Things You'll Need:
- Excel
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Step 1
A project that is scheduled to be created and rolled-out during the course of a year or more typically deserves a life cycle cost estimate. So while the term cost estimate usually covers the time of idea determination to full deployment, the life cycle cost estimate includes the cost of maintaining the system and related personnel or administrative costs affiliated with the system during the duration of its functionality or useful life.
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Step 2
While a life cycle cost estimate is composed of two overarching pieces, the development or production costs and the operations costs the two overlap depending on how soon administrative or support staff need to attend to it and at what cost. The development costs consist of the acquisitions, lease or production costs as well. The software development costs if included speak to the complexity of the program to be developed and/or the cost of available commercial off the shelf or COTs software for sale.
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Step 3
Operations and maintenance costs include the license renewal for the use of related software if it is cots, help desk costs, administrative costs or recurring costs as well. The life cycle cost estimate is supposed to predict how much service would be required, if any. Most technical purchases or capital investments depreciate over time and the routine schedule and maintenance or service costs should include leeway to accommodate greater instances of repair after five years than during the first few years of service.
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Step 4
The last piece of a life cycle cost estimate should be the cost of disposal once benefits have been received and maxed out. If a program will loose vitality because the purpose was sated or the environment requires a different program, the cost of transitioning or jettisoning staff and equipment should be shown herein.
