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Cost-Benefit Analysis Training: APS Case Study

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1 Cost-Benefit Analysis Training: APS Case Study

2 Terminal Learning Objective
Action: Apply Army Cost Benefit Analysis to a Simple Scenario Condition: You are training to become an ACE with access to ICAM course handouts, readings, spreadsheet tools, and awareness of the Operational Environment (OE) variables and actors Standard: With at least 80% accuracy: Review the Army 8 Step Cost Benefit Analysis process Identify key elements of information from case study data Enter relevant scenario data into macro enabled templates to calculate cost data, and inform managerial cost decisions

3 CBA – Using analysis to make the case for a project or proposal:
Cost Benefit Analysis CBA – Using analysis to make the case for a project or proposal: Weighing the total expected costs against the total expected benefits over the near, far, and lifecycle timeframes from an Army enterprise perspective. 8. Report ____________ and _____________________ 7. Compare _________________ 6. Define Alternative ___________________________ 5. Identify ______________ and _____________________ Benefits 4. Develop ___________________ for each Alternative 3. Define _______________ 2. Define the _________; Formulate _______ and ____________ 1. Define the _________________________ COSTS _____________ costs Direct Indirect Initial/Start up Sustainment Procurement _______________costs Life/Safety/Health Perception/Image Opportunity Risk/Uncertainty Political BENEFITS The total of __________ and ________________ benefits _____________benefits Cost Savings Cost Avoidances ____________________benefits Greater capability Faster availability Better quality Improved morale Other? BENEFITS MUST BALANCE OR OUTWEIGH COSTS CBA Training Slides UNCLASSIFIED

4 Cost Benefit Analysis (Cont.)
CBA – Using analysis to make the case for a project or proposal: Weighing the total expected costs against the total expected benefits over the near, far, and lifecycle timeframes from an Army enterprise perspective. 8. Report Results and Recommendations 7. Compare Alternatives 6. Define Alternative Selection Criteria 5. Identify Quantifiable and Non- Quantifiable Benefits 4. Develop Cost Estimate for each Alternative 3. Define Alternatives 2. Define the Scope; Formulate Facts and Assumptions 1. Define the Problem/Opportunity COSTS Quantifiable costs Direct Indirect Initial/Start up Sustainment Procurement Non Quantifiable costs Life/Safety/Health Perception/Image Opportunity Risk/Uncertainty Political BENEFITS The total of quantifiable and non-quantifiable benefits Quantifiable benefits Cost Savings Cost Avoidances Non-quantifiable benefits Greater capability Faster availability Better quality Improved morale Other? BENEFITS MUST BALANCE OR OUTWEIGH COSTS CBA Training Slides UNCLASSIFIED

5 Practical Exercise: Overview
Case Background Army to select TYPE of storage facilities to be used at FIVE APS locations based on a National Security Strategy. 4,000 tactical vehicles returning from Iraq will be stored at the predetermined APS sites. Sites to receive vehicles, the number of vehicles to be moved to each site, and timeline for movement has also been predetermined. Storage options at each site are: Continental United States (CONUS): Lease warehouse, Purchase Large-Area Maintenance Shelters (LAMS), outside storage Outside Continental United States (OCONUS): Purchase LAMS, outside storage. UNCLASSIFIED

6 Practical Exercise: Overview (Cont.)
Army stores equipment at APS locations (Army Prepositioned Stocks) in order to make the equipment more rapidly deployable in the event of a contingency Practical exercise deals with storage facilities at several APS locations Options include LAMS (Large-Area Maintenance Shelters) New construction Lease of existing facilities Outside storage LAMS Typical New Construction or Leased Facilities CBA Training Slides UNCLASSIFIED

7 Practical Exercise: Overview (Cont.)
Case Background Two APS locations within the Continental United States (CONUS) indentified as: Oakland Army Terminal, California: (L1) Picatinny Arsenal, New Jersey: (L2) Three Outside Continental United States (OCONUS) indentified as: Doha International Airport, Qatar: (L3) Pirmasens Army Depot, Germany: (L4) Diego Garcia, Indian Ocean: (L5) UNCLASSIFIED

