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© 2003 LM Corporation Life Cycle Cost

Design of UAV Systems

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Lesson objective - to discuss the fundamentals of

Life cycle cost

to include…

• What does it include?• Why is it important?

Expectations -

• You will understand why life cycle cost is so important and what kinds of issues it addresses

• At the end of this lesson, you should understand (1) the fundamental issues and (2) how to make life cycle cost estimates

Objectives



13-2

• Review

• Parametric cost estimates• Development• Procurement• UAV application

• Operations and support

• Manned aircraft• UAV applications

Discussion subjects



13-3

Review - Life cycle cost

Development cost• The cost of developing a system• Considered a “non-recurring” cost

• Occurs only once (hopefully)

Procurement cost• The cost to buy a system once it is developed• Includes a lot of “recurring” cost

• Costs incurred every time a system is produced

Operations and support cost (Q&S)• The cost to maintain and operate a system after

purchase• Includes the cost of maintaining crew proficiency• Excludes the cost of combat operations

Development + procurement + O&S Life cycle cost



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Review - cost issues

Development cost

• Customers want this to be as small as possible• New systems are expensive

• Most of the cost is associated with risk reduction, engineering and test

• Programs need “margin” to cover uncertainty

Procurement cost

• This cost is sensitive to procurement quantity• Repetitive tasks become more efficient

• Also sensitive to the size and complexity • Aircraft empty weight is considered a cost driver

Operations and support cost

• Most of the life cycle cost of an aircraft is the “O&S”• O&S cost can be reduced by good up-front design



13-5

Review - LCC importance

Pre-concept design

Key technical issues addressed during this phase include:• Overall needs and objectives• Concepts of operation • Potential design concepts• Initial cost and schedule• Effectiveness estimates• Analysis of alternatives

The technical work done during the pre-concept design phase establishes the initial cost and schedule estimate that the project will have to live with for the rest of its life

• The product of this phase is a set of initial requirements and cost, risk and schedule estimates



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The cost driver - early decisions

Cu

mu

lati

ve P

erce

nt

Of

Lif

e C

ycle

Co

st

Milestones I II III IOC Out of Service

10095

85

70

50

10

Source – Defense Systems Management College, 3 Dec. 1991

PreliminaryDesign

DetailedDesign

Pre-conceptDesign

ConceptDesign



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Next subject

• Review






13-8

• Parametric models or cost estimating relationships (CERs) are used widely for aircraft cost estimating

- By industry for initial cost estimates- By customers for proposal evaluation

• Used when little is known about the design - But also used to check internal consistency of

detailed estimates• Methodology updates occur periodically

- Need to capture technology benefits and costs• Most recent updates focused on advanced structural

materials- Composite airframe materials drive airframe cost

• Although no CERs yet exist for UAVs, they will exist someday and we need to understand the approach

Parametric cost estimates

* (1) Advanced Airframe Structural Materials, a Primer and Cost Estimating Methodology, RAND R-4016-AF, Resetar, Rogers and Hess, c1990



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Material utilization trends

MaterialAluminumTitaniumSteelCompositesOther

F-111 (1967)

59%5% 33%

1% 2%

F-15 (1972)

52%40%5%2%1%

F-16(1976)

79%2%4%5%

10%

F-18 (1978)

48%14%15%11%12%

F-18(E/F)

27%23%

?22%13%

F-22

16%39%

?25%20%

C-17

70%9%?

8%13%

AV-8B

47%?%?

26%27%

B-2

27%23%

?37%13%

RAND data USAF/AFRL data

RAND Data - Advanced Airframe Structural Materials, a Primer and Cost Estimating Methodology, RAND R-4016-AF, Resetar, Rogers and Hess, c1990

AFRL Data – Evolution of U.S. Military Aircraft Structures Technology, AIAA Journal of Aircraft, Paul,Kelly,Venkaya,Hess, Jan-Feb 2003



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• CERs capture overall air vehicle cost drivers1. Size including airframe and empty weight, area, etc.2. Performance including speed, specific power, etc. 3. “Construction” including load factor, engine location,

area ratios, wing type, avionics weight ratio, etc.4. Program including number of test aircraft, new vs.

