A parametric cost model for estimating operating and support costs of US Navy (non-nuclear) surface ships

Abstract

With few effective decision-making tools to assess the affordability of major weapon systems, management of total ownership costs is continually misunderstood. Cost analysis provides a quick and reliable assessment of affordability. Because there is no standardized method for calculating reliable estimates of operating and support (O&S) costs (the principal component of total ownership cost), this thesis formulates a parametric cost model which can be used to determine the annual O&S costs of U.S. Navy (non-nuclear) surface ships based on known (or assumed) physical characteristics and manpower expectations. Source data for the cost model is obtained from the Navy Visibility and Management of O&S Costs (VAMOSC) database, a historical cost database maintained by the Naval Center for Cost Analysis (NCCA). Through standard regression and data analysis techniques, cost estimating relationships are developed for three major cost drivers: ship light displacement, ship overall length, and ship manpower. The formulated parametric cost model is a top-level and fairly reliable representation of average annual O&S cost, and it can be used by the DOD cost community to perform component cost analyses or independent cost estimates.