Acq202 M1 L01 508

ACQ202 Intermediate Systems Acquisitions Course (ISAC)
Lesson 1.1 - Considering the Cost
RHOURClS I PRINT I IIElP
Introductionc.. . . .c-__________________________________________________________________________
Clo sed Captio ning
In this lesson we 'll review the Anatysis of Altematives (AoA) and see how it is used to hefp select
the best corocept to meet a capability Meds. We will review the cost estimation methods used to
he lp predict the cost of an acql1isition program. Then we will consider the various types of costs
that are Or.cUfTed during an acql1isition program, the impact of these costs to a program, and how
those costs are typica lly distributed throughout the program's "fe - cycle.
Remember that the acquis ition process involves teamwoO<., and you'll need to chec k with Integrated
Product Team (IPT) members from other functional areas to carry out your assignments .
A CQ202 I nl ennt' cl id
idll e Sys
Systt e m s Ac qui s ili o n s CO llr
llrS('
S(' (IS
(ISA
A C)
Le ..""n 1.1 (",,,ld p r inglheCo51

Objj ectives
Ob
Upon completIOn of this lesson, you wil be <l
<lbIe
bIe 10
10::
(ICO)) <lnd <I
GIVen <In 1noO<l1 c..p<lbilities Document (ICO

sunvn<lry An<ltySlS of A1l
A1lee m <l<ltiv
tives
es ( AoA
AoA)) , select <In
"ppropri"te concepl, from the pe

perspectil/e
rspectil/e of the
system del/eloper, 10 meet the u s er's needs.
Gil/en a cost breakdown, determine Del/elopment Cost,
Flyaway Cost, weapon System Cost

Cost,, ~rocurement
Cost, AC(luisition Cost, and life Cycle Cost.
o Selec t a" appropriate method t o estim

estimate
ate the cos t o f
an ac<lUisitioo program.
Selecl an appropriil te appro<lch (e .g., Analogy,
....ametnc
....
ametnc,, Top-Down, Engin
ngine
e emg ( Bottom-Up ) ,
Actual, Delph ) to estJrn<lt

estJrn<ltee the cos t <lnd schedule fof
<I software - ontensrve syst

systee m.
Relate the typICal distribution of ""ttw,,'e ~fe cycle
costs to the plarYlln!l of <I<In

n <l<lc<lUisition
c<lUisition program .
R&cognoze the mpacI <l<lnd

nd interr
interree la tionship of
product support and ~fe cycl
cyclee cost.
~fe
cycle
QE I OUKU I I PR
PRII NT I MH'
Closed Capti
Captio
o ning
8efore w e begin
begin,, take a fe w moments to refresh y our memO!)' w ith some questions from ACQ 101
material . Here is some background "'formation pertaOning to the topics presented On this lesson .
ACQ 101 8ackground Information
idll e Sys
llrS('
S(' (IS
(ISA
A C)
Le ..
..""n
""n 1.1 (",,,ld p r inglheC.,51
ACQ 1 0 1 Re fre9l
fre9lee rQu
rQueslion
eslion 1
There "re foo..r b"sic lechniques u sed by DoD for crutJng COSI
e stim
stim"" tes: An"iogy, Parametric, ,,
,,00
00 Actu
Actu,,
,,1
1 Costs are Itvee
t e chniques.
s..lf!a" the rrns5JII9 techmque from the lis

lisrr below.
Statistical
Extrapolation
~ Engir>eeriog
Cost Estimating Rela tionship
Thiorr is COITett.
Thio
The engineering
engineering,, 0( "Bottom
"Bottom-- up: method is the fourth COSI
e stim
stim"" nng technique. T his method o f cost " n " IySlS IS the
most det
deta
a ~ed of all the technique
techniquess a nd most costly to
implement. Each WBS elemen

elementt mu
must
st be costed to build the
coss t estimate fO( the entire pro

co
prog
g ram .
QE I OUKU I I PR
PRII NT I MH'
idll e Sys
llrS('
S(' (IS
(ISA
A C)
Le ..
..""n
""n 1.1 (",,,ld p r ingtheCo5t
ACQ 10 1 Re fre9l
fre9lee rQu
rQues
estion
tion 2
Which <lIppropn<llD<>n cat
category
egory would fund the deS'9" of new
e quipment, matenel, or so
softw
ftw<ll<llrre ?
Procurement
Research, Development, Test, <li

<lind
nd EV<llluation
Military Personnel
Military
Mili
tary Construction
Operations and Ma n agemen t
That
is correct.
The R ese~rc
ese~rch
h , De ve
vellopment
opment,, Test
Test,, and Eva
Evalu
lu~Uo
~Uon
n
( ROTA
ROTAE)
E) appropnaD<>ns category would fund the deSlgO of
new eQl.lll)lTlent, matenel, or computer <lI<lIppIic<lltion

ppIic<lltion software.
This <lIppropriation category would also be used to
fund activIties related to Developm

Developmee ntal Test <lind Evaluation
(DT&.E), Initial Operational T est a n d Ev a luation (lOT&.E),
a n d operational costs for R&D d edicated installations.
QE I OUKU I I PR
PRII NT I MH'
ACQ202 Inl
Inlt'
t' rm c dldl
dldlee Systems Acquisiti o n s Co ur
urse
se (ISAC)
Le sso
sson
n 1.1
C<H1' l d~ rin
rinll
ll Ih e Cost
REiOUR(H I PR
PRII NT I MHP
R.,.,..ipl of ICD and AOA
1\
1\
Helo, a !l
!laa in. After recervng a favorable Materie
Materiell Dev
Devee lopment DeCISlOl"l
( MOO
MOO)) , w e are now a pprtlJ<mately three months in
intt o OU" Ma tenel SoIutJorl
Analy
An
alysis
sis ( MSA
MSA)) phase. We've been traclor'!! the Initi
Initiaa l Ca p a bilines Document
( ICO
ICO)) to the An
Anaa lysis of Alternatives based on concept studies of two UAVS:
one recover
recoveraa ble a nd one e)(pendable.
The Milestone Decis

