Life Cycle Cost Estimate(LCCE)
An estimate of total costs of a system or program over its entire life cycle, from development through disposal.
Overview
A Life Cycle Cost Estimate (LCCE) captures the total projected cost of a program or system from initial concept and development through production, operation, sustainment, and eventual disposal. It provides decision-makers with a comprehensive financial picture that extends well beyond the initial acquisition cost.
Why It Matters in GovCon
Agencies use LCCEs to compare alternatives, justify budgets, and make milestone decisions. Contractors who can demonstrate lower life cycle costs—not just lower acquisition prices—often gain a competitive advantage in best-value procurements where total ownership cost is an evaluation factor.
Key Details
- GAO Cost Guide: The GAO Cost Estimating and Assessment Guide provides the federal standard methodology for developing LCCEs.
- Cost Elements: Includes research and development, procurement, operations and support, and disposal costs.
- Inflation and Discounting: LCCEs account for inflation using appropriate indices and may apply discount rates per OMB guidance.
- Uncertainty Analysis: Credible LCCEs include sensitivity and risk analysis showing the range of possible outcomes.
- Milestone Reviews: Updated LCCEs are required at each major acquisition milestone in the DoD 5000 framework.
Related Terms
- Cost Benefit Analysis (CBA)
- Independent Government Cost Estimate (IGCE)
- Total Cost of Ownership
- Earned Value Management (EVM)
More Finance Terms
A guarantee submitted with a bid that ensures the bidder will enter into a contract if selected and provide required performance and payment bonds.
The government's internal estimate of what a procurement should cost, used to evaluate the reasonableness of contractor proposals.
The projected cost to finish remaining work on a contract or project based on current status.
Overhead costs that support the overall organization rather than direct contract performance.
Costs that cannot be traced to a single contract but are allocated across projects via indirect rates.
The total cost of owning, operating, maintaining, and disposing of a system or product over its entire useful life.
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