COST-BENEFIT ANALYSIS

Capabilities

A full knowledge of current costs, costs options, and tradeoffs is critical in informed decision making. Cost analysis provides a broad range of practical information for use in decisions about operations, investment, technology, and performance.

LMI’s cost-benefit analysis employs a rigorous economic technique that compares costs of programs with intended returns and agency benefits to

• evaluate sourcing alternatives,
• prepare financial alternatives analysis,
• create and present recommendation briefs, and
• provide projected long-term life-cycle costs.

We take a well-defined approach, which is based on understanding the operational context for the investment. Whether we are analyzing information technology, financial management systems, research programs, or major acquisitions, it requires understanding agency business objectives and processes, the achievable operational benefits of the investment, and the cost and schedule uncertainties involved in the development process.

Over the years, LMI has created many tools, models, and methods to help move new ideas into action. One of the most useful—and most used—is The Cost Analyst's Companion. Written by LMI’s Dr. David Lee, this guide is considered the leading and definitive source for all cost analysis.

CLIENT SOLUTION—Army PERFORMANCE AND COST MODEL

The Army asked LMI to design and build an Integrated Performance and Cost Model (IPCM) that would enable it to perform cost-performance tradeoff analyses early in the acquisition cycle. The solution eliminated the enormous amount of work required to integrate legacy models, allowing analysts to focus their efforts on developing programs that enhance the ability to achieve technical performance requirements at affordable costs.