1、SAE ARP*4293 92 7943725 050b923 b85 The EngineMng Society Ir* =For Advancing Mobility -Land Sea Air and Space, INTENATIONLU 400 Commonwealth Drive, Warrendale, PA 15096. .o001 AEROSPACE RECOMMENDED PRACTICE Submitted for recognition as an American National Standard ARP4293 Issued 1992-02-14 LIFE CYC
2、LE COST - TECHNIQUES AND APPLICATIONS FOREWORD The complexity and cost of military aircraft has inexorably increased. In real terms, the unit cost of military aircraft has grown by an average of 8% annually since World War II. There is a direct connection between the initial production cost and the
3、cost of development and of producing spares and repairs. Therefore a potential by-product of the growth in investment costs is an increase in support costs. This trend is emphasized by the fact that the increasing complexity, which drives up production costs, also tends to have an effect on reliabil
4、ity, further raising support costs (Reference 1). Life cycle cost (LCC) is used in the decision making process to evaluate and select equipment offering the most cost-effective solution to meet a defined need. Support costs can range from being equal to, or many times greater than the initial purcha
5、se costs; thus awareness of the whole life cost of equipment before making major procurement decisions is required. This is accomplished through the use of LCC techniques whereby the cost profile of equipment is built up and refined as cost data become available. These techniques address LCC issues
6、including supportability, performance, and manufacturing cost for the following considerations (Reference 2): a. Provide justification for “spend to save“ decisions b. Enable decisions to be better informed, in particular the determination of i nit i al requi rement s c. Allow the impact of differen
7、t levels of reliability and maintainability (R including use of cost estimating relationships (CER) , simulation techniques, and “top-down“/“bottom-up“ approaches. is also given to: Consideration a. Risk and uncertainty assessments b. Impact of economic variations including inflation, interest rates
8、, and c. exchange rate variation Adoption of discounting techniques when undertaking investment appraisals The use of tailored LCC models is preferred since there is an advantage in adopting a range of approaches particularly for the prediction of the costs of future technology and estimates of unce
9、rtainty which are specific to the aerospace industry. 1.1 Purpose: This document supplements the general guide1 ines contained in AIR1939. purpose of this document is to present an overview of LCC techniques and applications during the procurement process for defense related equipment. This document
10、 provides a typical “global I LCC element breakdown structure which is aircraft systems related; while a companion document, ARP4294 provides a detailed scheme for a cost element breakdown structure specific to propul si on systems. The LCC techniques provide a sound basis for cost benefit analysis.
11、 Although specifically aimed at the military procurement process, the recommendations contained in this document can apply to commercial procurement. The use of LCC analysis during the procurement process increases effectiveness of program evaluation by aiding decision making and providing a mechani
12、sm for transferring information on a common basis. 2. REFERENCES: 1. R.N. Gregory, “The Place of Support Cost Estimates in Initial Procurement Decisions“, Proceedings of Royal Aeronautical Society Conference, (November 1989) 2. HMSO, National Audit Office Report, Ministry of Defence: Reliability and
13、 Maintainability of Defence Equipment, (February 1989) -5- SAE ARPx423 92 W 7943725 050b2b 167 W SAE ARP4293 2. (Continued): 3. AECMA, Life Cycle Cost Perspectives Military Aircraft Applications, (October 1987) 4. R. McNally, “Life Cycle Costing - The Contractors View“, Government Contracting Review
14、, (Summer 1987) 5. SAE, ARP4294 Aerospace Recommended Practice, Data Formats and Practices for Life Cycle Cost Information 6. D.W. Daniel , “Life Cycle Costing: Concepts, Problems Structures and Data Bases“, US Society of Automotive Engineers, Technical Paper Series 861786, ( 1986) Defence Scientifi
15、c Advisory Council, “Report of the Working Party on the technical risk assessment of advanced technology on large projects“, Unpubl i shed MOD Report, Apri 1 1988 7. 2.1 SAE Publications: Available from SAE, 400 Commonwealth Drive, Warrendale, PA 15096-0001. ARP4294 Data Formats and Applications for
16、 the LCC of Aircraft Propulsion Systems 2.2 Acronyms and Abbreviations: AECMA AIR CALS CER CIP DC F DSAC EFH FOL HMSO IA ILS LCC MTBF NAO N PV O there exists a two way relationship with acquisition cost and a subsequent effect on the support and unavai 1 abi 1 i ty costs. AVAILABILITY: reliability,
17、maintainability and maintenance, and support) to perform its required function at a stated instant of time or over a stated period of time. The ability of an item (under combined aspects of its BASIC RESEARCH: project prior to project definition. techno1 ogy deve1 opment. Research work in the design
18、 concept stages of a system It includes theoretical studies and new CAPITAL INVESTMENT: Any capital investment in manufacturing or production equipment (including, where appropriate, dedicated software) , which is not amortized in the unit production price or included in the contractorsy overheads.
