COST ANALYSIS

Capabilities

Decision makers need accurate cost estimates for weapon systems and other programs to accomplish critical tasks such as the preparation of accurate budgets, analysis of alternatives, and study of tradeoffs between costs and requirements. We help by

• independently estimating costs and schedules,
• modeling costs and requirements,
• analyzing business cases, and
• researching new methods and approaches to cost analysis.

Our multidisciplinary staff applies an integrated approach that combines engineering insight with innovative cost analysis methods—examining the sources of cost, schedule, and technical risk in depth—resulting in usable, practical information for decision makers.

Clients and Solutions

U.S. Army—IPCM

Cost estimates for most major acquisitions occur too late in the design cycle to significantly impact system design and total ownership cost. To overcome this problem, the Army asked LMI to design and build a way of integrating design, operational effectiveness, and cost modeling to enable cost-performance tradeoff analyses early in the acquisition cycle. Our groundbreaking solution, the Integrated Performance and Cost Model (IPCM), eliminates much of the work required to integrate legacy models, enabling analysts to develop systems that achieve technical performance requirements at affordable costs.

Senior leaders in DoD annually make top-level decisions on the program and budget for operations and maintenance funding, but they lack adequate tools to help them determine how much funding to allocate to the various O&M accounts. The Office of the Secretary of Defense (Program Analysis and Evaluation) asked LMI to develop models to aid in forecasting depot maintenance funding requirements. LMI developed cost models suitable for supporting senior DoD-level decision making via instruments such as program budget decisions and program decision memoranda. Our models produce an estimate—significantly more accurate than those developed by other means—of the amount of O&M funding the department should allocate to depot maintenance.

JPDO—Improving Air Transportation

LMI continued its support of the Joint Planning and Development Office, a multiagency effort to build the Next Generation Air Transportation System (NGATS). Our current efforts focus on producing preliminary estimates of what it would cost to build the NGATS and constructing analytical methods to ensure that the system will operate safely. The JPDO relies on LMI's analysts and our unique suite of models to identify performance gaps and measure the benefits of alternative technology strategies.