Decision
ion Authority ( MDA) has assi!lned me as the PM for thos
program. The MDA al
also
so clir
clirecte
ecte d the estabh
estabhshment
shment of a pr
provisional
ovisional joint
Program
Prog
ram Marla!leme rlt Office (P MO
MO)) w itt1 the Army as lead Service because
o f interest express ed by the Navy arid AK Force.
80tt1 conce
concepts
pts adequat
adequately
ely address the ca
capabilOty
pabilOty !laps ide
iden
n tifi<!
tifi<!d
d in the ICO.
AS part o f the Miles t one DeCISlOl"l process, we ne
neee d t o provide a
recommendation
recommend
ation to the Milestone DecISIOn Au thority , or MOA, on the most
cos t"effectiv
t"effectivee a nd affordable concep t that wil me
meet
et OU" user's needs. Thos
reVIeW wil help us dete
dete...........
........... what OU" nex t s tep
tepss should be in the
acquisition de
decision
cision process .
neee d yOU" he
help
lp detemww>g what to pr
pree s e nt to the MDA. To be affordable
affordable,,
I ne
the ~fe
~fe-- cycle cost of Firebord must be consisten
consistentt with the long-range
.weslmerlt
.weslm
erlt a nd force structure plans of the services.
idll e Sys
llrS('
S(' (IS
(ISA
A C)
Les""n 1.1
(",,,ld p r i ngtheC"5t
QE I OUKU I I PR
PRII NT I MH'
ICD and IV>A SUmmaries
-"~
~\
~\
you'l ne
nee
e d t o become f<tmili<tr WIth how the AoA is us
use
e d. My proVlSlOn<t1 deputy
pr<>gr<tm
pr<>gr<t
m m<t
<tn
n <t
<tger
ger,, D<tn D<twson, hu helped me e v <t
<tlu
lu<t
<t te <t few AoAs on the
put, <t
<tnd
nd he's compiled SUlM1<trieS of the lCO <t
<tnd
nd the AoA for the concepts.
I w <t
<tnt
nt you t o first rud the summ<try of the lCD, then the AoA. After rudiog
the summ
summ<t
<tri
rie
e s, stop by D<tn's office to get some <t
<tdvic
dvic e on ev<tlu<tt
ev<tlu<tting
ing the AOA.
Review the summ,,";"s by selecting each of the documents below.
ACQ202 Inlt'rmcdldle Systems Acquisiti o n s Co ur

urse
se (ISAC)
Le sson 1.1
C""'ld~,inll the C.,5t
REiOUR(H I PR
PRII NT I MHP
Analysis of Altern
Alternaa tives
Hey , {FIRST NAM
Hey,
NAME
E) . I heil' you need some poin te
ters
rs on e Vil
illu
luil
il ting iln AoA l 1 ilm
hilppy to il
iln5w
n5wee r il
ilny
ny queStJon!i you mily hilv
hilvee , so fir
firee il
ilw
w il
ily
y.
..uk Dan for mo
more
re info~tlOn on.4OAS by selecting the foIoW1119 quest>Ons.
What is a n AoA?
What types of progr

programs
ams re q uore an AOA?
I--klw is t:he AoA us e d ?
Wha t i!; t:he basi!; for t:he AlJA

AlJA??
ACQ202 Intermedi.ate Systems Acquisitions Course (ISAC)
RHOURUS
I PRI NT I HELP
Ana lys
ysis
is of Alternat
ternatiives
He y , [ FIRST NAM EJ . I hear y ou need some pointers on e v a luating an AoA! I am

happ y to ans w er an y Questions y ou ma y ha v e, so fire a w a y .
Ask Dan for more information on A<lAs by selecting the following questions .
What is an AoA?
studd y o f the opera ti
tiona
ona l effectiveness and life - c y cle cost of the
T he AoA is a stu
v arious a ltematives that ma y be ab le to meet a capab ili ty need . It
It''s usua lly
prepared b y the user
user,, or b y some other agenc y that
that''s independent of the
program office , li ke a Federa lly Funded Research and De v elopment Center .
primarily
ly used to ass ist dec ision
sion-- makers in se lec ti
ting
ng the most cost
cost
T he AoA is primari
effective w a y to meet a capab ility need .
RHOURUS
I PRI NT I HELP
Ana ly s is of Alte
tern
rnaa t ive
vess
He y , [ FIRST NAME J . I hear y ou need some pointers on e v aluating an AoA! I am

h app y to ans w er an y Questions y ou ma y ha v e, so fire a w a y.
Wh a t types o f progr
prograa ms require a n AoA?
AIl AoA is mandatory fo
forr a ll acquis ition programs . It identifies the ad
adv
v antages
and d isad
sadvv antages of one o r mo
more
re potentia l a ltemative so
sollutions that address
the capab ility need desc riribed
bed in the !CD
!CD.. AoAs are a lso used to help justify the
need for star
starti
ting,
ng, stopp
stoppiing, or con tin
tinu
u ing an acquis ition progra m.
RHOURUS
I PRI NT I HELP
Ana lys
ysiis of Alter
ternna ti ves

h app y to ans w er an y Questions y ou ma y ha v e, so lire a w a y .
How is the AoA used?

AIl AoA pro vi
vides
des a re liab le , objective assessment of the op ti
tions
ons for mee ti
ting
ng
mililiitary capab
capabiility needs . The a ltematives a re compa red based on the ir
es tim
timated
ated effectiveness and life - c y cle costs . The resu
resullts of the two UAV
a ltema tiv
tivee ana ty
tyses
ses a re combined to produce a cos t/ effec tiv
tiveness
eness
comparis on, w h ic h a lllloo w dec is ion
on-- makers to make the op tim
timaa l cho
choiice .
RHOURUS
I PRI NT I HELP
Ana lys
ysiis of Alter
ternna ti ves

h app y to ans w er an y Questions y ou ma y ha v e, so fire a w a y .
What is the basis for the AoA?

tion
on from the lCD
lCD,, such as
T he AoA effort is based on spec ific informa ti
app licab le func tio
tiona
na l areas , range of military operations irirwo
wow
w ed
ed,, ti
timeframe
meframe
under consideration to add ress the capab ility need
need,, and ke y attrib
attribu
u tes defined
b y broad measures of effectiveness for the capab ility .
rebiird, the bas ic capab ililiity needs are to pro v ide s ituationa l a w areness
For Fireb
and force app lica ti
tion
on w h il e pro v id ing " stan
stand
d of
off"
f" to troops from dangerous
s ituations . T he range of mili ta ry opera ti
tions
ons cou
coulld be an yw here from small
small-- sca le
specia l opera tio
tions
ns missions to large - sca le theater campa igns . A ke y attrib
attribu
u te
for Fireb ird cou
coulld be its ab ililiity to destro y an enem y target w ith
thiin a spec ified
time
ti
me .

urse
se (ISAC)
Le sson 1.1
C""'ld~rinll the Cost
REiOUR(H I PR
PRII NT I MHP
Basiss of /IJ)A
Basi
Gre at questions! And WIth regard to y.....- las t question on the basIS of the
Great
AOA, a low me t o c a rTY that over to .....- progr
prograa m.
For Fir
iree bird, the b a s.i<: capability needs ar
aree to provid
providee situ
situaa tional awareness
and force a pplic a tion while proVIding standoff" to troops from dangerous
situaa tions. T h e ra nge of military operabOns could b e a nywhere from smaN
situ
sc a le sp
spee ci
ciaa l op
opee ra tions miSSlOllS to large-sc a le th
theate
eate r c a mpaigns. A key
attributee for Fire bir
attribut
birdd could be its ab~ity to des tr
troy
oy a n e n e my target WIthin a
specified
speci
fied ti
time
me .

