MIE258H1 Lecture Notes - Lecture 12: Systems Development Life Cycle, Needs Assessment, Opportunity Cost

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By the end of this chapter, you will have learned: what a life-cycle cost analysis is, important cost concepts and terminology. The life-cycle of a project is its entire life from the time the idea was conceived until the conclusion of the project. Life-cycle costs: the summation of all costs incurred during the life-cycle. Life-cycle cost analysis: a tool used to determine the most cost-effective alternative by considering all life-cycle costs. The phases of life-cycle costs are: needs assessment, conception, and justification, conceptual design, detailed design and/or prototype, production and/or construction, operational use, decline and/or retirement. The figure below displays various cost curves for the life cycle of a project. In general, the later a product design change is made, the higher the cost: earlier changes are easier and less costly, see the red line: opportunity for lcc savings .

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