[This article was first published in Army Sustainment Professional Bulletin, which was then called Army Logistician, volume 3, number 3 (May–June 1971), pages 12–13, 40–41. The text, including any biographical note, is reproduced as faithfully as possible to enable searchability. To view any images and charts in the article, refer to the issue itself, available on DVIDS and the bulletin’s archives at asu.army.mil/alog/.]
THE NATIONAL CONCERN about cost growth in the fielding of major defense systems has understandably led to increasing emphasis on refinement and improvement of life cycle costing techniques. Life cycle costing techniques provide a method for obtaining accurate prediction of total system costs from concept formulation through development and production to field operations and final disposal. Particular concern in the Department of Defense lies in the cost of system support during the field operations period of the life cycle. Integrated logistics support (ILS) emerged as an expression of that concern. ILS is the composite of all necessary elements to support a system throughout its life cycle.
The need to achieve close control of life cycle costs was realized early by the armored reconnaissance scout vehicle (ARSV), XM800, project manager’s office. It was recognized in concept formulation that special management tools and techniques would be needed to make full and complete use of integrated logistics support. To optimize support quality, minimize support cost, and obtain the best possible support cost data and estimates for life cycle costs, an analytical computer model was needed. Stanley Connelly, Thomas Marceau, and George Claybaugh — who provided the information for this article — are integrated logistics support specialists of the Supply and Maintenance Division of the ARSV project manager’s office. They, together with a management consultant firm, hammered out the basic requirements for an analytical computer model.
Scout managers wanted to evaluate logistics elements at the assembly, subassembly, and component levels. Further, they wanted to be able, within a single system, to predict and compare trade-off values in life cycle costs that would result from introducing changes in design, componentry, assembly techniques, and other factors that affect the quality and cost of logistics support. Existing computer models were studied but it was determined that they did not permit simple, economical generation of these kinds of data.
The Scout Support Phase Cost Model (SPCM) is a computer program that calculates the costs of supporting and maintaining a failure-prone hardware assembly of any complexity, based upon the inclusion of selective but detailed descriptions of the physical characteristics of the assembly and of the distribution and operating environments in which it will function. It includes considerable detail in its representations of system and environmental factors. By virtue of its design the SPCM will specifically enable the Scout system engineers to —
• Project support phase costs implied by a specific characteristic of system design.
• Conduct design trade-off studies for subsystems and components at any level of the work breakdown structure.
• Integrate methodically the cost savings resulting from efforts of individual engineers with the life cycle cost estimates of system analysts.
• Validate support cost characteristics by the same test procedures that apply to other vital system characteristics.
Support Cost Elements
Figure 1 indicates the support cost elements of the total life cycle costs that are computed or transmitted by the Scout SPCM and also shows those other non-support cost elements, such as vehicle production costs and certain operating costs that must be added to determine the total life cycle cost. Because of its scope and flexibility, the SPCM will be used as a management tool throughout the successive phases of the Scout program.
The XM800 armored reconnaissance vehicle, currently in concept formulation, will introduce into the military inventory a vehicle that incorporates optimum cross-country mobility, agility, day-night vision, crew protection, quietness of operation, and amphibious characteristics. It will replace the M114A1 command and reconnaissance carrier.
The latest management techniques will be used by the Scout project management in the development and acquisition of vehicles. The program is employing the concept formulation and expanded contract definition approach during development based upon a performance specification permitting either a tracked or a wheeled configuration. Two contractors will be used during expanded contract definition, and one of these will be selected competitively to execute development and advanced production engineering under contract.
During phase B of expanded contract definition, operating prototypes of the vehicles will be required as well as the paper studies normally produced during contract definition. These will be evaluated during phase C of expanded contract definition. The Government will have the option of ultimate production either from the developing contractor or from another source. The development phases and life cycle of the Scout vehicle are portrayed in figure 2.
During the expanded contract definition phase, the computer model will be used in design trade-off studies and in development of life cycle costing estimates on the basis of selective maintenance engineering analysis data. During the engineering development/advanced production engineering phase, the Support Phase Cost Model will provide a basis for engineering change evaluation and development of life cycle cost estimates on the basis of now-complete maintenance engineering analysis data.
In each phase, the project office engineering and integrated logistics support groups will use the SPCM for the validation of life cycle costing estimates. The Government will use the model at the end of the expanded contract definition and engineering development/advanced production engineering phases to reevaluate cost and support estimates in light of the experience derived from field tests of prototype and pilot test vehicles.