urse
se (ISAC)
Le sson 1.1 C""'ld~rinll the C.,5t
REiOUR(H I PR
PRII NT I MHP
Know ledoe Rev iew - I
So, now that you have had a chance t o ask me some qu<'stions, let me ask
you one ...
Given the inform
informaa tion I just proVIded, what's the prim
primaa ry pu-pose of an AnalySIs
of Altern
Alternaa tiv
tives
es (Ao
(AoA
A) ?
statement
ent of operational need
Identify a non-system spe.: ific statem
Document
Docu
ment the user's objective a mi th
thrreshold le vels of capabil
capabiliity nee d s
SeNe as the fr
frama-wori(
ama-wori( for planning, d;recting, ami ma
managing
naging a program
. , ProVIde dec
decision-making
ision-making aid in selecting a cos t - eff
effective
ective matenel alternative
The AoA IS pnrnarily us

used
ed t o assist d eds
edsion
ion n.ak
n.akers
ers ...
selecting the most cost
cost-e
-effectiv
ffectivee w a y to meet a moS!IIOfI
need.
RHOURUS I PRI NT I HEL P
E- fIliIil : Evaluiltinll an AoA
Iknnen"" < W.lknnen:gfir

W.lknnen:gfireebird.pmo >
F rom
rom:: "COL Iknnen
To "[LAST ",,"-ME], [FIRST Xo\,\IE] " < action.officer@fir
action.officer@fireebird.pmo>
Subj
bjeect Evaluating an AoA
[FIRST ",A,\IE],
Dan ju
just
st stopped by
by.. He said that he gave yo
you
u som
somee good infortrultion regar
arding
ding
preevio
viouu sly, 1 need yo
you
u to help me ev aluat
aluatee Fir
Fireebird
bird'' , AoA.
AoA,. As I mentioned pr
When evaluating an AoA, w e need to consider cos
cost,
t, perfOl1ll.1!lc
perfOl1ll.1!lcee , and schedule.
Wled,
ed, ple
pleaa se go u.lk with the cos
costt
We 'n firs t focus on cos
costt . Befor
Beforee w e get sWl
andd see which methods wer
weree used to e stimat
stimatee th
thee cos
costs
ts
analy st from our cos
analy
costt lPT an
andd if th
an
theey wer
weree appropriat
appropriatee . Her l!.1IIl
l!.1IIlee is Car
arol
ol Ann. rn sen
send
d her an e -mail an
and
d let her
know yo
youu 'n be coming by
by..
ACQ202 I nl
nlt'
t' r mcdld l e Sys
Systt e ms A c qui s iti o n s Co ur
urse
se ( I S AC)
Les,""n 1.1
("'''ld~rinlltheC<>5t
RE I OURU I I PR
PRII NT I MHP
Cost Estimation
Hi. COl. Berne tt t old me th<ot you'd be droppong by. Let me til you on on the cost
estimation me thods that were used in prepanng the Fir
ire
e bird AoA.
Forst of ai, cost e stim
stima
a tion pro)Ccts the cost of h a rdw
rdwa
a r e , software
software,, or sel"VlCes
by relating historic a l cost, performance, schedule, a nd teclvlical data of SImilar
items or servic e s.
ACQ202 Inlt'rmcdldle Systems Acquisitions Course (ISAC)
Les,""n 1.1 ("'''ld~rinlltheC<>5t
RE IOU RU II PRINT I MHP
Cost Estimation Me thod

thodss
AS you know, there a re foo.r baSIC methods used t o develop cost eStimates f
defense a cquisition programs : analogy, parametric, engine
engine.".w,g,
.".w,g, and actual costs.
Let me explain these fu"ther.
SeJe.ct each tab below for more informatIOn on cost es
esrimares.
rimares.
Analogy
Parametricc
Parametri
Engineering
Actual Cos
Costs
ts
Ana logy is a compari

comparison
son of the Moo syste m or
compone nt oo itl1 a sirNa. ex;stir">g sys t e m or
componen t .
The analogy method Can geMrally be done quickly
and inexpensiv
inexpensivee ly. Analogy estmates are commonly
used early in the a cquisition process, but are
subjectivee and less precise tl1an other methods.
subjectiv

urse
se (ISAC)
Le s,""n 1.1 ("'''ld~rinlltheC<>5t
RE IOU RU II PR
PRIINT I MHP

thodss
defense a cquisition programs : analogy
analogy,, parametric, engine
engine.".w,g,
SeJe.ct each t a b be
below
low for more in
informatIOn
formatIOn on cost es
esrimares.
rimares.
Analogy
Param e t ric
En gi n ee
eering
ring
Actual Costs
P a r a metri c is a statistica l ana lysis o f a database of
simila r sys tems . It is used to de~elojl a re lations hip
between cos t and Of><! <Y more perfOllllance <Y design
charac te
te,;,;
,;,; tics o f other sys t ems.
In the parametric method, a Cost Estimating
Relationship is e sta~hed between cos t and a
characte,;,;tic
char
acte,;,;tic ( such a s speed <Y acc
acc...
...acy
acy ) o f v a rious
systems
syst
ems,, which can be used to eStimate the cos t of
a new sys te
tem.
m. Thi5 method IS nexpenslYe and used
relatively
rel
atively ea
earty
rty in the a cqus'tIOn process. The cos
costt
estimaa ting rel

estim
relaa tionship is very useful in analyzing
what;/" scen
scenaa rios, but it is only as valid as the
statistic a l cO/T
cO/Tee la tion and the database used to
create it.
ACQ202 Inlt'rmedldle Systems Acquisitions Course (ISAC)
RE IOU RU II PRINT I MHP

thodss
defense a cquisition programs : analogy, parametric, engine
engine.".w,g,
esrimares.
rimares.
Analogy
Parametricc
Parametri
I "<llne"rin,]
Actual Costs
Engineering is w h e re a detailed, 'b<lttOffl up

up
arlafysis ;5 made o f a~ the materials, parts, aM
labor requir
required
ed t o develop aM produce the
s~ tem.
Additiona l in formation about Engoneemg method:

Additional
The engineering method is very acc
acc...
...ale
ale and is
more objectiv
objectivee than other methods, bul II Ca n
be expensive a nd v e ry time consl.Kl'W1g.
Engineee ring es
Engine
estim
timaa les are typoCally used for
elements identified a s cost drivers in the lat
at....
....
stages of system development .
J (",ineeri",

urse
se (ISAC)
Le s,""n 1.1 ("'''ld~rinlltheC<>5t
RE IOU RU II PR
PRIINT I MHP

thodss
AS you know, ther

theree a re foo.r baSIC methods used t o dev
devee lop cost eStimates f
defense a cquisition programs: analogy, parametric, e ngine.".w,g, and actual costs.
Let me expl
explaa in thes
thesee fu"ther.

