Army Cost Analysis Manual

1 2020 army Cost Analysis Manual army COST Analysis Manual 1- 1 FOREWORD The mission of the Office of the Deputy Assistant Secretary of the army - Cost and Economics (ODASA-CE) is to provide army decision-makers with cost, performance, and economic Analysis . ODASA-CE is the principal advisor to the Assistant Secretary of the army (Financial Management and Comptroller) (ASA (FM&C)) for all army cost and economic Analysis activities. Recognizing the need for timely army reference material, ODASA-CE produced this Manual to provide a solid foundation in cost Analysis for army analysts.

2 The Manual is intended to provide junior analysts with material that can be easily understood and applied, while serving as a reference for senior analysts. This Manual supersedes the May 2002 Department of the army Cost Analysis Manual . army COST Analysis Manual 1- 2 Table of Contents Chapter 1 Introduction .. 1- 7 1. Purpose of the army Cost Analysis Manual (CAM) .. 1- 7 2. Overview of Cost Analysis .. 1- 7 Chapter 2 Cost Analysis References .. 2- 8 1. Introduction .. 2- 8 2. Key Documents .. 2- 8 Chapter 3 Cost Estimating Process .. 3- 8 1. Introduction.

3 3- 8 2. Planning .. 3- 9 i. Define the Estimate s Purpose .. 3- 9 ii. Define the Estimating Team .. 3- 11 iii. Define the Estimating Schedule .. 3- 11 3. Data Collection .. 3- 12 i. Define the Program .. 3- 12 ii. Determine the Cost Structure .. 3- 13 iii. Obtain the Data .. 3- 14 4. Develop the Point Estimate .. 3- 17 5. Conduct Sensitivity Analysis .. 3- 17 6. Risk and Uncertainty Analysis .. 3- 18 7. Presentation .. 3- 18 8. Updating .. 3- 18 9. Documentation .. 3- 18 10. Rough Order of Magnitude (ROM) Estimates .. 3- 19 Chapter 4 Cost Estimating Methodologies.

4 4- 20 1. Extrapolation from Actuals .. 4- 20 2. Parametric Cost Estimating .. 4- 20 3. Analogy .. 4- 20 4. Engineering (Bottoms Up) .. 4- 21 5. Expert Opinion .. 4- 21 Chapter 5 Inflation .. 5- 21 Chapter 6 Acquisition Costing .. 6- 25 1. Introduction .. 6- 25 2. Milestones .. 6- 25 i. Milestone A .. 6- 25 army COST Analysis Manual 1- 3 ii. Development Request for Proposal Release Decision Point .. 6- 25 iii. Milestone 6- 25 iv. Low Rate Initial Production (LRIP) and Milestone C .. 6- 26 v. Full-Rate Production (FRP) .. 6- 26 vi. Post-Initial Operational Capability (IOC).

5 6- 26 3. Appropriations .. 6- 26 i. RDT&E .. 6- 26 ii. Procurement .. 6- 26 iii. Military Construction (MILCON) .. 6- 27 iv. Military Personnel (MP) .. 6- 27 v. O&M .. 6- 27 4. Unit Costs .. 6- 27 i. Average Procurement Unit Cost (APUC) .. 6- 28 ii. Program Acquisition Unit Cost (PAUC) .. 6- 28 iii. Average Manufacturing Unit Cost (AMUC) .. 6- 28 Chapter 7 Software Cost Estimating .. 7- 28 1. Introduction .. 7- 28 2. Software Development .. 7- 28 i. Sizing Metrics .. 7- 28 ii. Productivity .. 7- 29 3. Software Maintenance .. 7- 30 i. Software Maintenance WBS.

