Page 109 - Global Project Management Handbook

4-16 STATE OF THE ART OF GLOBAL PROJECT MANAGEMENT

THROUGH-LIFE COST

The project team is responsible for projecting budgetary requirements for the new sys-
tem and then ensuring that the necessary funding is available to support the system.
This type of cost estimation is different from the LCC technique used as a key element
of the decision-making process. To estimate the actual expenditure of money required
to operate and support the system, the project team should use through-life cost
(TLC). The concept of TLC is illustrated in Table 4.8. The TLC cost-estimation tech-
nique differs from LCC because it identifies direct costs that must be funded specifically
for system operation and maintenance. TLC can be performed only after the preferred
system to be purchased has been selected because it requires detailed information that
typically is not available until after the purchase decision has been completed.
Detailed design information, final repair processes, and support-infrastructure costs
are used to project the budgetary requirements for the system by financial accounting
period and by budget category.

TLCSM AND SUSTAINMENT

The TLCSM concept can be successful only if it is perpetuated throughout the opera-
tional life of the system. The project team must transition with the system into the
operational phase and continue its management of the system. This focused respon-
sibility is the core of success for TLCSM. The goals, thresholds, and constraints
developed during acquisition of a system now must be used to continually evaluate the
success of the system and its support infrastructure to ensure that it is meeting its
requirements. Every statistic used to make the purchase decision should be used to
assess its success. Therefore, the project team must be capable of monitoring and
tracking all system activities. This typically is accomplished through use of a facilities
management system that includes an operation and maintenance support data collection
and information tracking system. The data collection should be as focused as possible on
the key indicators needed to identify shortcomings of the system or support infrastruc-
ture. Table 4.9 provides a list of the statistics that are normally collected and analyzed as
an integral part of the TLCSM process. This range of information provides the project

TABLE 4.8 Through-Life Cost (TLC)
TLC: A budget-estimation process that estimates the costs of a single option over its intended life.
Estimate results in costs calculated by financial year and budget category.
Establish budgets for:
• Operational resources
• Fuel
• Personnel
• Training
• Support resources
• Spares and materials
• Maintenance
• Personnel
• Facilities
• Transportation and storage