8 Practical Exercise: Overview (Cont.)
Oakland Army Terminal, California Diego Garcia, Indian Ocean Doha International Airport, Qatar Picatinny Arsenal, New Jersey Pirmasens Army Depot, Germany UNCLASSIFIED

9 Practical Exercise: Overview (Cont.)
Class Assignment: Using the Army Eight Step Cost Benefit Analysis Process: Conduct a Cost Benefit Analysis to determine the “best” APS storage scenario based on guidance provided. Develop a response to each of the eight items in the eight step process. Begin with Steps 1 and 2 Use the Decision Matrix provided to address Item #7

10 Practical Exercise: Overview (Cont.)
Case Background APS cost consists of storage facility purchase or lease, and Care Of Supplies In Storage (COSIS). LAMS and leased warehouse will be available when needed where the storage option exist. After five years of use, each LAMS structure requires refurbishment at 20% original purchase price. LAMS Useful life = 20 years at which point they must be replaced. The LAMS manufacturer has a Government approved price list that shows price increase 2%/year. The cost of leasing a warehouse increases 2% each year. COSIS is subject to 3% inflation. UNCLASSIFIED

11 Practical Exercise: Overview (Cont.)
Case Background Supporting Data Investment and Operating Cost (Millions of FY12 Dollars, Except Where noted Location Lease Warehouse Annual Purchase LAMS Annual Care of Supplies in Storage (COSIS)* “Indoor Storage” Annual COSIS* “Outdoor Storage” LAMS Refurbishment Cost (Current Dollars) L1 19.2 43.5 8.0 14.5 20% of original purchase price every five years L2 14.9 32.7 15.4 27.8 L3 Not an option 3.7 .7 1.3 L4 L5 2.8 9.7 * Annual COSIS cost if location is at full capacity; Cost is proportional to the % utilization. (e.g., at 25% utilization, cost would be 25% of the value shown. UNCLASSIFIED

12 Practical Exercise: Overview (Cont.)
Case Background Supporting Data Based on the approved transfer timetable, the capacity for each site is as follows: Site No. Location FY12 FY13 FY14 and beyond L1 Oakland Army Depot 0% 50%* 100% L2 Picatinny Arsenal L3 Doha International Airport L4 Pirmasens Army Depot L5 Diego Garcia * COSIS cost is proportional to the % utilization. IN FY13 L1 and L2 are only 50% utilized. UNCLASSIFIED

13 Practical Exercise: Overview (Cont.)
Case Background A Cost Benefit Analysis (CBA) has been requested to determine the best “Cost Informed” decision for the following storage scenarios. Lease warehouse at location L1, L2 and purchase LAMS at location L3, L4, L5. Purchase LAMS at all locations. Use outside storage at all locations. Life Cycle (FY12-FY36) considered most important decision criteria. Use constant dollars POM/Budget Cycle (FY12-FY19) an important decision criteria. Use current dollars Deployment response time, Long term impact to site, and resale of LAMS also decision criterion to be considered. UNCLASSIFIED

14 Step 1 Define the Problem / Opportunity
Does the problem statement define a clear, unambiguous issue? As appropriate, does the objective reflect an enterprise perspective? What major stakeholders are likely to be impacted? CBA Training Slides UNCLASSIFIED

15 Step 1 Define the Problem / Opportunity (Cont.)
Select the type of storage facilities to be used at five predetermined APS locations to house 4,000 vehicles returning from Iraq. Does the problem statement define a clear, unambiguous issue? As appropriate, does the objective reflect an enterprise perspective? What major stakeholders are likely to be impacted? CBA Training Slides UNCLASSIFIED

16 Step 2 – Define Scope, Formulate Facts, and Assumptions
Army is moving 4,000 tactical vehicles to new APS locations as part of the drawdown of combat operations in Iraq. Determine the type of storage facility to be used in each of the predetermined APS locations. Assumptions: CONUS storage options include: LAMS, Outside Storage, Lease Warehouse Space OCONUS storage options include: LAMS, Outside Storage Facts: 4,000 tactical vehicles need to relocate Five Locations are predetermined Are the assumptions realistic? Were they provided by an appropriate subject matter expert? Are the assumptions or facts structured in a way that favors one alternative COA? Do the scope, assumptions, and facts clearly identify the natural and/or artificial limits or expansions placed on the solution set? CBA Training Slides UNCLASSIFIED