existing engines, contractor experience, etc.• Of these, a few emerge statistically as real drivers*

- Airframe unit weight (AUW)- Empty weight (EW)- Maximum speed (Vmax)- Number of test aircraft (NTA)- Airframe material type and composition

• Software should also be a driver (no data in 1990?)* (2) RAND N-2283/2-AF, Aircraft Airframe Cost Estimating

Relationships : Fighters, December 1987

Cost drivers



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• RAND defines CERs in two major overall cost categories: non-recurring and recurring costs*- Non-recurring (development) cost elements are:

- Non-recurring engineering hours (NRE)- Non-recurring tooling hours (NRT)- Development support cost (DS)- Flight test cost(FT)

- Recurring (production) cost is normalized for 100 air vehicles and made up of the following elements:- Recurring engineering hours (RE100)- Recurring tooling hours (RT100)- Recurring manufacturing labor hours (RML100)- Recurring manufacturing material cost (RMM100)- Recurring quality assurance hours (RQA100)

* Their methodology does not include engines, avionics, armament, training, support equipment and spares. These elements must be added.

Cost categories and elements



13-12

• RAND starts with an aluminum baseline cost estimate

- Non-recurring cost elements

NRE(hrs) = 0.0168(EW^.747)(Vmax^.800) (13.1)NRT(hrs) = 0.01868(EW^.810)(Vmax^.579) (13.2)DS = 0.0563(EW^.630)(Vmax^1.30) (13.3)FT = 1.54(EW^.325)(Vmax^.823)(NTA^1.21) (13.4)

- Recurring cost elementsRE100(hrs) = 0.000306(EW^.880)(Vmax^1.12) (13.5) RT100(hrs) = 0.00787(EW^.707)(Vmax^.813) (13.6)RML100 (hrs)= 0.141(EW^.820)(Vmax^.484) (13.7)RMM100 = 0.54(EW^.921)(Vmax^.621) (13.8)RQA100 (hrs-cargo acft) = 0.076*RML100 (13.9)RQA100 (hrs-non-cargo) = 0.133*RML100 (13.10)

Baseline CERs



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Typical application

• RAND example, hypothetical all-aluminum fighter

EW (lb) 27000Vmax (kt) 1300NTA 20Structure (lb) 13000Production quantity 100

• Typical labor rates (1999 $/hr)*

Engineering $86Tooling $88Manufacturing $73Quality Assurance $81

* From Raymer, page 588 - Inflation factors can be used to adjust these to current year prices (also required for material costs)



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Baseline cost

• From equations 13.1 through 13.10

NRE(Khrs) = 10634NRE($) = $914.5MNRT(Khrs) = 4611NRT($) = $405.7M DS($) = $389.4M FT($) = $577.6M

Nonrecurring = $2,287MTotal program (from NR + R) = $5.44B

RE100(Khrs) = 7463RE100($) = $642M RT100(Khrs) = 3636RT100($) = $320.0RML100(Khrs) = 19502RML100($) = $1423.7RMM100 ($) = $559M RQA100(Khrs) = 2594RQA100($) = $210.0

Recurring($) = $3,155M



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Other costs

• Engine cost

- Raymer’s cost discussion (Chapter 18) includes an equation for engine procurement cost in 1999$

R(propul) = 2251*(0.043*Tmax + 243.25Mmax + 0.969*TiT -2228)

(13.11)where

Tmax = Maximum thrust (lb)Mmax = Maximum MachTiT = Turbine inlet temperature (degR)

≈ 2000 - 2500 degR- For other propulsion cycles we will use $/lbm(engine)

• Avionics cost- Raymer recommends a weight based approximation of

$3000-$6000 per pound ($1999)- We will use $5000/lb for both avionics and payloads



13-16

Quantity effects

• RAND recurring cost methodology is based on production quantities of 100 aircraft

- Other quantities are adjusted for the “learning curve”- A term used to describe the efficiencies that result

from learning repetitive processes and tasks- Learning curve effects are generally expressed by

exponential forms such as the following from RAND

Cost (Qn) = Cost(Q100)*(Qn/100)^exp (13.12)

exp(engineering hours) = 0.163exp(tooling hours) = 0.263exp(manufacturing hours) = 0.660exp(manufacturing material) = 0.231exp(tooling hours) = 0.714exp(total program) = 0.356

where



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Advanced material effects

• Advanced materials effects are applied to the aluminum baseline as separate cost factors

• Effects of advanced materials vary by element- Tooling (both nonrecurring and recurring) has twice

the sensitivity to material type as engineering- Tooling focuses primarily on airframe structure - Engineering hours are driven by a wider range of

design and manufacturing issues such as, design, integration, test, evaluation, etc.