Two Operating Programs
The Scout Support Phase Cost Model consists of two operating programs — the time-share model, which can be operated on line on an interrogation-conversational basis for selective analysis of individual assemblies or components, and the batch-processing model for processing large problems involving any number of parts and assemblies at any level of the end item work breakdown structure. Both programs have been coded in FORTRAN. The batch program is designed for operation on the CDC 6600 computer. It has the capacity to accumulate the total life cycle costs of the support phase components of the Scout system and to recompute these costs as changes are introduced in Seoul deployment and operational programs. The time-share model will develop component data and these will be fed into the batch model for accumulation of total life cycle support costs.
The Scout Support Phase Cost Model has been designed to compute the cost of supporting the Scout vehicle during the operational support phase of its life cycle; specifically from the fielding of the Scout to the phaseout and retirement of the last vehicle.
Both the time-share and the batch models have a software program called the Main Scout Program. The following basic elements are built into the logic of this program —
• The Scout system deployment schedule by year and major theater of operation.
• Army theater-of-operation characteristics.
• Standard Army costs of supply and maintenance operations.
The time-share model has an additional software program called the Program Builder. Specific data concerning individual piece parts and assemblies — such as unit cost, weight, and failure rate — are fed into the time-share component in an on line mode through the Program Builder. The maintenance planning data generated in the Army’s Maintenance Engineering Analysis Data System (MEADS) will be fed into the Program Builder, as available, for assembly groups under their MEADS-assigned functional group codes. Data are then fed by the Program Builder into the Main Scow Program. The model then calculates the cost of acquiring, transporting, and storing the individual piece part and the assembly.
Army cost factor inputs are provided from TM 38-715-1, Provisioning Techniques, and AR 37-18, Weapon/Support Systems Cost Categories and Elements. Instructions are explicit as to which data shall be furnished by the project manager and which by the contractor. For example, usage data, expressed in thousands of miles (rounds, or hours) per year, per vehicle, and per theater are furnished by the project manager. The contractor is required to provide support cost data, such as cost of special support equipment and training, by theater, by level, by year.
A group of specific assumptions, jointly developed by integrated logistics support specialists and the consulting staff, are embodied within the SPCM. For example, it is assumed that storage costs are proportionate to the dollar value of material held, that handling and transportation costs are proportionate to weight, and that overhaul and new vehicles are equivalent for purposes of calculating support costs.
The SPCM is presently assigned to integrate various elements of data in making a cost summation. The design provides for data collection from six theaters at five logistics levels (from using organization back to CONUS depot) and for a twenty-year life span encompassing the period from the fielding of the first Scout to the retirement of the last one. Thus, total life cycle costs can be accumulated within a very broad matrix of time, area, and maintenance levels. The program consists of a basic computation block with four loops. One loop transmits theater data inputs; another, support level data; the third, data by year; and the fourth, data on the part for which costing is being carried out.
Family of Subroutines
The basic computation block consists of a family of subroutines that contain the formulas for performing the elaborate array of computations required to sum up costs for the various support operations. For example, subroutine PIPLIN (for pipeline) calculates quantities by reorder quantity, inventory, replenishment safety stock, and exchange float at each level.
The specific cost categories are acquisition, holding, transportation, line item, repair, disposal, special training, and support facilities. The computer program elements comprising the time-share and batch versions of SPCM are depicted in figure 3. The basic computation block contains subroutines and four loops representing levels, theaters, years, and parts.
When the Scout SPCM is fed the deployment schedule, the accepted costs of Army supply operations, and properly documented maintenance engineering analysis data for a group of interrelated Scout assemblies, it will calculate the yearly costs incurred by the assembly group during the support phase of the system life cycle. These include costs of acquisition, movement, storage, and overhaul or repair of assemblies or end items and the costs of their spares or repair parts. When these calculations for all Scout assemblies for all years are added together, the total life cycle costing for support of the Scout is obtained.
Scout integrated logistics support planners are currently studying the applicability of SPCM to the full spread of integrated logistics support planning decisions — maintenance support alternatives, operational readiness float, essentiality coding, and many others. Intensive work will continue to determine specific applications of the SPCM during the early months of the expanded contract definition phase before the receipt of prototype test vehicles. The Scout system engineers are expected to make extensive use of SPCM during the development and production phases by making trade-off analyses and by evaluating engineering change proposals. Contractors can make substantial use of the SPCM or their own variations of this model during both the expanded contract definition and the development phases in their decision making processes. Preliminary testing indicates that the Scout Support Phase Cost Model will be a valuable tool in the management process of planning and achieving maximum integrated logistics support at minimum cost.