17 Step 2 – Define Scope, Formulate Facts, and Assumptions (Cont.)
Army is moving 4,000 tactical vehicles to new APS locations as part of the drawdown of combat operations in Iraq. Determine the type of storage facility to be used in each of the predetermined APS locations. Assumptions: CONUS storage options include: LAMS, Outside Storage, Lease Warehouse Space OCONUS storage options include: LAMS, Outside Storage Facts: 4,000 tactical vehicles need to relocate Five Locations are predetermined Are the assumptions realistic? Were they provided by an appropriate subject matter expert? Are the assumptions or facts structured in a way that favors one alternative COA? Do the scope, assumptions, and facts clearly identify the natural and/or artificial limits or expansions placed on the solution set? CBA Training Slides UNCLASSIFIED

18 Step 3 – Define Alternative Courses of Action
CONUS APS storage facility options Lease warehouse space LAMS Outside storage OCONUS APS storage facility options Outside Storage Have all feasible alternatives been considered, to include alternatives that represent creative thinking? Have the alternatives been defined or described clearly, and to a sufficient level of detail to support the development of a cost estimate? Is the status quo included, or is its absence explained? Do the alternatives span a reasonably wide range of potential solutions? CBA Training Slides UNCLASSIFIED

19 Step 3 – Define Alternative Courses of Action (Cont.)
CONUS APS storage facility options Lease warehouse space LAMS Outside storage OCONUS APS storage facility options Outside Storage Have all feasible alternatives been considered, to include alternatives that represent creative thinking? Have the alternatives been defined or described clearly, and to a sufficient level of detail to support the development of a cost estimate? Is the status quo included, or is its absence explained? Do the alternatives span a reasonably wide range of potential solutions? CBA Training Slides UNCLASSIFIED

20 Developing Alternatives
Be innovative … think creatively Consider the complete process that is the subject of the CBA, and be willing to change any of the elements. This includes: Inputs Outputs Performance standards Policies Resources used to perform the process (in-house labor, contractors, automation, supplies, etc.) To help address the problem from all perspectives, get active participation by all stakeholders Think outside the box! CBA Training Slides UNCLASSIFIED

21 Step 3 – Define Alternative Courses of Action (Cont.)
Oakland Army Terminal California L2 Picatinny Arsenal New jersey L3 Doha International Airport Qatar L4 Pirmasens Army Depot Germany L5 Diego Garcia Indian Ocean COA #1 Lease Warehouse Purchase LAMS COA #2 COA #3 Use outside facility CBA Training Slides UNCLASSIFIED

22 Step 3 – Define Alternative Courses of Action (Cont.)
Oakland Army Terminal California L2 Picatinny Arsenal New jersey L3 Doha International Airport Qatar L4 Pirmasens Army Depot Germany L5 Diego Garcia Indian Ocean COA #1 Lease Warehouse Purchase LAMS COA #2 COA #3 Use outside facility CBA Training Slides UNCLASSIFIED

23 Step 4: Develop Cost Estimates for Each Alternative
Guidelines: Develop supporting documentation that can stand alone to explain the cost estimate – a critical element for CBARB reviews Current vs. constant dollars Definitions Current: Includes inflation … the cost that will be incurred when the money is used. Also referred to as “then-year dollars” and “inflated dollars.” Constant: Cost with inflation removed. Guidance: Develop cost estimate in constant dollars to support decision making. Ensures apples-to-apples comparison of costs over time. Display cost estimate in current dollars to ensure decision maker is aware of impact on POM and budget. CBA Training Slides UNCLASSIFIED

24 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) L1 L2 LAMS Purch Cost (total) L3 L4 L5 LAMS Maint (total) COSIS Inside (total

25 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) -- L1 L2 LAMS Purch Cost (total) 14.5 L3 L4 L5 LAMS Maint (total) COSIS Inside (total 2.8

