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ID:
107553
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| Publication |
2011.
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| Summary/Abstract |
Although life cycle costing (LCC) is internationally considered the best instrument for evaluating investments in military equipment, its practical application remains insufficiently studied. This paper presents an international panorama of systems used for evaluating military investments, identifying the procedures and instruments most commonly employed, and identifying their strengths and weaknesses. The LCC methodology is then systematically applied, revealing opportunities for improvements. The research methodology is based on a questionnaire sent to 64 countries, inquiring into their standard practice regarding decision taking, cost estimation, risk management and performance indicators. The results obtained show that the main limitations facing these countries in employing LCC methodology concern weaknesses in their organizational structures and in their technical regulations, with particular respect to cost breakdown structures. Also significant are the scant number of cost estimation models available, the absence of up-to-date, reliable databases and the limited use made of appropriate techniques for risk and uncertainty estimation.
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| 2 |
ID:
166555
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| Summary/Abstract |
Energy saving is a major policy objective worldwide and in the EU in particular. Evaluating the convenience of energy-efficient investments, however, is complex. This paper aims to apply stochastic Life Cycle Costing to assess the economic value of energy-efficient building retrofitting investments. The proposed approach investigates how macroeconomic variables affect such an evaluation by explicitly taking into account their interdependent stochastic nature. Consequently, the economic evaluation of an investment is itself stochastic thus expressing both its expected value and its inherent uncertainty and risk. On this basis, an illustrative case-study is presented, where alternative designs of the energy-saving intervention are compared and a sensitivity analysis performed to identify the determinants of the LCC outcome and of its variability. In terms of policy implications, a tool providing a sounder evaluation of the convenience of such investments can suggest when and to what extent incentives may be appropriate to facilitate these investments and what possible financial instruments could be put forward in order to reduce the associated risk.
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