Advances in Aircraft Carrier Life Cycle Cost Analysis for Acquisition and Ownership Decision‐Making

ABSTRACT The U.S. Navy recently conducted an analysis of alternatives (AOA) to set the stage for determining the characteristics and acquisition strategy for its next generation aircraft carrier. The platform design selected is expected to be in service throughout the 21st century. The parameters under consideration for change in the new carrier design lie in the areas of propulsion and electric power generation, aviation, survivability, service life, and total ownership cost (TOC) reduction. The issue of affordability is paramount This paper focuses on the need for the program management office and its supporting cost analysis staff to understand the life cycle cost (LCC) of the existing and proposed future aircraft carriers and to then translate these LCC's into meaningful information for cost‐conscious decision making. The challenge is to relate the LCC in terms the key decision‐makers and the engineering team can use to satisfy their respective roles. Thus, it is necessary to translate the results of the given ship design alternative LCC's into the paradigms of the respective stakeholders: Fleet User (operators of aircraft carriers) Ship Designers (translators of the fleet operator requirements) Program Sponsors (providers of the funding resources) Program Management Office, Shipbuilder and Supporting Industry (executors of the acquisition and construction of the ship) Navy and OSD decision‐makers (overseers of program execution) The paper describes the aircraft carrier LCC breakdown structure that has resulted, in part from a recent navy/shipbuilder integrated product team effort to capture total ownership costs. The structure has been used in the AOA as a tool to identify cost drivers and to add the time element to the cost equation in order to perform return on investment and program affordability analysis. The expanded ship work breakdown structure (ESWBS) has emerged as the central backbone of the cost work breakdown for AOA work. The ESWBS structure is a natural choice as it is the framework within which the design and engineering community works, it forms the basis of weight estimating for ships, and it has been widely used in ship acquisition cost estimating for years. In addition, the ESWBS provides perhaps the best framework from which to relate to program requirements, as it describes the ship by ship system. The approach, for the first time, provides a breakdown of the operating and support (O&S) cost elements by ESWBS. From this nucleus structure, it is possible to present costs in other required formats such as the: Office of Secretary of Defense (OSD) cost analysis improvement group (CAIG) summary level LCC categories, by ship capability or design feature, and by cost driver hierarchy.