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If you have ever used the terms Life-Cycle Costs (LCC) and Total Ownership Costs (TOC) interchangeably, or in case you ever wondered exactly what the differences between them actually are, the best and most comprehensive source of information is the Defense Acquisition Guidebook (DAG) Chapter 3.1.
According to DAG Section 3.1.1, “both DoD Directive 5000.01, The Defense Acquisition System, and DoD Instruction 5000.02, Operation of the Defense Acquisition System, make reference to life-cycle cost and total ownership cost. This section of the Guidebook explains the meaning for each of these terms. The terms are similar in concept but somewhat different in scope and intent. For a defense acquisition program, life-cycle cost consists of research and development costs, investment costs, operating and support costs, and disposal costs over the entire life cycle. These costs include not only the direct costs of the acquisition program but also indirect costs that would be logically attributed to the program. In this way, all costs that are logically attributed to the program are included, regardless of funding source or management control. The concept of total ownership cost is related but broader in scope. Total ownership cost includes the elements of life-cycle cost as well as other infrastructure or business process costs not normally attributed to the program. DAG Section 3.1.5 defines and describes this concept in more detail.”
Life-Cycle Cost Tools
Financial Management - Teaching notes, tools and links collected by DAU Center for Business, cost estimates and financial management.Reducing System Support Costs - Computer models and sample solicitation Language to obtain data to estimate and reduce system support costs. The Logistics Cost Estimating Tool (LCET) can be used with the Computerized Optimization Model for Predicting and Analyzing Support Structures (COMPASS) to estimate logistics support costs and optimize maintenance & supply support concurrently. LCET links to COMPASS and can be downloaded from this site.
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