esrimares.
rimares.
Analogy
Parametricc
Parametri
Engineering
Actual Cos t s
Actu
Act
u a l co
cost
st is w her
heree the costs of fut","a e ffo rts
a ra ex
extra
tra pol
polated
ated b ased on pravious cos t da t a fOf
the iden tica

tical,
l, Of nearty identical, s y stem.
ACtual cos t a lso re fers to the use of actual cos t
data from comple te

ted
d portions of the program t o
upda te the progr

prograa m's ~fe cycle cost eSbma te .
Cos t e stima te
tess b a s e d on the Actual cost method
are typic
typicaa ly v e ry a ccurate.
ACQ202 I nl
nlt'
t' r mcdld l e Sys
urse
se ( I S AC)
Les,""n 1.1
RE I OURU I I PR
PRII NT I MHP
US<" of Me thod
thods
s
Each of the melhod5 c a n be used ondependently or in combination. In fact

fact,, one
method c a n be us
usee d to esumate the cost of one component of the system
system,, and
another method c a n be used to esumate the cost of a nother component .
The estim
estimaa tion method is usualy determoned by the type a nd a ccuracy of data
that is a v a ~ a b l e , where you are in the progr
prograa m's ~ fe
fe-- cyde, a nd the relative
importance
import
ance of the cost element being estimate d .
ACQ202 I nl
nlt'
t' r mcdld l e Sys
urse
se ( I S AC)
Les,""n 1.1 ("'''ld~rinlllheC<>51
RE I OURU II PR
PRII NT I MHP
Knowledoee Review - 2
Knowledo
NOw, le t't'ss pu l yOU"" knowledge of COSI eSbmation method 10 the test . The Army
needs t o modi
modify
fy a n existing convnercoal truck d e sign by a dding features to
' ruggediz
ruggedizee ' it . A d e t a iled won: breakdown structur
structuree h as be
beee n developed that lays
out a l the p a rts
ts,, e quipment
quipment,, and labor involved in the modific a tion
tion,, along WIth
the..
the
.. a ssoci
ssociated
ated costs.
Which of th
thee fOU"" me thods is most appropriate t o es tim
timate
ate the cost of the
modifie d truc k?
Actua
ctuall Cos t
That is co
correc
rrect.
t.
Parra metric
Pa
The Engineering method would be most

appropria te beca
becalJ'5
lJ'5ee the estimate can be
deli:v
de
li:vered
ered by a dding up a l the matenals, parts
parts,,
and labor cos ts ide
identifi
ntifiee d in the won:
breakdown structur
structuree .
ACQ202 I nl
nlt'
t' r mcdld l e Sys
urse
se ( I S AC)
RE I OURU II PR
PRIINT I MHP
Softwal"f! Costs
AI these methods could be used to estimate the cos t of software onteflSlVe

systems, but w e oft
oftee n don't halle analogous syst
systee ms, a ctual systems, or
sufficient d a t a t o us
usee the engoneering method to a cc ...
...aa teiy predict the cost of
softwaa re. We most often use p a r a m e tri
softw
tricc models to estimate software
dellelopment costs a nd schedules. There are a lso th
thee Top
Top-- Down and Delpho
methods a ll
llaa ililaa ble for estimating software costs.
,-Isk Carol ,-Inn for more informatIOn about soltwa ro cost esrimation methods by
selecring the foIiowing questions.
What is the Top

Top-- Down method?
What IS the De lphj method?
RHOURUS I PRI NT I HELP
Software Costs
Al l these methods cou

All
coulld be used to estimate the cost of software Onterlsive
systems, but we ofterl dOrl ' t ha ve arla logous systems, actua l systems, or
sufficierlt data to use the erl'lirleering method to accuratety predict the cost of
software . We most ofterl use parametri c mode ls to estimate software
developmerlt costs arld schedu les . There are a lso the Top
Top-- Dowrl arld Delphi
methods ava il ab le for estimating software costs .
Ask Carol Arm for more information about software cost estimation methods by
selecting the following questions .
What is the To p-Oowrl method ?

The Top
Top-- Dowrl method takes a systems - le ve l v iew of the software
developmerlt project . Irl this method, resource estimates are allocated to
spec ific W85 activ
activiities based on past experierlce . Conllicts are reso
resowed
wed as
developers determ
determiirle how to meet reQu
reQuiiremerlts w ith ava ilable resources .
8ecause this method wones from the top dowrl, it may overlook details if root
appllied dowrl to the appropriate le ve l.
app
Software Costs
Al l these methods cou

All
coulld be used to estimate the cost of software Onterlsive
systems, but we ofterl dOrl ' t have arla logous systems, actua l systems, or
sufficierlt data to use the erl'lirleering method to accuratety predict the cost of
software . We most ofterl use parametri c mode ls to estimate software
developmerlt costs arld schedu les . There are a lso the Top
Top-- Dowrl arld Delphi
methods ava il ab le for estimating software costs .
Ask Carol Arm for more information about software cost estimation methods by
selecting the following questions .
What is the Delphi method ?

The Delphi method, a lso known as the expert jud'lmerlt method, uses a team
of experts working both Ondeperlderlttv arld together to combOne d iffererlt
approaches arld arrive at a co
colllective judgme rlt through COrlserlSus . Team
members must have the proper Qua li ficatiorls for this method to won.:
effectivety . This techroiQue terlds to be subjective, so it is ofterl combOned w ith
other estimatirlg methods .
ACQ202 I nl
nlt'
t' r mcdld l e Sys
urse
se ( I S AC)
RE I OURU II PR
PRIINT I MHP
Activity
Acti
vity 1 - ElIl)etld
ElIl)etldll
ll bl
blee UAV
There il
ilrre severil
severilll sm
smil
iller,
ler, but s-noIar, unmanned Ae rial Ve hicle (UAV
(UAV)) and
progril
progr
ilms
ms out there that could !jIVe us iI gener
generil
illl fe el for the overal
costs.
R"IU'lIbOns
Given th
thil
iltt the expend
expendil
ilble
ble UAV would be a new progr
progril
ilm,
m, wh
whil
iltt is the most
appropriilte co
cost
st e stimilting method for it?
Actuil l Cost
Thilt is correct.
The analogy me thod would be most
Engine
ngineee rflQ
Pil
ilrilmetric
rilmetric
Ao,w,
appropria t e, be
becc a use we can use costs from
the earlier sys te
tem
m plus ilny estimated costs
for changes or diff
diffee re nces between the
earlier sys te
tem
m il
ilnd
nd Fir"
ir"ee bird, to derNe the
costs o f ..... new UAV.
ACQ202 I nl
nlt'
t' r mcdld l e Sys
urse
se ( I S AC)
RE I OURU II PR
PRII NT I MHP
Activity
Acti
vity 2 - Recoverable UA
UAV
V
Given th
thil
il t the re cov
covee rilble UnmiIfVMId Aenal Ve hicle (U
(UAV)
AV) is bilsed on an eXISting
Joont Cil
ilpp il
ilbility
bility T e clv>ology DemoostratlOl'1 ( JCTO
JCTO)) t o be e quipped WIth Non
Developmentil
Developmen
tilll Item ( NO
NO!)
!) munitionS
munitionS,, It w illik
illikee ly re quir
quiree e xtensive software
development. Ther
Theree il
ilre
re probably a lot of statistics ililVV ilil~~ ililbie
bie on software
development cost re
rellil
iltionships
tionships from other If'ltegr
If'ltegril
iltion
tion efforts.
What is the mo
moss t il pprDpriate cost estimating method for the software?
Ac tu
tuililll Cos t
Engine
ngineee mg
. , Pil
ilrril
ilmetric
metric
That
Th
at is correct
correct..
The parametric method would be the most

