Realizing the True Cost of Energy – Keeping the DoD Green
Methods and Models I Track
In recent years, the demand for energy as well as volatility in costs of energy for the Department of Defense has prompted individual programs to monitor these costs closely in order to identify new ways to control these costs. In response to spikes in energy costs in recent years, major programs are now evaluating different alternatives to improve fuel efficiency and ultimately reduce the military’s dependence on fuel. As these alternatives are being considered, the basic metric used to evaluate alternatives has been the Fully Burdened Cost of Fuel (FBCF) which includes not only the cost of the fuel needed but also includes the cost to transport the energy and fuel, cost to dispose of fuel by-products (i.e., liquid fuels and batteries) and the impact on the investment and Operations and Support (O&S) Costs when determining different energy options.
In response to the new focus on quantifying the energy needs of a program, Booz Allen has developed a new Energy tool that is designed to estimate and apply the Fully Burdened Cost of Fuel (FBCF) for different energy alternatives to estimate the energy cost per system throughout its lifecycle and to determine a program’s cost from a total ownership cost (TOC) perspective.
This paper will describe the processes used to build the Energy tool. These processes include developing the cost estimating methodologies used to estimate the Fully Burdened Cost of Fuel for a program and managing the information flow process throughout the tool to generate the outputs needed. This paper also explores the key features and capabilities of the tool and details how costs are estimated for each different type of energy.
Booz Allen Hamilton
Mr. John Ko attended the Graduate School of Industrial Administration (now known as the Tepper School of Business) at Carnegie Mellon University to earn his MBA in Operations Research, Finance and Information Systems.
Mr. Ko has over ten years of experience in supporting the US Army and the United States Marine Corps as a Cost Estimator. Mr. Ko joined the Ground Vehicle Team of the Weapons Systems Division of ODASA-CE as an Operations Research Analyst. At ODASA-CE, Mr. Ko developed Life Cycle Cost Estimates (LCCEs) for the Stryker Program and Future Combat Systems and represented ODASA-CE in reconciling of LCCEs developed.
Mr. Ko joined SAIC where he continued to support ODASA-CE by developing and updating LCCEs and Cost Analysis Requirements Documents (CARD) for U.S. Army and joint ground vehicle programs. Mr. Ko also developed various Cost Estimating Relationships (CERs) and cost estimating methodologies for a variety of ground vehicle technologies. These included developing cost models to estimate the production costs of Active Protection Systems (APS), ammunition autoloader systems, UGVs, Hybrid Electric Drive systems, MRAP Vehicles and band track systems. Mr. Ko also developed CERs to estimate the O&S cost impact associated with the weight gain that vehicles experience as they are upgraded and when add-on armor is added to vehicles.
At Booz Allen Hamilton, Mr. Ko supported USMC program offices such as PM AAVS, JLTV Program Office, GCSS-MC, and AC LCL. Mr. Ko developed the LCCE and CARD for the AAV SCE, I-UGWS, and Survivability upgrades. Mr. Ko also supported the JLTV Program Office by completing alternative cost analysis research to develop new costing methodologies used to validate and verify the existing JLTV PLCCE. At Booz Allen, Mr. Ko applied his cost estimating experience to the logistic requirements of a program by developing the LRFS for the GCSS Program Office and developing the cost model library for the LRFS Cost Estimating Tool (LRFS CET) to support AC LCL programs. The LRFS CET is designed to automatically populate an LRFS for a program by using specific program requirements provided by a logistician to identify the cost models needed for each LRFS cost element in the cost element structure. Mr. Ko continues to further develop the LRFS CET cost model library by adding new cost models applicable to the LRFS.
Mr. Ko is currently a SCEA Certified Cost Estimator/Analyst (CCE/A) and has obtained the DAU Business Cost Estimating and Financial Management (BCEFM) Contractor-Equivalent of Level III Certification.