Life-Cycle Costs.

The products, goods, and services designed by engineers all progress through a life cyclevery much like the human life cycle. People are conceived, go through a growth phase, reach their peak during maturity, and then gradually decline and expire. The same general pattern holds for products, goods, and services. As with humans, the duration of the dif- ferent phases, the height of the peak at maturity, and the time of the onset of decline and termination all vary depending on the individual product, good, or service. Figure 2-3 illustrates the typical phases that a product, good or service progresses through over its life cycle.

Life-cycle costing refers to the concept of designingproducts, goods, and serviceswith a full and explicit recognition of the associated costs over the various phases of their life cycles. Two key concepts in life-cycle costing are that the later design changes are made, the higher the costs, and that decisions made early in the life cycle tend to "lock in" costs that are incurred later. Figure 2-4 illustrates how costs are committed early in the product life cycle-nearly 70-90% of all costs are set during the design phases. At the same time, as the figure shows, only 10-30% of cumulative life-cycle costs have been spent.

FIGURE 2-3 Typical life cycle for products, goods and services.

 

FIGURE 2-4 Cumulativelife-cycle costs committedand dollars spent.

FIGURE 2-5 Life-cycle design change costs and ease of change.

Figure 2-5 reinforces these concepts by illustrating that downstreamproduct changes' are more costly and that upstream changes are easier (and less costly) to make. When planners try to savemoney at an early design stage, the result is often a poor design, calling for change orders during construction and prototype development. These changes, in turn, are more costly than working out a better design would have been.

FromFigures2-4 and 2-5we seethat the time to consider all life-cycleeffects, andmake design changes, is during the needs and conceptual/preliminary design phases-before a lot of dollars are committed. Some of the life-cycle effects that engineers should considerat design time include product costs for liability, production, material, testing and quality assurance, and maintenance and warranty.Other life-cycle effects include product features based on customer input and product disposal effects on the environment. The key point is that engineers who design products and the systems that produce them should consider all life-cycle costs. . ..