Page 111 - Materials Chemistry, Second Edition

5.3 The economic assessment—LCC 107
be analyzed quantitatively. The quantitative indices will also be gained, and the decision basis
for life cycle cost is provided.

5.3.2.5 Trade-off analysis
The trade-off analysis has two main demands: that the choice will be included in adequate
alternatives, and that balance and comparison are made between the life cycle costs. It turns
out that the trade-off analysis is very effective for reducing the life cycle cost, especially for
maintenance and support costs in the middle and later periods. The early costs for security
and safety of equipment not only ensure smooth operation, but can also reduce the huge ex-
pense of maintenance.

5.3.3 Estimating method
According to different stages of information at hand and cost estimation, an LCC estimat-
ing method can typically be divided into three methods, which are parameter estimating
method, analogy estimating method, and engineering estimating method.

5.3.3.1 Parameter estimating method
Parameter estimating method (parameter analysis method) is aimed at studying the inner
system of cost estimation on the basis of parameters and variables. Estimating the life cycle
cost is to choose the physical and performance parameters with the greatest and most obvious
influence, building on the original data of similar equipment. At the same time, the relation-
ship between cost and parameters is expressed by the mathematical model of regression anal-
ysis. In different application areas, this method has different application modes.
Showing the advantages of convenience and speed, the parameter estimating method in-
puts performance parameters into the system and gains the relationship between the estima-
tion equipment and the cost (or the characteristic quantity and the cost). And the difference of
changing the design scheme will also be evaluated objectively. In sample points gained by the
parameter estimating method, several problems (such as error, delay, alteration, and so on)
exist in the system, directly manifested by sample points. Compared to the analogy estimat-
ing method, the parameter estimating method can improve stability of the estimated value of
the new cost, because of fewer variables and less outside impact.
The parameter estimating method still has some disadvantages: reliable and effective cost
estimation must have huge historical costs and data stored into the database to make the sam-
ple useable again in cost estimation. After updating the system, the risk of the extrapolated
database will be improved. There is a huge difference between the updated system and the
quondam system; so, the system with big update range or technical differences will be
refused.

5.3.3.2 Analogy estimating method
In the analogy estimating method, the life cycle cost will be estimated from the data of the
known equipment first. Then, the equipment and data information will be analyzed and com-
pared, and the coefficient will be determined by the related parameters, which makes the pro-
cess of estimation complete. The above method is usually used in scheme reform, scheme