Cost Benefit Analysis Methodology for Strategic Investments in Industrial Base Support J. Farr, J. Harris and G. O’Conner COST BENEFIT ANALYSIS METHODOLOGY FOR STRATEGIC INVESTMENTS IN INDUSTRIAL BASE SUPPORT

ID: 164 John V. Farr United States Military Academy Email: [email protected] Jacqueline A. Harris United States Military Academy Email: [email protected] Gregory J. O’Conner Program Executive Office Ammunition, Picatinny Arsenal Email: [email protected] Address: Center for Nation Reconstruction and Capacity Development, Department of Systems Engineering, United States Military Academy, West Point, New York 10996 Phone Number: 845-938-5206 ____________________________________________________________________________________________ Abstract In today’s resource-constrained environment, the Army must exercise wise stewardship of every dollar managed. A key element in our conservancy is to develop and use sound cost benefit analysis (CBA) practices throughout all requirements/resourcing processes. Supporting the industrial base is just one of the key force enablers that support not only power projection issues but the ability of the Army to perform its’ mission. The purpose of this research is to develop and articulate a CBA process specifically for investments in industrial base projects with a focus on production support for the Army ammunitions industrial base. The process will assist analysts in identifying, quantifying, and evaluating the future costs for strategic production investments. We used the Army’s CBA guide to structure our process. Our research focused on how to develop quantifiable and non-quantifiable benefits for the proposed investments which is a key step in the process. Specifically, we used value modeling with total ownership costs to develop the quantifiable benefits. We also developed a means to represent risk within a value modeling approach.In today’s resource-constrained environment, the Army must exercise wise stewardship of every dollar managed. A key element in our conservancy is to develop and use sound cost benefit analysis (CBA) practices throughout all requirements/resourcing processes. Supporting the industrial base is just one of the key force enablers that support not only power projection issues but the ability of the Army to perform its’ mission. The purpose of this research is to develop and articulate a CBA process specifically for investments in industrial base projects with a focus on production support for the Army ammunitions industrial base. The process will assist analysts in identifying, quantifying, and evaluating the future costs for strategic production investments. We used the Army’s CBA guide to structure our process. Our research focused on how to develop quantifiable and non-quantifiable benefits for the proposed investments which is a key step in the process. Specifically, we used value modeling with total ownership costs to develop the quantifiable benefits. We also developed a means to represent risk within a value modeling approach.