26 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) -- 17.1 L1 9.6 L2 7.5 LAMS Purch Cost (total) 14.5 7.4 L3 3.7 L4 L5 LAMS Maint (total) COSIS Inside (total 2.8 15.9 4.0 7.7 .7

27 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) -- 17.1 34.1 L1 9.6 19.2 L2 7.5 14.9 LAMS Purch Cost (total) 14.5 7.4 L3 3.7 L4 L5 LAMS Maint (total) COSIS Inside (total 2.8 15.9 27.6 4.0 8.0 7.7 15.4 .7

28 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) -- 17.1 34.1 L1 9.6 19.2 L2 7.5 14.9 LAMS Purch Cost (total) 14.5 7.4 L3 3.7 L4 L5 LAMS Maint (total) COSIS Inside (total 2.8 15.9 27.6 4.0 8.0 7.7 15.4 .7

29 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) -- 17.1 34.1 L1 9.6 19.2 L2 7.5 14.9 LAMS Purch Cost (total) 14.5 7.4 L3 3.7 L4 L5 LAMS Maint (total) 2.9 COSIS Inside (total 2.8 15.9 27.6 4.0 8.0 7.7 15.4 .7

30 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) -- 17.1 34.1 L1 9.6 19.2 L2 7.5 14.9 LAMS Purch Cost (total) 14.5 7.4 L3 3.7 L4 L5 LAMS Maint (total) 2.9 1.5 COSIS Inside (total 2.8 15.9 27.6 4.0 8.0 7.7 15.4 .7

31 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
What costs should be included in COA #1? Estimate lifecycle costs in constant dollars COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost (total) 221.7 -- 17.1 34.1 L1 9.6 19.2 L2 7.5 14.9 LAMS Purch Cost (total) 21.9 14.5 7.4 L3 3.7 L4 L5 LAMS Maint (total) 4.4 2.9 1.5 COSIS Inside (total 184.3 2.8 15.9 27.6 4.0 8.0 7.7 15.4 .7 432.3

32 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
Using the previous slide as a guide, complete the lifecycle cost estimate for COA #1 (FY12-36) Don’t forget LAMS replacement cost Ignore LAMS resale value Prepare lifecycle cost estimates for COAs #2 and #3 (FY12-36) Use the “Building Cost Estimates” Excel spreadsheet to prepare POM/Budget cost estimates for all COAs (FY12-19) CBA Training Slides UNCLASSIFIED

33 Instructor Support Materials: POM12-19 Calculation
Screenshot of COA#1 using the Building Cost Estimates spreadsheet. Enter the constant dollars calculated in the Lifecycle Costs into the spreadsheet to calculate the POM/Budget cost.

34 Step 4 – Develop Cost Estimates for Each Course of Action
COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Lifecycle POM12-19 FY12-14 Whse Lease Cost 801.4 241.2 51.2 LAMS Purchase Cost 43.8 22.0 21.9 LAMS Maint 13.1 4.9 0.0 LAMS Resale (ignore) COSIS Inside 653.5 208.6 46.3 1,511.8 476.7 119.4 COA #2 Purchase LAMS all 5 locations 196.2 100.5 98.1 58.9 22.2 908.6 331.3 144.4 COA #3 Use Outside Storage at all locations Lease Cost - COSIS Outside 1,299.0 418.8 97.8 The data to the right shows the cost estimate for three COAs: FY12-14 POM/Budget FY12-FY19 Entire 25 year Life cycle Which course of action is the least costly: FY12-14? POM/Budget FY12-19? Life Cycle 25 years? Note how cost decisions are impacted when costs are considered through time. CBA Training Slides UNCLASSIFIED

35 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
Step 4: Develop Quantifiable and Non-Quantifiable Cost estimate for each Courses of Action COA #1 COA #2 COA #3 QUANTIFIABLE COST (Life Cycle) FY12-FY36 $2,050M $1,150M $1,924M QUANTIFIABLE COST POM/Budget FY12-FY19 $396M $249M $339M NON-QUANTIFIABLE COST (POM/Budget) Possible EOQ purchase of LAMS Deterioration of vehicles. Vehicle higher maintenance Vehicle life reduced Vehicle assess in adverse weather NON-QUANTIFIABLE COST (Life Cycle) Vehicle life reduced. Does Cost estimate span appropriate life cycle? Is there supporting documentation for our cost estimate?