• Overall effects are captured by historical Structural Cost Fractions (SCF) for airframe structure Nonrecurring Recurring

NRE - 45%NRT - 87%

RE - 42%RT - 82%RML - 67%

RML - 67%RMM - 58%RQA - 69%



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• Used to capture labor hour and cost effects of different design and manufacturing processes

- RAND uses complexity factors (CFs) to determine material effects by structural cost element

NRE NRT RE RT RML RMMRQA

Al 1.0 1.0 1.0 1.0 1.0 1.0 1.0Al-li 1.1 1.2 1.1 1.1 1.1 2.7 1.1Ti 1.1 1.4 1.4 1.9 1.6 2.8 1.6Steel 1.1 1.1 1.1 1.4 1.2 0.7 1.4GrExp 1.4 1.6 1.9 2.2 1.8 4.9 2.4GrBi 1.5 1.7 2.1 2.3 2.1 5.5 2.5GrTP 1.7 2.0 2.9 2.4 1.8 6.5 2.6

Complexity factors



13-19

• Advanced material effects are applied to each cost element

MWC (j) = SCF(j)*[CF(i,j)*SW(i)/ SF(I)]+[1- SCF(j)]

(13.13)where

MWC(j) = Material weighted cost element j

SCF(j) = Structural cost fraction for cost element j (chart 24-18)

CF(i,j) = Complexity factor (chart 24-19)

SW(i) = Structural weight by material type

• See RAND Report R-4016-AF, Advanced Airframe Structural Materials, a Primer and Cost Estimating Methodology, for more application information

Methodology



13-20

• Unfortunately, there are no known UAV CERs and no consistent UAV cost data bases. An example:

- Total procurement cost projected by the Defense Airborne Reconnaissance Organization (DARO) for Predator in 1996 was $118M for 13 systems.

- In 1998 12 Predator systems were listed as $512M or $42.7M per system

- The same document budgeted $23.9M for one system for delivery in 1998

• These contradictions exist across a number of UAV types and it is clear that a comprehensive cost study is needed to resolve the issues

- Such a study is beyond the scope of this course• We will take a simpler approach

UAV cost issues



13-21

• We will assume that manned aircraft CERs apply to UAV air vehicles and propulsion- Cursory checks show this not a bad assumption

• Global Hawk development cost ≈ $350M- The RAND aluminum baseline development cost

CER for EW + payload = 11,100 lb, Vmax = 360 kts and two flight test aircraft predicts a development cost of $313M in $1999 (less engines and avionics)- Avionics development costs are not available

• Global Hawk procurement cost goal = $10M- The RAND aluminum baseline procurement cost

CER predicts a unit 20 development cost of $15.7M- The customer acknowledged in 1998 that Global

Hawk unit cost would be about $13M- Latest reports are that the airframe costs $16-20M

UAV cost approach



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• Little information is available on UAV control station and communications development and no CERs - Available data indicates Tactical Control Station (TCS)

development costs exceed $100M• Development costs for the Global Hawk/Dark Star

common ground station (GCS) appear ≈ $250M• We will assume, therefore, that control station

development (including communications) ≈ 70% of air vehicle development cost

• Ground station procurement is harder to determine- Predator ground and communications station costs

appear about equal at around $3M each- Global Hawk/DarkStar initial GCS procurement ≈ $25M

each for 3 units. Latest reports = $45M- We will assume control station procurement including

communications ≈ 1 air vehicle + payload procurement

Other UAV system elements



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• We have no good information on UAV payload development costs- However, there are many payloads available off the

shelf and we will assume development cost is limited to integration, which is covered under the air vehicle

