Using Technology to Reduce Cost of Ownership. Volume 2. Business Case.
Abstract
The Deputy Under Secretary of Defense (Logistics) tasked the Logistics Management Institute (LMI) to assess the leverage available to reduce operations and support (O&S) costs through insertion of technology in fielded weapon systems. LMI evaluated the tools DoD is currently using to identify cost drivers and characterized the ongoing programs targeted at reducing O&S costs. This provided a basis for identifying the best practices in DoD and for developing recommendations for a new program. The initial phase, documented in the Volume I annotated briefing, concluded that cost-tracking systems and sustaining engineering are not the limiting factors in reducing O&S costs. Rather, production funding for technology insertion is the most serious obstacle. A cost of ownership reduction investment program funded by the Defense Business Operations Fund capitalization is proposed. Volume 2 contains a business case to test whether currently available investment candidates could provide an adequate return on investments (ROI) to justify such a program. LMI developed a Microsoft EXCEL spreadsheet model and used it to evaluate nine potential Service projects. The business case confirmed that an ROI of 9:1 in 20 years for currently available Service candidates was feasible.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 01, 1996
- Accession Number
- ADA309888
Entities
People
- Donald W. Hutcheson
Organizations
- LMI