6 Part 6: V-Modell Reference Activities

6.3 Activities

6.3.2 Planning and Control

6.3.2.9 Performing Life Cycle Cost Calculation

Purpose

The aim of this activity is to calculate all expected costs of planning stage, the planned project costs, the expected »Manufacturing Costs and the projected costs of use and to derive the commercial result.

Firstly, the expected development costs will have to be determined on the basis of the project structure and be combined to accounts that make sense from a managerial point of view.

Secondly, the expected manufacturing costs will have to be estimated on the basis of the »Product Structure, evaluating the elements of the overall system on the basis of empirical knowledge with regard to the manufacturing costs.

In addition, the costs of planning stage and the costs of use will have to be determined bysed on the life cycle specifications.

Beyond that, the risks and chances regarding the above-mentioned topics will have to be assessed with regard to costs

With the help of this information the monetary result will have to be planned, i. e. the cost-effectiveness of the project will have to be evaluated. In addition, from this information target costs for the overall system and its elements will have to be determined.

6.3.2.9.1 Estimating Costs of Planning Stage

The costs at planning stage will be calculated for the requirements specification phase until the award of contract. They include costs for the requirements specification, project defintion, request for proposals and contract award.

6.3.2.9.2 Estimating Project Costs

Based on what was defined in the integrated planning of the »Project Plan, the overall costs of the completion of the project shall be determined on the basis of the »Estimation of Effort with regard to personnel, material and expenditure on material.

They shall be valued at the hourly rates or the commercial surcharge and be regulated by way of the project duration. In addition, risks and chances shall be assessed with regard to costs and with the help of the »Risk List.

The aim is to determine all costs that are to be expected for the development of the overall system in the project.

6.3.2.9.3 Establishing Accounts

The accounts shall be derived mainly from the project structure plan. The expenditures determined shall be used to value the costs of each individual »Work Package and to integrate them into accounts that make sense from the managerial point of view.

In this process the »Account Structure may be established in accordance with the product structure plan so that it will be possible to show how the costs are allocated to the individual elements of the overall system. However, also other principles of order, such as a breakdown according to development disciplines or the products to be delivered, will be possible.

Expenditures on material and non-cash contributions, such as travel or contracted services, will be mostly recorded on separate accounts or allocated to the individual elements of the »Product Structure or broken down according to the above-mentioned principles.

6.3.2.9.4 Estimating Manufacturing Costs

As a basis for an estimate of the »Manufacturing Costs of the hardware the »Product Structure, respectively the architecture of the overall system shall be used (see also the product structure plan of the »Project Plan).

The assembly and manufacturing technology for the individual hardware elements of the overall system shall be determined in detail down to unit level. Characteristic parameters in this context will be for example size, weight, assembly technique, printed circuit type and component complement.

The manufacturing costs shall be determined in analogy to similar system elements or units developed earlier, additional determining factors being the manufacturing location and the available know-how and - in case of new technologies - possible learning curves.

In the course of the project the data and assumptions used shall be recorded and occassionally reviewed (see »Commercial Project Status Report).

6.3.2.9.5 Estimating Costs of Use

The costs of use will first be calculated at the beginning of the project in the Outline of the Life Cycle and the Overall System Architecture, when the the life cycle is considered during the preparation of the Requirements Specification.

Afterwards, the product Overall System Specification is the basis for the calculation, which may be refinded in the course of the project development

6.3.2.9.6 Planning of the Overall Project Result

The cost-effectiveness of the project should be planned with the help of the expected costs of planning stage and project costs as well as the planned »Manufacturing Costs and the deviations of the costs of use.

The project costs spread over the business years shall be included each time in turnover and result, taking into account payment milestones, etc.

Using the manufacturing costs that were determined and the expected annual quantity, the turnover and the result from the sales of the overall system shall be calculated and spread over the corresponding business years.

In order to determine the total utility, the costs of planning stage and the expected deviations of the costs of use shall also be included into the economic analysis.