6 7- 30 4. Off-the-shelf (OTS) .. 7- 30 Chapter 8 Military Construction Costing .. 8- 31 1. Introduction .. 8- 31 2. Sustainment Restoration and Modernization (SRM) Cost Components .. 8- 32 3. Base Operations Support/Maintenance (BOS) Cost Components .. 8- 32 4. Guidance/Source References for Generating MILCON, SRM, and Maintenance Estimates .. 8- 33 Chapter 9 Demilitarization and Disposal (D&D) Costing .. 9- 33 1. Background .. 9- 33 2. Resources .. 9- 33 3. Methodology .. 9- 34 4. Example of EQLCCE or D&D Cost Analysis Using MS Excel .. 9- 35 Chapter 10 Force Costing.

7 10-38 army COST Analysis Manual 1- 4 1. Introduction to Force Costing .. 10-38 2. Activation .. 10-38 3. Inactivation .. 10-39 4. Acquisition of Resources .. 10-39 5. Operations & Sustainment (O&S).. 10-39 6. Movement of 10-40 7. Contingency Operations/Exercises .. 10-40 8. Force Design Update (FDU)/Concept Plan .. 10-40 9. Stationing/Location .. 10-41 10. Site .. 10-41 11. FCM .. 10-41 i. Costing .. 10-41 ii. Life Cycle Events .. 10-41 iii. Acquisition of Resources .. 10-42 12. ACM .. 10-43 13. TDA .. 10-44 14. CFH .. 10-44 Chapter 11 Acquisition Life Cycle Costing Considerations.

8 11-44 1. Different Types of Cost Estimates .. 11-44 i. POE .. 11-45 ii. CCE .. 11-45 iii. ICE .. 11-45 iv. ACP .. 11-45 2. Cost Review 11-46 3. Selected Acquisition Report (SAR) .. 11-48 i. Acquisition Program Baseline (APB) vs SAR: .. 11-49 ii. Variance Analysis .. 11-49 iii. Nunn- McCurdy Breaches .. 11-49 iv. Other Breaches .. 11-50 4. Life Cycle Management Command (LCMC) .. 11-50 Chapter 12 DASA-CE Cost Tools .. 12-50 1. AMCOS .. 12-50 2. army Civilian Pay Rates .. 12-52 3. Reimbursable Rates .. 12-52 army COST Analysis Manual 1- 5 i. Aviation Reimbursable Rates.

9 12-52 ii. Ground Reimbursable Rates: .. 12-53 4. ACEIT .. 12-53 5. JIAT .. 12-53 6. GFEBS .. 12-55 7. GCSS- army .. 12-56 8. FORCES .. 12-56 i. Unit Structure .. 12-57 ii. FCM .. 12-59 iii. ACM .. 12-59 iv. TDA .. 12-60 v. CFH .. 12-60 9. Fully Burdened Cost of Energy-Fuel .. 12-60 10. OSMIS .. 12-62 i. Overview of O&S .. 12-62 ii. Introduction to OSMIS Database .. 12-63 iii. Cost Element Structure (CES) .. 12-65 Chapter 13 C-BAs and Guidance .. 13-72 1. Introduction .. 13-72 2. What is a Cost-Benefit Analysis ?.. 13-72 3. When Should a Cost-Benefit Analysis Be Performed .. 13-73 Appendix 1: Acronyms.

10 2 Appendix 2: Definitions .. 10 Appendix 3: Key Unit Cost 12 1. Hardware Unit Cost .. 12 2. Rollaway Cost .. 12 3. Weapon System Cost .. 12 4. APUC: Also known as Procurement Unit Cost .. 13 5. PAUC .. 13 6. Life Cycle .. 13 Appendix 4: army Cost Estimating Structure (ACES) .. 14 1. ACES for DBS .. 14 2. ACES for Non-DBS .. 36 Appendix 5 Prior ACES to CAPE O&M Crosswalk .. 73 army COST Analysis Manual 1- 6 Appendix 6: Figures .. 80 Appendix 7: Example Documentation .. 81 Appendix 8: Economic Useful Life (EUL) Commodity Matrix-Guide to EUL Values for Cost 82 Appendix 9: Lessons Learned/White Papers.