PURPOSE: The purpose of the Cost Analysis
Working Group is to provide a forum for the exchange of information concerning
key aspects of designing and conducting meaningful cost estimates and analyses.
This exchange will foster a better appreciation for the role of cost estimating
and analysis in the DoD acquisition process. Our overarching goal is to improve
DoD processes and provide better operational systems to our warfighters. We will
realize this goal by encouraging the use of operations research tools to better
support cost analyses addressing the entire life cycle of systems, as well as
all support processes.
DISCUSSION: Cost analyses are prepared and
considered by a wide range of stakeholders throughout the life cycle of
acquisition programs. The changing political climate and declining DoD budget
have put increased emphasis on fully understanding all aspects of the costs of
development, procurement, operation, and disposal of DoD weapon systems. The
requirement to provide more realistic estimates of a proposed system’s total
ownership costs (TOCs) early enough in the design process to better support
trade-off decisions presents a significant challenge. Reliable assessments of
the costs and benefits of various alternative solutions to problems are
absolutely vital to sound decision making. The Cost As an Independent Variable (CAIV)
and Integrated Product and Process Development (IPPD) concepts properly
recognize and address these needs. The Cost Analysis Working Group will
investigate ways to better support these key components of DoD’s revolutions
in military and business affairs. Additionally, Defense and Acquisition Reform
initiatives, as well as new technologies, have significantly changed the
processes supporting the DoD infrastructure. Understanding the costs of both
operational and administrative support processes, and the value added by each,
will provide further basis for improving DoD’s business practices. Throughout
the life of any system or organization, the requirement for the best possible
understanding of the totality of its cost implications is a constant. Operations
research provides a number of tools to upgrade our cost estimating and analysis
capabilities, and support the decision-making challenges of the future.
OTHER WORKING GROUPS: The Cost Analysis
Working Group is a key component of Composite Group F (Acquisition). A joint
session will be held with the other closely related working groups making up the
Acquisition Composite Group. These are Working Group 24 (Measures of
Effectiveness), Working Group 25 (Test and Evaluation), Working Group 26
(Analysis of Alternatives), and Working Group 28 (Decision Analysis).
