Contents
Catalog Links
Share

OS4703 Cost Estimation IV: Applied Cost Analysis

This course is the third of three sequential cost estimation courses. It provides a broadbased understanding of the cost estimating principles applied to various fields of the acquisition and support of DoD systems. It focuses on the analysis of cost methods and topics such as Specialized Cost Estimating, Portfolio Analysis, Cost Benefit Analysis, Industrial Base Analysis, Supply Chain Management, and Labor Rates.

Prerequisite

OS4702, OA4702

Lecture Hours

3

Lab Hours

0

Course Learning Outcomes

Students who successfully complete this course will be able to:

  • Define cost economics, aka “an economic analysis (EA)”
    • Understand when an EA is required
    • Understand when an EA is not required
  • Demonstrate proficiency in performing an EA: 
    • Step 1: Describe how to prepare a “best” Statement of Objective.
    • Step 2: Demonstrate ability in identifying feasible alternatives.
    • Step 3: Create Cash Flow Diagrams
      • A representation of inflows (benefits) and outflows (costs). (Chapter 4)
    • Steps 4 and 5 Prerequisite: Understand & calculate “economic equivalence.” 
      • Calculate factors to apply to cash flow diagram’s inflows and/or outflows (Chapter 4)
      • Time Value of Money factors account for projected monetary interest on future cash flows
      • Apply factors to respective cash flows to calculate measures of economic equivalence (Chapter 4)
      • Measures of equivalence are Future Single Sum (F), Present Single Sum (P), and Annuity (A)
    • Step 4: Select the best criteria (economic measures-of-merit) for evaluating single projects & alternatives.
    • Step 5: Analyze and compare feasible alternatives.
      • Apply “equivalence” methods to evaluate single projects (Chapter 5)
      • Apply “equivalence” methods to evaluate mutually exclusive alternatives (Chapter 6)
      • Analyze multi-attributes by incorporating non-monetary attributes (Chapter 14)
    • Step 6: Select and present preferred alternative.
      • Show EA results with & without non-monetary attributes to better inform decision-maker (Chapter 14)
      • Include breakeven and sensitivity analyses to better inform decision-maker (Chapter 10)
  • By the conclusion of course, understand the role of and apply economic analysis in decision-making.