appropria te . Pil
ilrilmetric
rilmetric dilta is ava~able from
SI'I1iIar
SI'I1iI
ar softw
softwil
ilrre dev
devee lopment efforts that
e s tablish cos t re lil tionships WIth the UAV
effort. Thes
Thesee d il
iltt il Cil
iln
n be used to es tm
tmate
ate the
cost of int
intee gr
gril
ilting
ting the mo.ribons system.
Therefore, using the p il
ilrilmetric
rilmetric method would
be most ililpprDpri
pprDpriil
iltt e .
E- fIliIil : Calc
alculated
ulated Costs
F rom
rom:: "COL Iknnen
Iknnen"" < W.lknnen:gfu
W.lknnen:gfueebird.pmo >
To "[LAST ",,"-ME], [FIRST Xo\,\IE] " < action.officer@fu

action.officer@fueebird.pmo>
Subject
bject:: Calculated Costs
[FIRST ",A,\IE],
Carol Ann tens me that th
thee anmgy method w a s u sed to e stimat
stimatee th
thee cost of th
thee
expendable VA V, and th
thee parametric method w a s u sed to e stimat
stimatee th
thee cost o f the
recover:able VA V based on th
thee JCID
JCID.. rm confiden
confidentt that appropriat
appropriatee cost e stimating
methods wer
weree u sed for the two conc
concept.,
ept., but fm curio
curiou
u s to see what types o f cos
costt
weree included in th
wer
thee e stimat
stimatee .
costs
ts wer
weree c>.lcul:ited an
and
d why
why..
Check with Carol Ann again to see what types of cos
w'r
'r,,
Cal B2nMtI

Lesson 1.1
C<""ld~ rinll the C05t
REiOUR(H
REiOUR
(H I PRINT I MHP
Tvp<"s o f Cost
Hi, again. I unders ta

tand
nd that COl Bennett wants t o know wh
what
at types of cost
were consider
considered
ed for t:hf! Firebrd cost eSllmate. According to a CQUISItIOn policy,
t:hf!re a r e se v e n type
typess of costs related to an a cquisition program:
Development
Developm
ent
Flyaway
Fly
away
Weapon syste m
Pr<>ClJ
r<>ClJrement
rement
Program
Progr
am acquisitiof1
ep..rating and Support
Li fe-cycle
These cos ts are funded by speCIfic appropnatiof1s, in o the

therr words, "colors of
money." Let's take a look at a cost matrIX that I h a v e for the X-M3 advanced
tank conc ept t o ilustr
ilustrate
ate t:hf! dofferent types of costs!
Cak
akulatin
ulatinll
ll Types of Cost
Select eac
each
h tab below for more in
informatio
formation
n o n the types of cost.
Development
Flyaway
Weapon System
Proc
Pr
ocurement
urement
Program Acq uisiti

uisitio
on
OilS
Life- cyd e
De v el
eloo pment co
cost
st is the cost of a ll research arld de v elopmerlt
elopmerlt-- re lated activ
activiities
rlecessary to desigrl arld test the s y stem . De v elopmerlt costs are 1i.mded w ith the
RDT&.E appropriatiorl . For the X- M3 tarlk
tarlk,, the de v elopmerlt cost is $ 2 .93 b ill iorl .

ClIkullltinll Types of Cost
Select eac
each
informatio
formation
Development
Weapon System
e;,v ~ lol'm ~ nt
Proc
Pr
ocurement
urement
Program Acquisition
OilS
Life- cyd e
Cost
F lyaway co
coss t , otherwise kno w n as ro
rollla w ay cost
cost,, depend ing on the item, refers to
the cost of prOCUrlng prime mission equipment such as an aircraft or a ta n k . It is

funded w ith procurement appropriations . T he u n it procurement cost of each X- M3
tank is $ 9 mill ion
ion,, and w e expect to procure 1,000 un
uniits . So
So,, the ro
rollla w a y cost for the
X- M3 is estimated to be $ 9 mill ion x 1, 000 or $ 9 bi
billlion .
Cakulatinll Types of Cost

Select eac
each
informatio
formation
Development
Flyaway
Weapon System
a;,v ~ lol'm ~ nt
F l y ~ ... ~ y
Proc
Pr
ocurement
urement
Program Acquisition
OilS
Life- cyd e
Cost
Co s t
Weapon system cost ",eludes both n y a w a y cost arld the associated s u pport
eQuipmerlt for arl item , such as testirlg arld trairlirlg e Quipmerlt . T he y are 1i.mded w ith
Procuremerlt appropriatiorls . For the X- M3 , Weaporl s y stem cost is $1 0 . 2 bi
billll iorl .
Cakulatinll Types of Cost

Select eac
each
informatio
formation
Development
Flyaway
Weapon System
e;, v ~ lol'm ~ nt
F l y ~ ... ~ y
Pro c urement
Program Acquisition
OilS
Life- cyd e
Cost
Cost
W ~ al'on Syst ~ m
Cost
Procurement
Proc
urement cost
cost,, w h",h is a lso 1i.mded from Procurement appropriations , is made up
of Weapon S y stem cost p lus the cost of the s y stem 's ""
""iiha l spares . For the X- M3 ,
Procurement cost is $ 10
10.. 98 bi
billlion .
Cakulatinll Types o f Cost

Select eac
each
informatio
formation
Development
Flyaway
Weapon System
Proc
Pr
ocurement
urement
Program Ac quisition
OilS
Life- cyd e
a;, v ~ lol'm ~ nt Cost
F l y ~ ... ~ y Co s t
W ~ ~l'on Sy st ~ m
I'r oc ur ~ m ~ nt
Co s t
Co s t
Program aCQuisition cost cOrls ists of a ll costs assoc iated w ith de v e lop irlg
rlg,,
procuririrlg
procu
rlg arld hous irlg a w eaperl s y stem . T h is is the comp
compllete cost of acqu
acquiiring a
w eaporl s y stem - rea d y to operate . Program ac q liis itiorl cost co
con
n so
sollidates
de v elopme n t , procu
procurreme n t , and mililit
itaa ry COrlstructiOrl costs , so RD
RDT
T &.E , Procureme n t
arld MI LCON appropria ti
tiorls
orls are irlrlel
eluded
uded . For the X- M3 tank, Pro
Prog
g ram Ac q liis itiorl cost
is $ 13 . % b illi on . T h is is the tota l of the $ 2 .93 b illion for De v elopment p lus the $ 10
10.. 98
b illlliion for Procurement p lus $ 50 milli on for Mili ta ry COrlstructiOrl .

