<Background and Purpose>
Army weapon systems needed a reasonable method for analyzing operations and maintenance (O&M) costs.
◎ O&M costs are likely to increase as a result of increasing sophistication and cost in recent weapon systems.
◎ Decisions to introduce new weapon systems need to take account of their total life cycle cost inclusive of the O&M cost.
◎ Each service branch needs an appropriate method for analyzing and projecting the O&M cost of a weapon system that can adequately capture the characteristics unique to the systems in that branch.
The study presents a reasonable analysis and projection of the O&M costs of two Army weapon systems, K200(A1) and K21.
◎ We first analyzed and projected the cost of sustaining each equipment throughout its life cycle.
－ K200(A1): the share of O&M costs was 93% in the current cost and 88% in the constant cost of the equipment’s life cycle.
－ K21: the share of O&M costs was 67% in the current cost and 61% in the constant cost of the equipment’s life cycle.
◎ Then, we created a cost projection model for an equipment group’s O&M.
－ We selected the model with the strongest explainability after creating several statistical regression analysis models to account for the equipment’s age, uptime, quantity in inventory, and cumulative uptime.
－ We created a cost projection model for the armored vehicle equipment group―with platforms like the K242 and K281―that captured details such as vehicle length, weight, engine horsepower, basic loadout, and other design specifications so that the model can be used to project the O&M costs of new weapon systems.
－ We then used the model in a test-run projection of the O&M costs of newly fielded equipment to evaluate its validity.
◎ We identified limitations in our O&M analysis and the ways it could be improved.
－ O&M cost estimates require more consistent standards for determining figures such as the unit acquisition cost, equipment life, and quantity in inventory.
－ O&M cost data need to be kept and managed throughout all phases of the equipment life cycle (which include phases of introduction, stability, and retirement).
－ Finally, O&M cost projections need a clear presentation of the model’s premises and assumptions; efforts to enhance the model’s goodness of fit, structure, logic, and explainability ; and history management of the model iterations and output.