Weapon-System Cost Analysis

Abstract

A method of estimating cost inputs for weapon-systems analyses is discussed. The major characteristics of the method are (1) Total cost concept, which provides for accumulation of “support” as well as “direct” costs to the tactical unit of capability (e.g., wing or squadron in the case of the Air Force) (2) Distinction between investment and annual operating costs (3) Incremental costing, which provides for taking into account “inheritance value” of existing assets when a new weapon system is phased in to replace an existing one (4) Time phasing of weapon systems and the costs related thereto (5) Emphasis on consistency in costing alternative weapon proposals, which, for purposes of systems analysis, is perhaps more important than striving for a high degree of accuracy. In addition to the application to formal weapon-systems analysis, use of the method as a tool in military planning and programming of future weapon systems is also discussed.