Estimating the TCO is not a one-time event; accuracy and inclusion must be maintained throughout the life cycle. Preliminary estimates are required when determining whether a project is feasible in terms of a make vs. buy decision analysis. However, preliminary estimates are the most difficult to obtain and the least accurate because very little detail is known in the early stages of the life cycle. A preliminary estimate of TCO took place during USPS Supplying Practices Process Step 1: Identify Needs. A more complete TCO estimate must be calculated in USPS Supplying Practices Process Step 2: Evaluate Sources.
The TCO estimate should be at or below the funding objective established during Assess Resources activities of the Conceptualize Need task of USPS Supplying Practices Process Step 1: Identify Needs for the project to be sustainable. Otherwise, the purchase/SCM team should revisit the requirement and the RFP documentation to make appropriate adjustments.
When adjusting cost estimates, prior activities provide valuable input for cost estimation. Prior activities may exhibit cost needs across business areas and functions and may also identify external costs that may have a bearing on the TCO. The quality and detail of the input have a significant bearing on the resultant quality of the TCO estimate.
