Total Ownership Cost - Tools and Discipline
NAVAL POSTGRADUATE SCHOOL MONTEREY CA GRADUATE SCHOOL OF BUSINESS AND PUBLIC POLICY
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Control of total ownership cost TOC is a continuing initiative to manage costs over the entire life cycle of a weapon system. There are several major categories of costs that contribute to Total Ownership Cost but the principal categories are 1 RD, 2 Production, 3 Operating and Support, and 4 Disposal. System TOC is the same as Life Cycle Cost LCC and must be planned and controlled from requirements definition, system development, and sustainment-focusing on affordability, and cost to achieve required operational availability. The Program Manager PM is responsible for managing system TOC, with input from key stakeholders, such as the sponsor and users. This paper updates our work in 2003, addressing initiatives to control cost, congressional pressure to control cost leadership guidance, controls, and incentives that can be employed to encourage emphasis on system affordability. There is some discussion of metrics to control life cycle cost and the requirements for databases to assist in estimating and comparing life cycle costs. The growing cost of software supportability and its impact on system TOC is also discussed, along with methodologies for reducing these costs.
- Economics and Cost Analysis