NATO Initiatives to Improve Life Cycle Costing
TNO DEFENCE SECURITY AND SAFETY THE HAGUE (NETHERLANDS)
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There is a long and documented history of both cost growth and estimating optimism within military programmes. This is particularly the case for multi-national programmes. The NATO ALP-10 -Guidance on Integrated Logistics Support for multi-national equipment projects ILS dated June 1990 Reference 1 states the following Multi-national equipment projects will be required to implement a life cycle cost programme. The purpose of this programme is to ensure that the developed system will have the lowest possible life cycle cost consistent with performance and schedule requirements. The results of life cycle costing must, whatever the phase of the programme, contribute to the process by which managers can make the best decisions on options presented to them. The process of generating realistic cost estimates is based on the application of appropriate methods and models. It is essential that future NATO programmes have a framework within which to start generating realistic and consistent life cycle cost estimates. The objective of this paper is to present the findings to date of NATO RTO SAS studies to develop this framework. The first step in this framework was to develop the generic life cycle cost breakdown structure under NATO RTO SAS-028. The next step was to define methods and models within this framework and to develop a guideline for Life Cycle Costing which is the subject of NATO RTO SAS-054. The succeeding working group NATO RTO SAS-069 summarized the work of NATO RTO SAS-028 and NATO RTO SAS-054 in a Code of Practice for Life Cycle Costing.
- Economics and Cost Analysis