Archived - Guideline on Cost Estimation for Capital Asset Acquisitions

Long description for image: Figure 1. Application of Cost Method by Life-Cycle Stage

Figure 1 is a diagram that spatially illustrates the degree to which each of the four cost methods can be used in relation to each stage in the life cycle of an asset. Seven life cycle stages are listed: identification, options analysis, definition, implementation, closeout, operation and sustainment, and disposal. The four cost methods are represented adjacent to this list by angled spaces such that the wider portion of the space corresponds to the life cycle stages where they are most applicable and the narrowest portion of the space corresponds to the life-cycle stages where the methods are least applicable. The diagram shows that the analogous and parametric cost methods are most applicable in the early stages of the asset's life cycle and the engineering and extrapolation from actuals cost methods are most applicable in the later stages of the asset's life cycle.

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