36 Step 4: Develop Cost Estimates for Each Alternative (Cont.)
Step 4: Develop Quantifiable and Non-Quantifiable Cost estimate for each Courses of Action COA #1 COA #2 COA #3 QUANTIFIABLE COST (Life Cycle) FY12-FY36 $1,512M $909M $1,299M QUANTIFIABLE COST POM/Budget FY12-FY19 $477M $331M $419M NON-QUANTIFIABLE COST (POM/Budget) Possible EOQ purchase of LAMS Deterioration of vehicles. Vehicle higher maintenance Vehicle life reduced Vehicle access in adverse weather NON-QUANTIFIABLE COST (Life Cycle) Vehicle life reduced. Does Cost estimate span appropriate life cycle? Is there supporting documentation for our cost estimate?

37 Step 5 – Develop Quantifiable and Non-Quantifiable Benefits
Objective Benefits Cost (wide range of cost data can be developed) Cycle time or material usage Revenue generated from sales of assets Readiness ratings Number of documents processed Subjective Benefits Customer satisfaction Morale Mission capability Quality of service Risk to Soldiers and other personnel Public perception of the Army All objective benefits are quantifiable Usually quantifiable Usually not quantifiable The analysis should clearly identify what the Army will get in return for the costs that will be incurred. CBA Training Slides UNCLASSIFIED

38 Step 5 – Develop Quantifiable and Non-Quantifiable Benefits (Cont.)
COA #1 COA #2 COA #3 QUANTIFIABLE BENEFIT NON-QUANTIFIABLE BENEFIT Class discussion CBA Training Slides UNCLASSIFIED

39 Step 5 – Develop Quantifiable and Non-Quantifiable Benefits (Cont.)
COA #1 COA #2 COA #3 QUANTIFIABLE BENEFIT . NON-QUANTIFIABLE BENEFIT Good vehicle protection at all sites. Positive impact to community on warehouse lease. Local community involved in COSIS. Good vehicle protection at all sites Class discussion CBA Training Slides UNCLASSIFIED

40 Step 6 – Define Selection Criteria
APS – Selection Criteria Total life cycle cost (FY10-FY34) POM/budget impact (FY10-FY19) Deployment response time Long-term impact on vehicles Resale value of Large-Area Maintenance Shelters (LAMS) Class discussion The leader must validate the priority or weighting of the evaluation criteria. CBA Training Slides UNCLASSIFIED

41 Step 6 – Define Selection Criteria (Cont.)
APS – Selection Criteria Total life cycle cost (FY12-FY36) POM/budget impact (FY12-FY19) Deployment response time Long-term impact on vehicles Resale value of Large-Area Maintenance Shelters (LAMS) Class discussion The leader must validate the priority or weighting of the evaluation criteria. CBA Training Slides UNCLASSIFIED

42 Step 7: Comparison of Alternatives
7a. Compare COAs using alternative selection criteria to identify the preferred COA. 7b. If there is a bill associated with the recommended COA, identify the billpayer. 7c. Identify the positive and negative impacts of the second- and third-order effects. What must be done to manage the negative impacts? 7d. Determine the robustness of the conclusions. If anything changes – assumptions, costs, benefits, etc.. – would the recommendation change? 7e. Identify the high-risk aspects of the recommended COA and define appropriate risk mitigation measures. 8. Report Results and Recommendations 7. Compare Alternatives 6. Define Alternative Selection Criteria 5. Identify Quantifiable and Non- Quantifiable Benefits 4. Develop Cost Estimate for each Alternative 3. Define Alternatives 2. Define the Scope; Formulate Facts and Assumptions 1. Define the Problem/Opportunity CBA Training Slides

