PROJECT COST MANAGEMENT - ASSIGNMENT

LIFE CYCLE COSTING

Assignment Aim

To understand and apply the processes for life cycle costing.

Assignment Details

You are contemplating the purchase of a new 2014/2015 model 4-5 seater sedan (non-four wheel drive) for family use. You are to choose a new model and perform a Life Cycle Costing calculation using the Net Present Value methodto determine its life cycle costs, over a period of 6 years. The vehicle is NOT to be obtained by leasing or by loan. You are also to ignore any tax implications in your life cycle costing, but must consider depreciation and inflation.

As a minimum you must provide the following information:

? a detailed description of ALL your assumptions

? a detailed explanation and breakdown of all costs and values used in your costing (do NOT use published all-inclusive rates per kilometre for running expenses)

? sources for ALL the data used(with sources, properly referenced).

? a comprehensive explanation (with sources, properly referenced) for your choice of discount rate and method for handling inflation

? asingle A4 spreadsheet for the LCCwhich shows all the relevant costs and values for the full life cycle as well as the discounting calculations. The spreadsheet is to be in landscape layout, titled and use the following general layout for information:

? a detailed commentary on the outcome of the life cycle costing exercise, identifying ownership costs

The assignment is to be presented in the form of a report (including an executive summary, numbered sections and headers and footers). The number of words must be between 1400 and 1800 in total (including any tables, contents page, headers, footers and references, but excluding the cover sheet and the A4 spreadsheet). The word count must be stated on the front cover.