Select eac
each
informatio
formation
Development
Flyaway
Weapon System
Procurement
Program Acquisition
Life-cyde
e;, v ~ lol'm ~ nt Cost
Fl y ~ ... ~ y Co s t
W ~ ~l'on Sy st ~ m
I'r oc ur ~ m ~ nt
Co s t
Co s t
I'ro
I'
rog
g ram ....
....c
c qui s ition Co
Cos
st
Operating and Support (OilS

(OilS)) cost includes a ll costs for personrlel
personrlel,, eq ui pmerlt
pmerlt,,
suppl ies , sof
suppli
softw
tw are , arld serv
serviices , irlclud irlg COrltractor support
support,, associated w ith
operatirlg, mod
modiify
fyiirlg, ma irlta irlrliirlg, supp
suppty
tyiirlg, tra irlrliirlg arld supporting a s y stem .
Operatirlg arld Support costs are 1i.mded primari
primarity
ty w ith appropriatiorls for Operatiorl arld
Ma irlterlarlce , or 0&1>1, arld Mi
Millitary Persorlrle l, or MILP ERs . You carl see here that 0&5
cost for the X- M3 is $ 37
37.. 2 b illiorl .

Select eac
each
informatio
formation
Development
Flyaway
Weapon System
Proc
Pr
ocurement
urement
Program Acquisition
OilS
Life-cyde
e;, v ~ lol'm ~ nt Cost
F l y ~ ... ~ y Co s t
W ~ ~l'on Sy st ~ m
I'r oc ur ~ m ~ nt
Co s t
Co s t
rog
g ram ....
....c
c qui s ition Co
Cos
st
P ro
O l' ~ r~tin g
SUl'I'ort Co s t
Li fe-- cy
Life
cyde
de cost is the tota l cost for a program from beg
begii,m
,miing to end . It consists of
the Program Acquis ition Cost, Operating and Support cost, and a ll the costs requ
requiired
to eventlJa lty d ispose of the system . li
liffe cycle cost is synonymo
synonymou
u s w ith T ota l
Ownershiip Cost and represents the crad le - to
Ownersh
to-- grave cost of an acqu
acquiis ition program .
liffe cycle cost for the X- M3 is $ 53 . 36 b ill ion . T h is cost is a tota l from the $ 13 .9 b illion
li
for Program Acquis ition p lus $ 37
37.. 2 b ill ion for 0&5 p lus $ 2 . 2 b illion for d isposa l cost .
ACQ202 I nl
nlt'
t' r mcdld l e Sys
urse
se ( I S AC)
Les,""n 1.1
RE I OURU I I PR
PRII NT I MHP
Knowledoe
Knowledo
e Review - 3
Using the data proVIded in the cos t ma trix, which all'lOOXlt repr
repree s e n ts the a ppropriate
Proc ...ement
Proc...
ement of Pnme Mission Equipment cost?
Dtov..
Dtov
.. l opm
opm..
..,,1
,,1 COS
OSII
$2,930
$2
,930
1,000
"
Flvwaa v COS
Flvw
COSII
Wu pon
SV1llem Co1oI
Procu .... m .. nl C....

....II
Prooram "'
"'cc qul
qul.l
.lli
lio
on
Opf:ral
Opf:
rallo
lon"
n" Sup
uppo
port
rt
l il
il..
.. - evcle CO.
CO.II
Co~ 1
$3,939
. / $9,000
$11,, 930
$11
Co~ 1
A,
Tha
Th
a t is correct
correct..
The ~ppropri~te Procurem

Procuremee n t of Prim
rimee Mission Equipmerlt cost is $9,000
$9,000,, which is the rovrnber of
units
uni
ts ( 1,000) mu
mulltiplie d b y the un
uniit pr
proc
oc u reme"t cost ($9).

urse
se (ISAC)
Le s,""n 1.1
RE IOU RU I I PR
PRII NT I MHP
Knowledoe Review - 4
Using the data proVIded in the cos t ma trix, which all'lOOXlt repr
repree s e nts the a ppropriate
~fe- cycle cost?
Dtov..
Dtov
.. l opm
opm..
.. nl COS
OSII
Flvwav Co
CoSI
SI
[.IJ
Weapon SV1llem eo..l
$53,360
$51,160
Procu .... m..

..nl
nl C....
....II
$84,, 270
$84
S37 , 2OO
S37,
$2,, 2 00
$2
A,
That is correct
correct..
The ~ppropriate Life-Cycle co

cost
st is $53,360
$53,360,, whic h is progra m acq
acquis
uis ition cost ($13,960
($13,960)) plus 0&5
cost ($37,200
($37,200)) pl
pl"s
"s d ispos a l ($ 2 , 2 00) .
ACQ202 Inl
Inlt'
t' rm c dldl
urse
se (ISAC)
Le sso
ssonn 1.1 C<HI' l d~ rin
rinll
ll th e Cost
REiOUR(H I PR
PRII NT I MHP
Activity
Acti
vity 3 - Procurement Unit Cost
.".
1"\
Alternative''s ( ADA
ADA''s ) cos t ma trix
trix,, the procurement
ACCording t o the AnalysIS of Alternative
cost for a single e xpendable vehocle ( $45,000
$45,000)) is much less than the
procurement cost for a single
single,, recoverable vehicle (S lS0,000
lS0,000)) . I've heard that
Procurement funds may be tight for the next few ye
yeaa rs.
Sased <HI th
thes
esee unit procurement costs
costs,, do we hav
havee enough rationale to go
with the exp
expee nd
ndaa ble Unma"""d Aerial Vehicle (UAV)?
Select the doc
docum
umee n t to view the cost m a t riK atld t hen se
select
lect the best response.
Yes, that'
that'ss enough r a tionale
FI REBIRD
. , No
No,, that'
that'ss not enough rationale
A,
That IS correct.
It ' s n ot ill good Ideill to m .. ke .. decision bill sed On unit
It'
proc
pr
ocur
uree m e nt co
coss ts .. lone
lone.. We should first consider total
life-cycle costs before ma kin
kingg a fin
finaa l decision.
ACQ202 Inl
Inlt'
t' rm c dldl
urse
se (ISAC)
Le sso
sson
n 1.1
C<H1' l d~ rin
rinll
ll th e Cost
REiOUR(H I PR
PRII NT I MHP
Consideration o f O thet" Costs
Any single type o f cos t doesn

doesn'' t tel the whole s t ory. We must also consKler
how ill cos
costs
ts a re distributed across the ~fe cyc
cycle
le for a system.
.".
1"\
1"\
T o get a bette
betterr underst
understaa nding
nding,, taAc WIth La rry from the Logistics Management
Depaa rtmen
Dep
rtmentt a nd S a ma ntha from the Softw a re De p a rtment a bout how iogosbCs
a nd so
sofftw a re co
coss ts imp
impaa ct overa" ~fe-cycle co
cost
st .
ACQ202 Inl
Inlt'
t' rm c dldl
urse
se (ISAC)
Le sso
sson
n 1.1
C<H1' l d~ rin
rinll
ll th e C.,5t
REiOUR(H I PR
PRII NT I MHP
Life
Li
fe Cyde Prod Ud Support Costs
Hi, {FIRST NAME}. We've been expecting you! The Colonel

