PAD 505 Week 5 Discussion 1 Life Cycle Costing

Week 5 Discussion 1

5

Life Cycle Costing

Life cycle of a product refers to the stages which products are put through for example, most products usually begin from introduction and end with withdrawal, where the point in which the product is first brought into the market is termed as the introduction. Products have generally four stages which are maturity, growth, introduction and decline and these stages however support the promotion and the sales of the product. In life cycle costing, there is a stage in which an administrator is to come up with decisions on the time when the product should be put into termination during the analysis of the life cycle (Paul, 2011).

The right time to terminate a product is important despite the fact that focusing on its success is also a factor to be considered in the process. The decision that has been made to terminate the project will be known to be vivid when huge changes in its environment come up. On the other hand, the decisions can be made difficult if changes which are many and minor accumulate in these factors. One is also bound to consider the type of a project before making a conclusion on whether to pull the plug or not to. When the expenditures of a project are recoverable, it is easier to abandon it than when it has a little value for example it may have closing costs which are high like penalties of breached contracts, loses from the closing of facilities (Cerullo, 2007).

 In products for construction for example, there are high costs in case of a termination because an incomplete building has no salvage value. The two major reasons as to why an administrator can decide to terminate a product are political assassination and change in the environment of the project. Senior management and an occasional survey of the team of the project are essential and are the actions that may assist to monitor the environment of the project. Additionally, other techniques like cybernetic and No-Go control processes can also be used (Mantel, 2008).

                                             References

Balachandra, R., & Raelin, J. A. (2009). When to kill that R&D project. Research Management.

Cerullo, M. J. (2007). Determining post-implementation audit success.

Meredith, J., & Mantel, S. J., Jr. (2008). Project management: A managerial approach. New York: John Wiley & Sons.

Paul, L. G. (2011). Know when to bail out.