ABSTRACT
The LCC analysis is an engineering and economic optimization technique, where the main goal is to identify and choose the alternative that generates the highest revenue over lifetime, or in other words, generates the lower life cycle cost. Fabrycky and Blanchard (1991) define Life Cycle Cost (LCC) analysis as ‘‘a systematic analytical process for evaluating various alternative courses of actions with the objective of choosing the best way to employ scarce resources’’. In the oil and gas industry the focus is on forecasting the total ownership costs of systems due to unreliability, failures and errors, accidents etc. According to NORSOK standard (NORSOK O-CR-001, 1996) it is recommended to develop an LCC model based on the input data of the cost elements in the LCC analysis. Several of the LCC analysis structures that exist use LCC analysis methods of evaluation and comparison of alternative design to avoid system failures and errors, minimize system downtime and get higher revenue (see e.g., Greene & Shaw, 1990; Fabrycky & Blanchard, 1991; Garin, 1991; Blanchard, 1998).
