

over
percentage completion

costs

% complete
by project
phase

Life span
Ideapreliminary detailed production/
Generationdesigndesignmanufacturing

Explain above statement with help of given diagram in context of life cycle cost,in
maximum600 words. Your writeup must include all references you used, (reference
list will not be included in prescribed word limit).

Start writing here

LIFE CYCLE COST ANALYSIS


Life cycle cost analysis is a way of estimating the total cost of starting any
project or accept any facilities. It is very useful when someone start their
project any using multiple alternatives ,this analysis tells us about the total cost
saving or total cost estimation during the whole project that which alternative
has to be selected or not, by telling the maximum cost saving.
When we are going to introduce the cost of any object in the market, we want
its analysis for the coming 5 to 10 years that what kind of response will be
produce in the market, whether we earn profit or have to face some losses
during this time period, it can last for years also. This is how we can determine
at the end of life cycle in a context of some specific situation that is usually in
context of analysis.

GIVEN GRAPH ANALYSIS


In life cycle cost analysis there are different phases. The first phase i.e. idea
generation or acquisition phase, in this phase we have to generate the idea or
initially develop a base structure so, we can check the expected cost and
expected revenues related to that idea. Most of the cost saving will be done in
the acquisition phase. Because all the estimation are done on paper in this
phase. We execute the idea at smaller scale and test it after the test is
approved then we will go for the designing or operational phase
When the project come under the second phase i.e. the preliminary design
process, the less amount of cost is spending in that phase. The graph starts
from zero in these phases and gradually increases.
When the operational phase started, we saw in the graph that we spending a
lot. Actual life cycle cost indicates the trend of spending when actually we are
producing.
LIFE SPAN is show in the graphs, it is cost of object starts when an idea is
generated or requirements put up and its end with the retirement and disposal
of activities.
As we see in acquisition phases we are doing planning if there is any mistake in
our planning or designing we can easily change our decisions or design and we
do not have to pay much but we entered in operational phase we cannot
change our decision easily, we have to spend a lot in this phase. As operational
phase influences over the cost as given in the graph.
CONCLUSION:
Life cycle cost analysis is every important in making decisions or check our
decision that it is according to our target which we have settled or not or
improve the future business performance.
REFRENCES:
 https://corporatefinanceinstitute.com/resources/knowledge/finance/
life-cycle-cost-analysis/
 https://www.maintenanceandengineering.com/2018/02/13/lifecycle-
cost-analysis/
 Book ‘Engineering economic analysis by G.Sullivan’

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