19、COMPONENT IMPROVEMENT PROGRAM (CIP) COST: Total system CIP cost (including software) over the life of the aircraft system. fabrication, and test costs associated with component improvement, beyond the original performance level, once the aircraft system is in production. It includes design, COMPUTER
20、-AIDED ACQUISITION AND LOGISTIC SUPPORT: digital techniques to integrate technical information flowing from digital systems to facil itate the design, development, manufacturing and support of aircraft systems. manufacturing and support environment. CONCEPTUAL STUDIES COST: The sum of all contractor
21、 and government funded costs required to complete the feasibility studies and subsequent definition of any system or equipment conceived in response to meet a mission requirement. These include project related research, theoretical studies, hardware, material , tests, tooling and other supporting ac
22、tivities (e.g. , LCC and integrated logistic support (ILS) studies). The strategy aimed at using It implies the transition to a near paperless design, CONFIGURATION MANAGEMENT: The process that identifies functional and physical characteristics of an item during its life cycle, controls changes to t
23、hose characteristics, provides information on status of change action, and audits the conformance of configuration items to approved configurations. CONTRACTOR MAINTENANCE COST (4TH LEVEL): and all materiel costs, including the value of any customer supplied spares and the costs (labor, material and
24、 overheads) of repairing spares together with, if applicable, any transport costs and overheads including any charges made by the contractor for maintaining support teams at all lines. Comprised of the direct labor costs -7- SAE ARP*Li293 92 7943725 0506928 TIT M SAE ARP4293 2.3 (Continued): COST AN
25、ALYSIS: A systematic procedure for estimating the aggregate cost of a system/equipment, and for comparing the costs of alternative systems in order to determine the relative economy and effectiveness of the al ternatives. COST EFFECTIVENESS: al ternatives (actions, methods, approaches, equipment, ai
26、rcraft systems, support systems, force combinations, etc.) in terms of the interrelated influences of cost and effectiveness in accomplishing a specific mission. A comparative evaluation derived from analyses of COST ELEMENT: The lowest level identified cost for a given LCC analysis. A cost element
27、is further broken down into variables, rates, factors, or constants related mathematically which produce a money amount corresponding to an aspect of the product under investigation. COST FACTORS: A cost per unit of resource; hence a value established on a per unit basis which, when multiplied by th
28、e number of units or program factor, yields the estimated cost. COST MODEL: translating physical resources into costs. A mathematical device used to develop estimates and output formats for presentations. The model consists of an input format to specify the problem; information, including both syste
29、m description data and estimating relationships; and an output format. An ordered arrangement of data and equations that permits COST TRACKING: the reasons for variances between successive cost estimates or between planned or projected versus actual costs. A process which collects and evaluates data
30、 in determining DEVELOPMENT AND VALIDATION COST: The cost of all engineering effort, including theoretical studies and design, hardware, tooling, rig testing, management and other supporting activities including LCC and ILS considerations, to transform the results of conceptual studies into design p
31、roposal s sui table for full scale deve1 opment. ECONOMIC ANALYSIS: A systematic approach to the problem of choosing how to employ scarce resources and an investigation of the full implications of achieving a given objective in the most efficient and effective manner. determination of efficiency and
32、 effectiveness is implicit in the assessment of the cost-effectiveness of alternative approaches. EQUIPMENT: Refers collectively to an item, component, or subsystem procured for installation in a system or to support a system. The EQUIPMENT DEPRECIATION: The notional loss of monetary value ascribed
33、to equipment dedicated to the system, by virtue of its age. EQUIPMENT MAINTENANCE COST: Labor and material costs incurred in order to maintain the equipment dedicated to the system in a serviceable condition. _ -8- SAE ARPx4293 92 7943725 05Ob929 97b SAE ARP4293 2.3 (Continued): EVALUATION PROGRAM C
34、OST: The cost, if it occurs, of any system evaluation program subsequent to development. intra/extramurally. FACILITIES COST: The monetary value ascribed to buildings and equipment dedicated to the system during the Investment phase following full scale development which are associated with setting
