Glossary o f Terms
Analogy Estimation. In this technique, a currently fielded system (reference system) similar in design and/or operation to the proposed system is identified. The cost o f the proposed system is then calculated by adjusting the cost o f the reference system to account for differences between it and the new system. One drawback to analogy estimating at the subsystem level is the extensive amount o f detailed technical and
engineering data required. The analogy approach places heavy weight on the opinions o f "experts."
Concept Exploration. This is the first phase in the Army acquisition process. The Army conducts formal studies to develop feasible material solutions to meet required mission needs. The studies may also use limited experimentation to determine the feasibility o f proposed concepts. This phase serves as a tool to fully develop system level
requirements and specifications.
Disposal Costs. Captures costs associated with deactivating or disposing o f a military system at the end o f its useful life. These costs typically represent only a small fraction o f a system's Iife-cycle cost and are usually excluded from most system cost estimates. Engineering and Manufacturing Development. This is the third phase o f the Army acquisition process. It is used to develop detailed drawings o f the system, final
system/component specifications, and the manufacturing process. The program/product manager will also ensure the system undergoes rigorous developmental and operational testing. The program/product must demonstrate that the system can be mass-produced and that it meets the stakeholders’ requirements.
Engineering Estimation. This approach produces detailed "bottoms-up" estimates. An engineering estimate is constructed by consolidating estimates for individual work segments into a total project projection. The objective is to determine as accurately as possible all o f the actions that would occur in the "real world."
Ground Combat System. Full tracked combat vehicles (such as tanks, infantry fighting vehicles, and personnel carriers) designed as a direct fire, indirect fire or supporting systems for Army ground combat operations.
Investment Costs. Consists o f costs incurred during the Production and Deployment phase (from low rate production through completion o f deployment). Encompasses costs associated with producing, procuring, and deploying the primary hardware and directly associated hardware and activities, such as system-specific support equipment, training, data, initial spares, and military construction.
Milestone 0. This is a major Army decision point for acquisition o f a new weapon system. It provides the authority to begin formal paper studies and experiments to develop Army materiel solutions for combat requirements. The authorization is usually in the form o f a mission needs statement or operational requirements document.
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Milestone I. This formal authorization to start a new Army acquisition program and is usually based on an approved operational requirements document. It provides formal funding for programs in the FYDP and establishes a program office and program or product manager.
Milestone II. Provides formal authority to enter into the Engineering and Manufacturing Development phase. This decision point usually establishes a limited number o f systems to be produced during low rate initial production.
Milestone TIT Provides formal authorization to mass-produce and field the new system to Army units.
Operating Costs. Includes only the yearly costs of directing operating a fielded weapon system. These costs include maintenance, consumable and repairable materials, and fuel. Operating and Support Costs. Includes all yearly costs o f operating, maintaining, and supporting a fielded system. It encompasses costs for personnel; consumable and repairable materials; fuel; organizational, intermediate and depot maintenance; and facilities.
Parametric Estimation. Parametric estimation employs cost-estimating relationships (CERs) to develop projections o f weapons costs using various statistical techniques. A CER is simply an equation that relates one or more characteristics o f a system to some element o f its cost.
Production. Fielding. Deployment and Operations Support. This is the final phase o f the Army acquisition process, and it includes plans for system retirement and disposal. The weapon systems are manufactured at the production facility and readied for shipment to Army units. During this phase, the system and all support packages (logistics, training, computer resources, etc.) are delivered to actual Army units. Fielding is not considered complete until the units have been trained on all aspects o f the system. After all systems have been fielded, the program/product manager transitions to operations support o f the system and production ceases.
Program Definition and Risk Reduction. This is the second phase of the Army
acquisition process. The Army uses this phase to develop some detail specifications and a limited number o f system prototypes, which are tested and refined to meet stakeholder requirements. This phase results in a proposed system for full-scale development.
Research and Development Costs. Consists o f costs incurred from program initiation at Concept Demonstration and Approval (Milestone I) through the Engineering and
Manufacturing Development phase. It includes costs o f feasibility studies; modeling; trade-off analyses; engineering design; development, fabrication, assembly, and test o f prototype hardware and software; system tests and evaluation; system- specific support equipment; and documentation.