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Cost Analysis Improvement Group

Operating and Support
Cost-Estimating Guide


OFFICE OF THE SECRETARY OF DEFENSE -- MAY 1992

Contents at a Glance

[ Full Table of Contents ] [ Help ]

Preface
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Introduction
Requirements for O&S Cost Estimates
O&S Cost Methodology
Cost Element Structure
O&S Documentation Requirements
Presentation Requirements
Appendices
Exhibits


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TABLE OF CONTENTS

CHAPTER

PREFACE
1.
INTRODUCTION
1.1 Purpose
1.2 Authority and References
1.3 Applicability
2.
REQUIREMENT FOR O&S COST ESTIMATES
2.1 Introduction
2.2 Overview of Life-Cycle Costs
2.3 O&S Role in DAB Decisions
2.4 Need for O&S Cost Information
3.
O&S COST METHODOLOGY
3.1 Introduction
3.2 CAIG Review
       3.2.1 Cost Assessment Criteria
       3.2.2 Lessons Learned from CAIG Reviews
3.3 O&S Cost-Estimating Process
       3.3.1 Develop Approach
       3.3.2 Hold Pre-CAIG Meting
       3.3.3 Prepare Estimate
       3.3.4 Present Results to OSD CAIG
3.4 O&S Cost Conventions
4.
COST ELEMENT STRUCTURE
4.1 Introduction
4.2 O&S Cost Element Structure
4.3 Significant Cost Elements
4.4 Significant Non-Cost Data Elements
4.5 Cost Elements to Exclude
5.
DOCUMENTATION REQUIREMENTS
5.1 Introduction
5.2 Documentation Approach
5.3 Executive Summary
5.4 Program Overview
5.5 Estimate Documentation
5.6 Summary
6.
PRESENTATION REQUIREMENTS
6.1 Introduction
6.2 Presentation Formats


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APPENDICES

Appendix A Program Reference Documents
Appendix B Generic Operating and Support Cost Element Structure
Appendix C Aircraft Operating and Support Cost Element Structure
Appendix D Ship Operating and Support Cost Element Structure
Appendix E Missile Operating and Support Cost Element Structure
Appendix F Combat Vehicle Operating and Support Cost Element Structure
Appendix G Electronic Systems Operating and Support Cost Element Structure


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EXHIBITS

2-1Program Life Cycle (Illustrative)
2-2Percentage of Life-Cycle Costs Incurred in Various Program Phases
2-3Acquisition Milestones and Phases
3-1O&S Cost Estimate Preparation Process
3-2Pre-CAIG Review Meeting Topics
3-3System Description Summary
3-4Designed System Life Expectancy
3-5System Life Expectancy O&S Phases
4-1Generic O&S Cost Element Structure
5-1Documentation Structure
6-1Annualized Steady-State Deployable Unit O&S Cost
6-2Life-Cycle O&S Cost Comparison: POE and ICE
6-3Life-Cycle O&S Cost Driver Analysis
6-4Time-Phased Life-Cycle O&S Costs
6-5Life-Cycle O&S Cost Comparison: Prior POE and Current POE
6-6Time-Phased Life-Cycle O&S Costs by Appropriation Category


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PREFACE

      This guide was prepared by the Office of the Secretary of Defense (OSD) Cost Analysis Improvement Group (CAIG) for use by Department of Defense (DoD) components in developing estimates of weapon operating and support (O&S) costs. This guide supersedes previous O&S CAIG guides, and should be considered the authoritative source document for preparing O&S cost estimates.

      There has been an increased emphasis on operating and support costs in recent years. Independent review and validation of O&S estimates is critical to informed decisionmaking on major systems that will require the commitment of O&S funds for many years into the future.

      This guide implements several DoD instructions and directives that are further explained in Chapter 1. It should be used to prepare O&S cost estimates for systems that will be reviewed by the CAIG. The guide also may be used to develop O&S estimates for weapon systems reviewed outside the Defense Acquisition Board (DAB) process. General guidelines for preparing and documenting O&S estimates are provided in Chapters 3 through 6. Cost element structures and definitions for various categories of major weapon systems are presented in the appendices.

      HELP: Questions or comments concerning this guide should be addressed to OASD(PA&E), Room 2D278, The Pentagon, Washington, D.C. 20301, or telephone DSN 227-4311 or commercial (703) 697-4311.

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