35、up a viable manufacturing process capable of sustaining full scale manufacture. FUEL, OIL, AND LUBRICATION (FOL): All ground running, testing and mission fuel, oil, and lubricants consumed by the fleet during the total O there exists a two-way relationship with acquisition cost and a subsequent effe
36、ct on the support and unavailability costs. SYSTEM: A composite of equipment, facilities, and services which make up an entity. The complete system includes the prime and all support related equipment, materials, facilities, and personnel required for obtaining, operating, and maintaining the system
37、. SYSTEMS ENGINEERING: to the planning, design, construction and evaluation of systems and components. It includes the overall consideration of possible methods for accomplishing a desired result, determination of technical specification, identification and solution of interfaces between parts of th
38、e system, development of coordinated test programs, assessment of data, ILS planning and supervision of design work. The application of scientific and engineering knowledge TARGET: It is sometimes used as the basis for an incentive arrangement, is normally more ambitious than a goal , but sometimes
39、used interchangeably with “goal“. THEORETICAL STUDIES COST: theoretical studies related to a system project. Used in a contract to define the customers objective. The costs arising out of the execution of initial TRADE-OFF (ANALYSIS): system characteristics (cost, schedule, performance, and supporta
40、bil ity) . The determination of the optimum balance between - 11 - SAE ARP*4293 92 7943725 0506932 4b0 SAE ARP4293 2.3 (Continued): UNAVAILABILITY COST: The sum, over the life of a system, of the cost incurred providing replacement facilities to maintain the specified requirement when the primary so
41、urce is unavailable. NOTE: This implies that the unavailability cost also includes the cost of unscheduled maintenance work arising if either reliability, maintainability or availability levels fail to meet the specification. In addition, R there exists a two-way relationship with acquisition cost a
42、nd a subsequent effect on the support and unavail abi 1 i ty costs. UNCERTAINTY: assigning numerical probability weights to the different possible outcomes or there is no way to describe the possible outcomes. A situation is uncertain if there is no objective basis for UNSCHEDULED SUPPORT COSTS: bec
43、ause any or all of reliability, maintainability and availability fail to meet the specification. The cost of unscheduled maintenance work arising WORK BREAKDOWN STRUCTURE (WBS) : hardware, services, and data which result from the identification of acquisition tasks during the development and product
44、ion of a system or equipment, and which completely describes the program or project. A WBS displays and defines the product to be developed or produced and relates elements of work to be done to each other and to the end product. A product-oriented family tree composed of 3. LCC: This section define
45、s LCC, discusses the major program phases in terms of acquisition and ownership costs, and defines the intermediate phases. The relationship between actual and predicted costs is discussed in connection with the decreasing opportunity of cost reduction as the program matures. Major cost profiles for
46、 different programs are compared to illustrate pertinent economic variations, types of costs, and IAS that can ultimately influence the decision. Various estimating techniques are introduced and their suitability during different program phases is discussed. An example of a CER is used to illustrate
47、 the relationship between certain influencing factors. and the need for consistency is discussed. Sensitivity SAE ARPxY293 92 m 7943725 050b933 3T7 m SAE ARP4293 3.1 Description: LCC is defined as the sum of all monies expended, attributed directly and indirectly to a defined system from its incepti
48、on to its dissolution encompassing the acquisition, ownership, and disposal phases of a program. In addition, if the system being studied must maintain continuous capability of performing a specified task, then LCC must also include expenditures which arise because the primary provider of the capabi
49、lity is unavailable and a replacement is required. However, for most comparative purposes it is only necessary to identify those cost elements that are directly attributable to the system or subsystem, or that differ between the options being compared. In general, LCC issues need to be addressed initially during the conceptual studies phase when a specific program requirement has been established. 3. Program Phases: The elements of LCC are related to the principal program phases depicted in Figure 1, and are broadly defined as follows: a. Acquisition (1) RDT therefore, pred
