Chapter 1
Overview of Systems Life Cycle Costing
1.1 Overview of Engineering Economic Analysis
1.1.1 Business Operations
1.1.2 Customer Relationships
1.1.3 Engineering Services
1.1.4 Product Realization
1.2 Engineering Challenges for the 21st Century
1.3 Introduction to Systems Life Cycle Costing
1.3.1 Systems Life Cycle Costing
1.4 Cost Analysis, Estimation, and Management
1.4.1 Cost Analysis
1.4.2 Cost Estimation
1.4.3 Cost Management
1.5 Summary
Section 1 - The Mathematics of Engineering Economy
Chapter 2
The Science of Engineering Economics: Understanding the Time Value of Money
2.1 Introduction and the Time Value of Money
2.2 The Capital Budgeting Decision
2.2.1 Basic Concepts in Capital Budgeting
2.2.2 Benefit and Cost Development
2.3 Time Value of Money
2.3.1 Cash Flow Diagram Rules
2.4 Interest
2.4.1 Simple Interest
2.4.2 Compounded Interest
2.4.3 The “Rule of 72”
2.4.4 Compound Interest Notation and Interest Tables
2.4.5 Interest Compounded Other Than Yearly
2.5 Single Period Cash Flow
2.6 Common Cash Flow Series
2.6.1 Uniform Cash Flow Series
2.6.2 Linear Gradient Cash Flow Series
2.6.3 Irregular Cash Flow Series
2.7 Concept of Economic Equivalence
2.8 Amortization Schedules
2.9 Determining Inflation/Deflation
2.10 Summary
Chapter 3
Advanced Economic Analysis of Alternatives
3.1 Introduction
3.2 Net Present Value
3.2.1 NPV in Microsoft Excel
3.3 Annual Equivalent Worth
3.3.1 Introduction
3.3.2 AEW in Microsoft Excel
3.4 Capital Budgeting - Selection of Multiple Projects
3.5 Break-Even Analysis
3.6 After Tax Cash Flow Analysis
3.6.1 Depreciation
3.6.2 Corporate Income Taxes
3.7 Income and Cash Flow Statements
3.8 Expected Value
3.9 Sensitivity Analysis
3.10 Summary
Chapter 4
The Basic Theory of Interest
4.1 Introduction
4.2 Interest as Time Value of Money
4.3 Inflation
4.4 Market Interest Rates
4.4.1 United States Treasury Debt
4.4.2 Debt
4.4.3 Equity
4.4.4 Minimum Attractive Rate of Return
4.5 Summary
Chapter 5
Simulation Based Costing
5.1 Introduction
5.1.1 Ways to Study a System
5.1.2 Advantages and Disadvantages of Simulations
5.2 Review of Probability and Statistics
5.2.1 Introduction
5.2.2 Random Variables
5.2.3 Probability Density Functions
5.2.4 Cumulative Distribution Functions
5.3 Discrete Process Generators
5.4 Continuous Process Generators
5.5 Probability and Statistics Summary
5.6 Simulation in Practice
5.6.1 Introduction to Simulation in Practice
5.6.2 Building Complex Simulations
5.7 Using Readiness Levels for Model Input
5.8 Simulation Using Spreadsheets
5.8.1 Introduction
5.9 Building Systems Simulations
5.10 Sensitivity Analysis
5.11 Summary
Chapter 6
Life Cycle Framework and Techniques
6.1 Introduction to Developing Life Cycle Models
6.2 Developing LCC Models
6.3 Life Cycle Cost Categories
6.3.1 Industrial Base and Supplier/Vendor Relationships
6.3.2 Research, Development, Testing and Evaluation
6.3.3 Acquisition
6.3.4 Operations and Support
6.3.5 Disposal or Retirement
6.4 Cost Accounting
6.5 Summary
Section 2 - Estimation of Complex Systems
Chapter 7
Costing of Complex Systems
7.1 Introduction
7.2 Issues Surrounding Complex Systems
7.3 Systems Engineering and Management Cost
7.3.1 Hardware Costs
7.3.2 Software
7.3.3 Interfaces/Integration at the Component/System Level
7.3.4 Systems Engineering/Project Management Costs
7.4 From Requirements to Architectures
7.5 Summary
Chapter 8
Software Intensive Systems
8.1 Introduction
8.2 Software Estimating Techniques
8.2.1 Overview
8.2.2 Expertise Based and Hybrid
8.2.3 Algorithmic
8.2.4 Function Points
8.2.5 Mathematical and Statistical
8.3 Costing Labor
8.4 Summary
Chapter 9
Cost Estimating Techniques
9.1 Estimating LCC Throughout the Product Development Cycle
9.2 Analogy
9.3 Parametric Cost Estimating
9.3.1 The Role of Statistics
9.3.2 Some CERs of Interest
9.3.3 Summary and Conclusions
9.4 Detailed Engineering Builds
9.5 Summary of Cost Estimating Techniques
Section 3 - Cost Management
Chapter 10
Costing and Managing Off the Shelf Systems
10.1 Introduction
10.2 Commercial-Off-The Shelf Systems
10.2.1 Hardware Centric COTS
10.2.2 Software Centric COTS
10.2.3 Integration Costs
10.3 GOTS
10.4 Software Reuse
10.4.1 Cost Reductions Achieved with Software Reuse
10.5 Open Source
10.6 Summary
Chapter 11
Project Management’s Role in Life Cycle Costing
11.1 Introduction
11.2 Basics of Networks
11.3 Work Breakdown Structure (WBS)
11.4 Progress Measurement
11.5 Calculating Earned Value
11.6 Monte Carlo Simulation of Networks
11.7 Summary
Chapter 12
Use of Cost Metrics and Ratios
12.1 Introduction
12.2 Benefit-Cost Ratio
12.3 Return on Investment
12.4 Cost Benefit Analysis
12.5 Multi-Objective Decision Analysis Approach for Quantifying Benefits
12.6 Breakeven Analysis
12.6.1 Breakeven Quantity
12.6.2 Conventional Payback Period
12.6.3 Discounted Payback Period
12.6.4 Breakeven Charts
12.7 Internal Rate of Return
12.7.1 The Compounding Equation
12.7.2 The Quadratic Equation
12.7.3 Trial and Error Method
12.7.4 IRR in Microsoft Excel
12.7.5 Incremental IRR
12.8 Summary and Conclusions