Analysis and Forecasting of Operating and Support Costs for F-16 C/D
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Calhoun: The NPS Institutional Archive Theses and Dissertations Thesis Collection 2006-06 Analysis and Forecasting of Operating and Support costs for F-16 C/D Cobianu, Aurel Monterey, California. Naval Postgraduate School http://hdl.handle.net/10945/10124 NAVAL POSTGRADUATE SCHOOL MONTEREY, CALIFORNIA MBA PROFESSIONAL REPORT Analysis and Forecasting of Operating and Support costs for F-16 C/D By: Aurel Cobianu, and Konrad Madej June 2006 Advisors: Raymond E. Franck, Marshall R. Engelbeck Approved for public release; distribution is unlimited. THIS PAGE INTENTIONALLY LEFT BLANK REPORT DOCUMENTATION PAGE Form Approved OMB No. 0704-0188 Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and to the Office of Management and Budget, Paperwork Reduction Project (0704-0188) Washington DC 20503. 1. AGENCY USE ONLY (Leave blank) 2. REPORT DATE 3. REPORT TYPE AND DATES COVERED June 2006 MBA Professional Report 4. TITLE AND SUBTITLE: Analysis and Forecasting of Operating and Support 5. FUNDING NUMBERS Costs for F-16 C/D 6. AUTHOR(S) Aurel Cobianu and Konrad Madej 7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING Naval Postgraduate School ORGANIZATION REPORT Monterey, CA 93943-5000 NUMBER 9. SPONSORING / MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSORING / MONITORING N/A AGENCY REPORT NUMBER 11. SUPPLEMENTARY NOTES The views expressed in this report are those of the author(s) and do not reflect the official policy or position of the Department of Defense or the U.S. Government. 12a. DISTRIBUTION / AVAILABILITY STATEMENT 12b. DISTRIBUTION CODE Approved for public released; distribution is unlimited 13. ABSTRACT (maximum 200 words) The purpose of this MBA professional report is to examine and present an extended overview of the Total Life Cycle System Management (TLCSM) from the standpoint of USAF and other DoD organizations, and to make available a guide for implementing this concept. The report infers that TLCSM should be the foundation for effective management of complex weapon system such as a multi-role fighter aircraft. The primary objective was to understand the methodological specifics of estimating Operating and Support (O&S) costs for the F-16 fighter aircraft. To facilitate this, the report identifies and analyzes the top cost drivers over the F-16C/D lifecycle. The cost drivers are a major consideration in identifying Reduction of Total Ownership Costs (R-TOC) opportunities. This research also explores forecasting techniques to estimate the Cost per Flying Hour (CPFH). Holt’s method appears to have promise as an estimator of future CPFHs. Finally, this report concludes that TOC should be a priority consideration when acquiring a multi-role fighter aircraft such as F-16 and recommends that the Polish Air Force (recent F-16 user) and the Romanian Air Force (potential future user) should establish databases to record O&S costs and should implement R-TOC best practices. 14. SUBJECT TERMS Total Life Cycle System Management (TLCSM), Operating and Support 15. NUMBER OF (O&S) Costs, Reduction of Total Ownership Costs (R-TOC), Cost per Flying Hour (CPFH) PAGES 169 16. PRICE CODE 17. SECURITY 18. SECURITY 19. SECURITY 20. LIMITATION CLASSIFICATION OF CLASSIFICATION OF THIS CLASSIFICATION OF OF ABSTRACT REPORT PAGE ABSTRACT Unclassified Unclassified Unclassified UL i THIS PAGE INTENTIONALLY LEFT BLANK ii Approved for public release; distribution is unlimited ANALYSIS AND FORECASTING OF OPERATING AND SUPPORT COSTS FOR F-16 C/D Aurel Cobianu, Major, Romanian Air Force Konrad Madej, Captain, Polish Air Force Submitted in partial fulfillment of the requirements for the degree of MASTER OF BUSINESS ADMINISTRATION from the NAVAL POSTGRADUATE SCHOOL June 2006 Authors: _____________________________________ Aurel Cobianu _____________________________________ Konrad Madej Approved by: _____________________________________ Raymond E. Franck, Lead Advisor _____________________________________ Marshall R. Engelbeck, Support Advisor _____________________________________ Robert N. Beck, Dean Graduate School of Business and Public Policy iii THIS PAGE INTENTIONALLY LEFT BLANK iv ANALYSIS AND FORECASTING OF OPERATING AND SUPPORT COSTS FOR F-16 C/D ABSTRACT The purpose of this MBA professional report is to examine and present an extended overview of the Total Life Cycle System Management (TLCSM) from the standpoint of USAF and other DoD organizations, and to make available a guide for implementing this concept. The report infers that TLCSM should be the foundation for effective management of complex weapon systems such as a multi-role fighter aircraft. The primary objective was to understand the methodological specifics of estimating Operating and Support (O&S) costs for the F-16 fighter aircraft. To facilitate this, the report identifies and analyzes the top cost drivers over the F-16C/D lifecycle. The cost drivers are a major consideration in identifying Reduction of Total Ownership Costs (R-TOC) opportunities. This research also explores forecasting techniques to estimate the Cost Per Flying Hour (CPFH). Holt’s method appears to have promise as an estimator of future CPFHs. Finally, this report concludes that TOC should be a priority consideration when acquiring a multi-role fighter aircraft such as F-16, and recommends that the Polish Air Force (recent F-16 user) and the Romanian Air Force (potential future user) should establish databases to record O&S costs and should implement R-TOC best practices. v THIS PAGE INTENTIONALLY LEFT BLANK vi TABLE OF CONTENTS I. INTRODUCTION........................................................................................................1 A. PROBLEM DESCRIPTION...........................................................................1 B. SCOPE ..............................................................................................................2 C. RESEARCH QUESTIONS.............................................................................2 D. REPORT ORGANIZATION..........................................................................3 E. METHODOLOGY ..........................................................................................3 II. LOCKHEED MARTIN F-16 MULTI-ROLE AIRCRAFT.....................................5 A. F-16 FIGHTING FALCON - BRIEF HISTORY AND MAIN CHARACTERISTICS.....................................................................................5 1. History...................................................................................................5 2. Design....................................................................................................6 3. F-16 Versions and Customers.............................................................8 4. Specifications........................................................................................9 a. Structure....................................................................................9 b. Power Plant .............................................................................11 c. Avionics ...................................................................................12 d. Armament................................................................................15 5. Summary.............................................................................................17 B. ACQUISITION OF F-16 C/D BLOCK 50/52+ BY POLISH AIR FORCE............................................................................................................18 1. Polish Decision....................................................................................18 2. Evaluation Standards and Requirements for the Multi-Role Aircraft Proposals..............................................................................19 3. Offset Program...................................................................................21 C. ROMANIA – POTENTIAL F-16 CUSTOMER .........................................27 III. DOD’S APPROACH TO WEAPON SYSTEM MANAGEMENT.......................33 A. PROCESS OF ACQUISITION BASED ON THE DOD SYSTEM LIFE-CYCLE PHASES ................................................................................34 1. Pre-Acquisition...................................................................................37 a. Concept Refinement Phase and Milestone A.........................37 b. Technology Development Phase.............................................38 2. Systems Acquisition ...........................................................................39 a. Milestone B and System Development and Demonstration Phase........................................................................................39 b. Milestone C and Production and Deployment Phase............42 3. Operation and Support (O&S): Sustainment and Disposal...........44 a. Sustainment.............................................................................44 b. Disposal ...................................................................................45 B. TOTAL LIFE CYCLE SYSTEM MANAGEMENT