A Robust Design Approach to Cost Estimation: Solar Energy for Marine Corps Expeditionary Operations
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Authors
Sanchez, Susan
Morse, Matthew M.
Upton, Stephen
McDonald, Mary L.
Nussbaum, Daniel A.
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Advisors
Date of Issue
2014-04-30
Date
Publisher
Monterey, CA; Naval Postgraduate School
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Abstract
Life Cycle Cost (LCC) assessments are of interest during the design phase for new systems. These often involve costs that must be estimated from a variety of different sub-models, including cost models constructed from historical data, forecast models that attempt to predict future economic conditions, and economy-of-scale models that impact production schedules, and more. When these disparate models are put together to obtain an overall cost model, many of these individual sources of uncertainty end up being aggregated or ignored. Consequently, the cost estimates may not provide program managers with appropriate assessments of the risk and overall variability of the new systems. We propose a structured approach for obtaining robust LCC estimates by taking into account a broad set of environmental noise conditions. This will enable program managers to better understand the uncertainty in their overall estimates, and to identify any decision factor combinations that result in both low costs and low cost variability. This may provide guidance on which of the many potential uncertainty sources require close monitoring, and which can safely be disregarded. We illustrate this approach with a model that the USMC is evaluating for use in cost/benefit analysis of alternative energy systems.
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Report
Description
Series/Report No
Acquisition Research Symposium
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NPS Report Number
NPS-AM-14-C11P22R01-075
Sponsors
Naval Postgraduate School Acquisition Research Program
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This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.