Project content
In the public sector, more and more detailed finance feasibility studies are required for larger acquisition projects. This is derived among other things from ‘Working instructions for the introduction of finance feasibility studies’ issued by the German Federal Ministry of Finance.
For some years now, it has been preestablished in Germany, as in numerous other countries, the consideration of the costs over the entire life cycle in finance feasibility studies of a major acquisition project in the armament sector.
Every investment in armament goods is financially linked to later utilization costs and the acquisition decision can therefore not be solely made on the basis of acquisition costs. Rather, it must be preceded by a comprehensive analysis of the total costs in form of an LCC-Calculation. This includes the development, production, utilization and disposal costs of a product from cradle to grave.
Project aim
The aim of the project is the development of a LCC-Tool with which Life Cycle Costing calculations and analysis of armament goods can be carried out by customers and manufacturers.
Project content
The LCC-Model consists of one Input-Module, one Calculation-Module and one Output-Module that are respectively separated from each other, but that are applicable with results that build on each other. The respective output of each module is stored in databases between the individual process steps. It is available for further processing. It is possible to apply several sets of input data to consider risks in the form of a sensitivity analysis or a 3-point-estimation. Furthermore, the results can be correlated with run parameters to identify cost drivers.
Main idea
The LCC-Tool can serve as a communication mean between contractor and customer to conduct efficient and comprehensible negotiations on the basis of objective facts. Therefore, great emphasis is placed on the transparency of the calculation and every input, calculation, formula and output is disclosed and archived.
The file input is user-friendly and easily accessible, although it offers great flexibility in the types of armament goods to be considered. The module structure allows different weapon systems with their respective technical and organisational data to be compiled for calculation using the cost breakdown structure.
The module structure is also found in the calculation and out module. They make possible the continuous improvement and actualization of the model with manageable effort to be able to use it profitably in regard to the reorientation of the Military Forces.
Project duration
May 2013 - December 2015
Project team
Coordination: Prof. Dr. Manfred Sargl
Research fellows: Max Mangold und Martin Gawliczek