L-257 Life Cycle Cost Method And Examples For Munition Health Monitoring

Within the NATO context, a cost benefit analysis (CBA) is a valuable support tool for economic analysis for defence programs. A major part of any CBA is a sound life cycle cost analysis of all options. Steps for a CBA are outlined, within which different perspectives for life cycle costing are described. In developing the life cycle cost model, the two important factors are the methods for determining input costs and accounting for the variability of these costs. The NATO recommended practice is to incorporate Monte Carlo simulations to account for this cost variability. Case studies are presented that reflect the nature of the decisions about munitions health management: should munition health management be used; should an existing munition health management scheme be continued; and which of two (or more) munition health management programs should be selected. In three of the four case studies, the implementation of an appropriately sized munitions health management can be justified on a cost basis alone, regardless of any other benefit in terms of safety.