ABSTRACT
This chapter discusses the purpose of system Life Cycle Cost (LCC) estimation is to ensure that all costs are properly taken into account and that the resulting LCC value is the minimum reasonably possible. Present Value Analysis is a financial technique used to compare costs and benefits occurring in various moments of a system life cycle, and specifically in each of the stages included in it. From the economic point of view, most attention is attributed to initial acquisition costs, while much lesser attention, in a number of cases, is paid to costs related to subsequent life cycle stages. LCC concept and its application criteria were first considered by the United States (US) Government specifically due to the fact that acquisition costs were found to be often largely less than utilization and support costs. Acquisition, ownership and retirement costs should be estimated as soon as possible, so that responsible authorities can find an optimum balance between System Effectiveness factors and LCC.