43 Step 7 – Compare Alternatives
A Decision Matrix tool is provided for comparing alternatives. Decision Matrix COA #1 COA #2 COA #3 Lease L1, L2, LAMS L3,L4,L5 LAMS L1-L5 Outside Storage L1-L5 Criteria Weight Data Rank Score Total Life Cycle Cost (Long Term) 25% 1511.8 1 0.25 908.6 4 1299.0 2 0.5 FY12-FY19 Cost (Short Term) 40% 476.7 0.4 331.3 1.6 418.8 3 1.2 Response Time 15% 0.45 0.3 Vehicle Impact 0.6 0.15 LAMS Resale 5%  27.3 122.4  0.2 0.05 100% 1.85 3.7 2.2 Rankings Best Acceptable Marginal Worst CBA Training Slides UNCLASSIFIED

44 Reporting Results You return to your senior leader to report the results of your CBA Senior leader provides new information Funding for new military construction (MILCON) is available POM/Budget cost should reflect additional appropriation requirements Resale value of LAMS should be considered How do you respond? CBA Training Slides UNCLASSIFIED

45 Instructor Support Materials: Lifecycle Cost Calculation
COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 Resale Whse Lease Cost 801.35 - 17.05 34.10 LAMS Purchase Cost 43.80 14.5 7.4 0.0 LAMS Maint 13.14 2.9 1.5 LAMS Resale (ignore) -10 COSIS Inside 653.50 2.8 15.9 27.6 1,511.79 COA #2 Purchase LAMS all 5 locations 196.20 45.5 38.1 58.86 9.1 7.6 -25 908.56 COA #3 Use Outside Storage at all locations Lease Cost COSIS Outside 1,298.95 9.7 33.45 54.6 COSIS costs: Capacity inside outside Location 100% FY14 and + fy12 fy13 fy14 + Costs to include storage facility purchase or lease L1 8 0% 50% 100% 4.00 8.00 7.25 14.50 cosis L2 15.4 27.8 7.70 15.40 13.90 27.80 LAMS Maint 20% Purch Price every 5 yrs L3 0.7 1.3 0.70 1.30 whse lease inc 2% / yr L4 Life fy10-fy36 L5 2.80 9.70 LAMS life = 20yrs 15.90 27.60 54.60 LAMS resale after 5 years = $5mm LAMS purch price inc 2% / yr

46 Instructor Support Materials:
FY12-14 Calculation COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 Whse Lease Cost 51.15 - 17.05 34.10 LAMS Purchase Cost 21.90 14.5 7.4 LAMS Maint LAMS Resale (ignore) COSIS Inside 46.30 2.8 15.9 27.6 119.35 COA #2 Purchase LAMS all 5 locations 98.10 45.5 38.1 144.40 COA #3 Use Outside Storage at all locations Lease Cost COSIS Outside 97.75 9.7 33.45 54.6

47 Instructor Support Materials:
POM12-19 Calculation COA #1 Lease L1 & L2, Purchase LAMS L3, L4, L5 Cost Analysis Total FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Whse Lease Cost 241.2 - 17.4 35.5 36.2 36.9 37.6 38.4 39.2 LAMS Purchase Cost 22.0 14.5 7.5 LAMS Maint 4.9 3.2 1.7 LAMS Resale (ignore) COSIS Inside 208.6 2.8 16.4 29.3 30.2 31.1 32.0 33.0 33.9 476.7 COA #2 Purchase LAMS all 5 locations 100.5 46.4 39.6 22.2 10.2 8.8 331.3 COA #3 Use Outside Storage at all locations Lease Cost COSIS Outside 418.8 9.7 34.5 57.9 59.7 61.5 63.3 65.2 67.2 Assume 2% inflation on lease & LAMS replacement Assume 3% inflation on COSIS Assume 2% inflation on LAMS maintenance

48 Instructor Support Materials: POM12-19 Calculation
Screenshot of COA#2 using the Building Cost Estimates spreadsheet.

49 Instructor Support Materials: POM12-19 Calculation
Screenshot of COA#3 using the Building Cost Estimates spreadsheet.

50 TLO Summary Action: Apply Army Cost Benefit Analysis to a Simple Scenario Condition: You are training to become an ACE with access to ICAM course handouts, readings, spreadsheet tools, and awareness of the Operational Environment (OE) variables and actors Standard: With at least 80% accuracy: Review the Army 8 Step Cost Benefit Analysis process Identify key elements of information from case study data Enter relevant scenario data into macro enabled templates to calculate cost data, and inform managerial cost decisions


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