Life cycle costs estimates for conceptual ideas

The challenge of determining, and then comparing, life cycle cost and operational effectiveness when the alternatives under study range from existing weapon systems to conceptual ideas was faced by Frontier Technology Inc. (FTI) in performing an air refueling cost and operational effectiveness analysis. Making this task even more challenging was the wide range of alternatives (10), the even larger number of scenarios (16) considered for the study, and the significant difference in aerial tankers needed in each of the scenarios. It was necessary to generate over 160 life cycle cost estimates and determine a single cost effective alternative across all 16 scenarios. The answer: develop an innovative approach for deriving and calculating life cycle costs. FTI developed, verified and used such an innovative approach in performing an air refueling cost and operational effectiveness analysis. FTI's innovative PC-based cost model, derived missing data from information in existing cost databases and Sources, accounted for variations in anticipated military service life between alternatives, identified factors which significantly affect life cycle cost, automatically calculated life cycle cost with changes in inputs (total aircraft), and predicted cost variations based on estimates of program risk. The fidelity and ease of use of this unique PC-based tool enabled FTI to calculate rapidly and accurately the required 160 life cycle costs for various mixed fleet of alternatives, identify the relative risks of these 160 alternatives, and then systematically and objectively compare the alternatives across the unequal operational requirements. This paper describes the methodology developed and explains how it was used in the air refueling cost and operational effectiveness analysis performed by FTI.