Significance of Life Cycle Costing in Strategic Asset Management

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This technical paper is submitted in partial fulfillment of the requirement for recognition as certified Cost Consultant (CCC) as required by Association for the Advancement of Cost Engineering International (AACE International)

Title:

SIGNIFICANCE OF LIFE CYCLE COSTING IN STRATEGIC ASSETS MANAGEMENT 4th of January, 2011

By:

Kolawole Olawuyi Ebunlomo

AACE Membership ID: 65674

Table of Contents

List of Figures Abstract Introduction Fu n d a men ta l s of L if e Cycl e Cos ti n g Life Cycle Cost (LCC) Life Cycle Costing Life Cost Planning Life Cost Analysis Uses of Life Cycle Cost Modeling Life Cycle Cost Cost Modeling Life Cycle Costing Model Life Cycle Cost Breakdown into Asset Cost Elements Estimating Asset Cost Element Sources of Cost Data Method of Analyzes Life Cycle Costing Process Stages of Life Cycle Costing Process Plan Life Cycle Cost Analysis Select/Develop LCC Model Apply LCC Model Document and Review LCC Result Prepare Life Cost Analysis Implement and Monitor Life Cost Analysis Conclusion Bibliography

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List of Figures

Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6:

Life Cycle Cost Iceberg Analogy Top Level of LCC Tree Potential Savings and Cost relationship Traditional LCC Committed versus Incurred Cost Curve The Changing Focus in Life Cycle Costing during an Asset’s Life Cycle The Life Cycle Costing Six-Staged Process

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Abstract In view of the often huge capital investment associated with finance of Strategic Assets, and the grave economic, physical and social consequences of failure, it is pertinent to approach