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Cost-Effectiveness
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English
Abstract
We are unlikely to achieve adequate operational system reliability until the cost-effectiveness analysis techniques are understood and put to work. A current example of opportunity to improve launch vehicle cost-effectiveness via reliability improvement is cited, and a quantitative cost-effectiveness definition proposed.
Six questions about past and potential use of these techniques are posed to representatives of DOD, U.S. Air Force, U.S. Navy, U.S. Army, NASA, Aerospace Corp., and Rand Corp. The DOD response is contained in Dr. Charles J. Hitch's banquet address on “Cost Considerations and System Effectiveness” and all others in the Proceedings and Panel discussions.
There is general agreement that cost-effectiveness must be a quantized comparison (usually the ratio) of operational system effectiveness with total program cost. Contract incentives, if used at all, should be related to cost-effectiveness instead of cost and/or reliability. All of the Services have long been using cost-effectiveness analysis for “operational” situations, to establish optimal system definition prior to design and production, but seldom accounting for reliability impact. Many such analyses have also been made for system design by contractors, but again only a few fully accounting for reliability impact. A great deal of such analysis has been applied to existing systems to improve the efficiency of their utilization, with remarkable payoff.
While cost-effectiveness models are thus being widely used for analysis of particular operations or systems, there is little evidence of their use for regular management audit and control of cost-effectiveness gain or loss throughout a program. If the latter can integrate or displace other needs, instead of just adding more paperwork, there should be a very substantial saving to taxpayers.
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Authors
Citation
Winlund, E., Marsh, F., Ellis, C., Sargent, C. et al., "Cost-Effectiveness," SAE Technical Paper 640549, 1964, https://doi.org/10.4271/640549.Also In
References
- Hitch Charles J. McKean Roland N. “The Economics of Defense in the Nuclear Age” Harvard University Press 1961
- Winlund E. S. “Economy Models for System Design Engineers” 6 14 WESCON Convention Record 1960
- Winlund E. S. “Cost-Effectiveness Analysis for Optimal System Reliability and Maintainability” Reliability Control Engineering Dept., GD/Astronautics San Diego 19 February 1964
- Thomas C. S. Winlund E. S. “System and Cost-Effectiveness Definitions” Reliability Control Engineering Dept., GD/Astronautics San Diego 2 January 1964
- McRuer D. T. Krendel E. S. “The Man-Machine System Concept” Proceedings of the IRE May 1962
- Chapter IX on Management Sciences, “Management: Concepts and Practices” Industrial College of the Armed Forces 1963
- Kamins Milton “Determining Checkout Intervals for Systems Subject to Random Failures” Rand Report RM-2578
- Kamins Milton John McCall “Rules for Planned Replacement of Air-craft and Missile Parts” Rand Report RM-2810
- Bell Chauncey Kamins Milton “Determining Economic Quantities of Maintenance Resources: A Minuteman Application” Rand Report RM-3308
- Feeney G. Petersen J. Sherbrooke C. “The Aggregate Base Stock-age Policy for Recoverable Spare Parts” Rand Report RM-3644
- Milton Kamins “Validating Maintenance Policies and Estimating Launch Capability” Rand Report RM-3645 (Abridged)
- Deavers K. L. McCall J. J. “An Analysis of Procurement and Product Improvement Decisions” Rand Report RM-3859
- Henry G. C. “Improved Effectiveness through Availability Models” Proceedings of the Second SAE-ASME-AIAA Conference on Reliability & Maintainability 29 June 1964
- Bell F. Smith T. C. “The Oxnard Base Maintenance Management Improvement Program” Rand Report RM-3370
- Winlund E. S. “Product Assurance” IRE Winter Convention on Military Electronics 4 February 1960 IRE Transactions on Engineering Management December 1960