told us you might h,we some questions a bout logistics and
softwaa re cost. We are happy to help.
softw
YOU may not rea lilize

ze it, but costs rela ted to oper
operaa tions
and support of a fie lded system throug~t its lilife
fe
represe n t the la rgest pr
proportioo
oportioo o f its cos t . T h is is
bf!cause
bf!cau
se o f the CO<1tr.uous costs ttl
ttlaa t a re iocUlTe d over a
IorIg period o f time , for ins t ance operatioo,
transpor
tr
ansportation
tation , mairltenance, and moaocation costs .
Remember, some o f our systems are used for 10, 20 ,
even 30 y e ars or more.
ACQ202 Inl
Inlt'
t' rm c dldl
urse
se (ISAC)
Le sso
ssonn 1.1 C<H1' l d~ rin
rinll
ll th e C.,5t
REiOUR(H I PR
PRIINT I MHP
Life Cyde Prod Ud Support Costs Ch

Chaa rt
In this ch
chart
art you c a n see how the largest amoun
amountt of cost is related to the
opera tion a nd support, not on the deSJgll, dev
opera
devee lopm
lopmee nt, or productIOn of the
system.
A gener
generaa l rul
rulee o f thumb is that 70'!lo-80'!lo of the co
costs
sts acc .. la te on the ~fe
cycle dl.ring Ope ra tions a nd Support. The specific pe rc e ntage v a ries depend
dependiing
upon the syste m and the length of se...ncs lif
lifee . 50 you s houl
houldd ta ke a long-term
outlook
outloo
k at th
thee tota l cost over the ent
ent"" e liliffe-cy
e-cycle
cle , ra ther than just the ..",it
" ,it
cost .
,00
P,odooion, fielding. & Sowa<!

Life Cycle Product SUl'l'Ort Costs Chart
Long Description
life Cy
Cycle
cle cost chart . Ho
Horirizontal
zontal liline
ne is separated in to An
Anaa ty
tyss is , Pla nnin
nning
g , Des ig
ign
n, &
De v e lopment ( whic h spans ap
appr
prox
oxim
imate
ate ty a Quarter of the life c y cle ti
time
me liline
ne ) a n d Prod
Produ
u c ti
tion
on,,
Fie ld in g , & Support ( whic h spans the rema inin
ining
g th
three
ree Quarters of the life c y cle ti
time
me liline
ne ) .
ourr moun
ounds
ds appear across the life c y cle ti
time
me liline
ne :
Fou
1. RIlD Co st stretches across the Ana
An a ty
tyss is , Pla nnin
nning
g , Des ig
ign
n & De v e lopment segment of the
time
ti
me liline
ne a n d represents ro
roug
ughty
hty 10
10-- 15%
15 % o f the total li fe Cy
Cycle
cle Cost ;
third
rd of the Produ
roducc tion Fiel
eld
d in g , &
2 . Procurement Cost stretches o v er roughty one thi

S u pport ti
time
me liline
ne , represen tin
tingg appro
approrim
rimate
ate ty 15
15-- 2 0 % o f the total li
liffe Cy
Cycle
cle C ost .
3 . Operations Il Support Cost stretches o v er ro

roug
ughty
hty h a lf o f the Pro
Produ
ducc ti
tion
on Field ing
ng,, &
S u pport ti
timel
meliine a n d represents approx
approxiimate ty 7 0 - 8 0 % o f the total li fe Cy
Cycle
cle Cost .
third
d of the Prod
Produ
u c ti
tio
o n Field
eldin
ing
g , & Support
4 . Disposal Cost stretches o v er roughty one thir
timee liline
tim
ne o v erlapp
erlappin
ingg 0&5 costs , whi
whicc h represents appro
approrim
rimate
ate ty 5 % of the total Life
Cycle
Cy
cle Cost .
ACQ202 Inl
Inlt'
t' rm c dldl
urse
se (ISAC)
Le sso
sson
n 1.1
C<H1' l d~ rin
rinll
ll Ih e C.,51
REiOUR(H I PR
PRII NT I MHP
Sofiwal'f! Cost
Costs
s
I !tonk softw
softwil
ilrr e cost h il
ilss iI smila. dostributlOn. Isn'
Isn'tt th
thil
il t
nghl, Sam?
Yes, softw a re cost is distributed in iI sim~

sim~a
a r ma nn
nnee . Le t 's
ta ke a look a t the Typical Do{) Software u fecyd
ecydee costjeffort
distribution ch
char
art.
t.
Le~""n 1.1
RI IOU RU I I PRINT I MHP
Sofiwal"f! Costs Ch a rt
See how the largest a moun

mountt of cos
costt is related to software ma int
intee n a nc e , not in the
design or development?
Uke hardware, the lar

argest
gest distribu
distribution
tion of software cost will be la te in the program
program''s
~fe cycle, WIth decisions ma de e a rty in the program affecting thos

thosee fin
finaa l costs. In
fact, the primary costs of software a re related to the upgr

upgrades
ades and the
maintenance that it ta kes to keep the software l"lII""II"ling. Ma inten

intenance
ance is usually
bJoken out into seve ral categories including fixes, upgrades, and new func tions .
Le~""n 1.1
Sofiw
So
fiwal"f!
al"f! Cost
Costss Ch art
lo n g Descrip t io n
Chart sho
sho....
.... s a bkK:
bkK:kk divid
dividee d into live horizontal bars from t op t o bo tt
ttom
om
as foIo
foIo....
.... s: Requiremen ts Definition 3"'; De59'1 8"', [notial Coding 7%;
TesDng 15 "'; Softw
Softwaa re Ma int
intee n a nce 67'!11o .
Another block appe
appeaa ring t o the right of the Software Ma int
intee n a nc e bkK:k
lists the aClMbeS th
thaa t a re pe
performed
rformed durYIg software ma inten
intenaa nc e :
Improve Re~ability a nd Ma int
intaa in
inaa bility
bility,, Remove Old Code, Improv
Improvee
Efflcoency,, Provide Ne .... In
Efflcoency
Inte
terf
rfaa cing, Fixes
Fixes,, New Threat
Threat,, Add Ne
New
w
Functions.
idll e Sys
llrS('
S(' (IS
(ISA
A C)
L"s""n 1.1
(",,,ld p r ingtheC"5t
Kno
Kn
o wledo
wledoe
e Re\lle
e\llew
w - 5
According to the rule of thumb, wha t'

t'ss the percentage of ~fe
~fe
cycle cost of a program tha t typic

typicaa ly occurs durwIg operatIOn
a nd support?
90-95 ~
50-60%
30-40'110
~ 70-80'110
Tilde
is correct
correct..
Although the amount of ~fe-cycle cost incurred durWIg
operatIOns and support varies depending on the system and
its service ~fe

