EQUIPMENT BID AWARDS: INITIAL COST VERSUS LIFE CYCLE COST. FINAL REPORT

The cost of operating and maintaining equipment frequently exceeds the purchase cost of the equipment itself and varies widely between functionally equivalent candidates. Yet for most public organizations, policy states that a bid award be made to the company submitting the lowest initial cost bid. Life cycle cost (LCC) bidding was established in the 60s. Though the LCC bidding system enjoyed wide popularity in the 70s and 80s, it has been a controversial method ever since. Its implementation complexity and potential legal problems have impeded many public agencies from using this system. This research evaluated the feasibility of awarding equipment bids by life cycle cost rather than by the existing low bid purchase cost within the Alaska Department of Transportation and Public Facilities (AKDOT&PF). Research results show that the LCC bidding system can be implemented legitimately within AKDOT&PF for equipment procurement. The methodologies and the supporting computer program proposed in this research project can significantly improve the LCC bid process with respect to ease of implementation, efficiency, and user transparency.

Language

  • English

Media Info

  • Features: Figures; References;
  • Pagination: 48 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00720210
  • Record Type: Publication
  • Report/Paper Numbers: SPR-UAF-92-20, INE/TRC 94.22
  • Files: TRIS, USDOT, STATEDOT
  • Created Date: Apr 17 1996 12:00AM