~fe,, the general rule of thumb is that 7 0 - 8 0 % of
a program's ~fe
~fe-- cycle cost wi" occur in this period.
QE I OUKU I I PR
PRII NT I MH'
ACQ202 Inl
Inlt'
t' rm c dld'
dld'ee Systems Acquisiti o n s Co ur
urse
se (ISAC)
Le sso
ssonn 1.1 C<H1' l d~ rin
rinll
ll th e C.,5t
Activv ity 4 - ElIl)etl
Acti
ElIl)etld
d llb
llblle
1\
1\
REiOUR(H I PR
PRII NT I MHP
Recov
ecovet"lIble
et"lIble UAV
\IS.
Let's t il
ilk
ke iI look il t au- two Urvnanned Al!nal Ve hic
hicle
le (UAV) concepts aga....
aga ....
Based on wh
whil
il t you know about the costs for eil
eilch
ch conc e p t , which IS the better
chooce?
SeJe.ct the document to
FIREBIRD
.
,
-0
."'~
."'~
D~nt.l
D~n
t.loon
oon
V.leW
the cost matrix ilnd tlK>n s.-Je.ct the best respons.-.

Expemlable UAV
RKover
r able UAV
~ RKove
-'--""
-'--""That IS correct.
The total ~f
~fe
e -c
-cycle
ycle cos
costt mil
ilke
kess the . ec
ecoo ve
ve'' lI
lIb'
b'ee UAV
the better chooc e. Even though the ..... t vehicle
procurement cost of the e>:peml
e>:pemlil
ilble
ble UAV IS much lower
than that of the recover
recoveril
ilbl
blee UAV, hilving so many of
them to procure, tr
tril
ilnspor
nsportt , il
ilmI
mI mil
ilintain
intain causes the
costs to significantly incr
increase
ease over the ~fe of the
system.
ACQ202 Intermediate Systems Acquisitions Course (ISAC)

RHOURClS I PRINT I IIElP
Concl
Con
cl usion
--~~~~~~~~~~~~-~~~~~~~~~~~~-
Clo
Cl
o sed C a pti
ptio
o ning
In this lesson, we leamed that the AoA is a study of the operational effectiveness and life - cycle
cost of a program
program''s a ltematives. It is mandatory for an acquis ition programs, and provides an
objective assessment of the options for meeting mi
millitary capabi
capabillity needs. We a lso leamed that the
AoA is based on information from the lCD, such as functional a reas , range of mil
miliitary operations,
time, and key attributes. We leamed about va""us types of estimation and costing methods such
as: anak>gy, parametric, eflgiMeolru} ( bottom
bottom-- up
up),
), actual cost, Top
Top-- Down and Delphi. F",a lly
ly,, we
defined the seven types of costs re lated to an acqlJ
acqlJiisition program and how they a re funded.
Here is a summary of the key information presented", this lesson.
Lesson 1.1 S ummary PD
PDF
F

Le~""n 1.1
Lesson Completion
You ha ve comple ted the conteot for this less on.

To cootirllie, select aoo ther lesson from the Tab le of Contents on the klft.
If you have clo sed or hidd-en the Table of Con tents, c lick the Show TOC
bu tton a t the top in the Atlas navigation b ar.

Acq202 M1 L01 508

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Acq202 M1 L01 508

Uploaded by

Copyright:

Available Formats

ACQ202 Intermediate Systems Acquisitions Course (ISAC)

Lesson 1.1 - Considering the Cost

RHOURClS I PRINT I IIElP

Clo sed Captio ning

Le ..""n 1.1 (",,,ld p r inglheCo51

(ICO)) <lnd <I

GIVen <In 1noO<l1 c..p<lbilities Document (ICO

"ppropri"te concepl, from the pe

system del/eloper, 10 meet the u s er's needs.

Gil/en a cost breakdown, determine Del/elopment Cost,

Flyaway Cost, weapon System Cost

Cost, AC(luisition Cost, and life Cycle Cost.

o Selec t a" appropriate method t o estim

Selecl an appropriil te appro<lch (e .g., Analogy,

Actual, Delph ) to estJrn<lt

<I software - ontensrve syst

Relate the typICal distribution of ""ttw,,'e ~fe cycle

costs to the plarYlln!l of <I<In

R&cognoze the mpacI <l<lnd

s..lf!a" the rrns5JII9 techmque from the lis

implement. Each WBS elemen

coss t estimate fO( the entire pro

Research, Development, Test, <li

new eQl.lll)lTlent, matenel, or computer <lI<lIppIic<lltion

This <lIppropriation category would also be used to

fund activIties related to Developm

(DT&.E), Initial Operational T est a n d Ev a luation (lOT&.E),

a n d operational costs for R&D d edicated installations.

R.,.,..ipl of ICD and AOA

The Milestone Decis

ICD and IV>A SUmmaries

Review the summ,,";"s by selecting each of the documents below.

ACQ202 Inlt'rmcdldle Systems Acquisiti o n s Co ur

C""'ld~,inll the C.,5t

What types of progr

I--klw is t:he AoA us e d ?

Wha t i!; t:he basi!; for t:he AlJA

ACQ202 Intermedi.ate Systems Acquisitions Course (ISAC)

Lesson 1.1 - Considering the Cost

He y , [ FIRST NAM EJ . I hear y ou need some pointers on e v a luating an AoA! I am

ACQ202 Intermedi.ate Systems Acquisitions Course (ISAC)

Lesson 1.1 - Considering the Cost

He y , [ FIRST NAME J . I hear y ou need some pointers on e v aluating an AoA! I am

ACQ202 Intermedi.ate Systems Acquisitions Course (ISAC)

Lesson 1.1 - Considering the Cost

He y , [ FIRST NAM EJ . I hear y ou need some pointers on e v a luating an AoA! I am

How is the AoA used?

ACQ202 Intermedi.ate Systems Acquisitions Course (ISAC)

Lesson 1.1 - Considering the Cost

He y , [ FIRST NAM EJ . I hear y ou need some pointers on e v a luating an AoA! I am

What is the basis for the AoA?

ACQ202 Inlt'rmcdldle Systems Acquisiti o n s Co ur

C""'ld~rinll the Cost

ACQ202 Inlt'rmcdldle Systems Acquisiti o n s Co ur

Le sson 1.1 C""'ld~rinll the C.,5t

Know ledoe Rev iew - I

The AoA IS pnrnarily us

ACQ202 Intermedi.ate Systems Acquisitions Course (ISAC)

Lesson 1.1 - Considering the Cost

RHOURUS I PRI NT I HEL P

E- fIliIil : Evaluiltinll an AoA

Iknnen"" < W.lknnen:gfir

ACQ202 Inlt'rmcdldle Systems Acquisitions Course (ISAC)