• We also have no good information on UAV payload procurement costs - We will use Raymer’s assumed $5000 per pound

parametric until something better comes along- This would imply that predator payload (450lb) costs

are about $2.25M, far more than airframe cost- At a payload weight of 1900lb, Global Hawk payload

cost would be $9.5M, about equal to original airframe estimate (recent USAF data cites payload at $11M)

• Despite the fact that some of these estimates are guesses, we will use them until something better comes along- It is better to guess than to leave something out

Other system elements - cont’d



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Next subject

• Review






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Manned aircraft data

O&S costs are driven by 2 factors• 2/3 by manpower (pilots, operations, maintenance,

logistics and other personnel)• 1/3 by flight hours - Flight hours (and numbers of

missions) drive maintenance and fuel consumption • Average annual O&S ≈ 10% unit procurement cost

- Typical SE fighter ≈ $3M/yr or $9000/flight hourTypical manned fighter O&S cost breakdown

- Direct personnel (pilots, maintenance, etc.) = 40-45%- Pilots (10%), ops support (15%), maintenance (75%)- Approximately 20-30 maintainers per aircraft

- Indirect (security, medical, facilities etc.) = 20-25%- Fuel and spare parts = 25-35% (≈ $2K/FH for fighter)- Other = 5-10%- 1997 O&S data shows USAF average annual squadron

personnel costs at about $45K per person



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Direct aircraft operating costs

This is the portion of the O&S cost that is directly related to flight hours (fuel and spare parts)

- Direct operating costs are key figures of merit for commercial operators- Airlines typically quote direct operating costs in terms

of cost per seat mile

- Others including the military use cost per flight hour ($/FH) and it appears to correlate with empty weight and speed

Operating cost parametric ($FY94)

0.00

0.05

0.10

0.15

0.20

0 250 500 750 1000 1250 1500

Maximum speed (kts)

($/F

H)/

EW

FightersTransportsBombers



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Other direct operating costs

• There is no information available on O&S cost for payloads, communications equipment and ground stations- We can assume that the equipment is reliable but that

it undergoes regular upgrade and refurbishment at least every 10 years- We will assume, therefore, annual O&S cost to be

about 8% of initial procurement cost• Once again, we are simply making an educated

guess but it is better to do so than to leave out an important element of cost- If our guesses are incorrect, we can improve them

when we get more data- If we leave something out, there is no chance for

improvement



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UAV data

Three O&S data points• In 1997 DARO budgeted Hunter UAV operations and

support costs were at about $17.5 million for about 2000 flight hours or $8750/FH (almost the same as as a typical manned fighter)

• In 1999 the VTUAV program established an O&S cost goal of 25% less than Pioneer at $6500 per flight hour

• Published lifetime (10yr?) O&S cost for 11 Predator systems (44 air vehicles) = $697M in $FY97

Other data- UAV squadron manning data provides insight to adjust

manned aircraft O&S data for UAV applications- A 4 air vehicle Predator squadron, for example,

deploys with 55 people, of which 30 are operators and analysts and 24 are maintainers (13.75 total people or 6 maintainers per aircraft)



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UAV air vehicle application

The minimum data required are number of personnel (maintenance and operators), flight hours (FH), direct cost per FH, other direct cost and indirect personnel

• Predator for example has 13.75 persons per air vehicle. At $45K per person per year (FY 97 est.), personnel costs would be $620K/year per air vehicle

• Also assuming an indirect personnel cost ratio of 25%, annual indirect costs would be $155K

• Assuming 1000 FH per year at $75/FH (chart 13-24 @ 100 kts), air vehicle operating costs would be $75K

• Payload O&S is estimated at 8% procurement cost/year = .08*(450lb*$5000/lb) = $180K

• Ground station plus comms is also estimated at 8% or cost/year = 0.08*(≈$6M) = $480K

Estimated annual O&S cost for Predator, therefore, would be about $1.5M per air vehicle



13-30

Comparison

11-12 System LCC (Base-year FY 1996 $M)

* RDT&E = $ 213 * Production = $ 512 * O&S, etc. = $ 697 * Total = $1,422

From Defense Airborne Reconnaissance Office (DARO) 1996 Annual Report - Predator

- O&S/production = 1.36 or 14% of production cost per year (assuming a 10 year Life Cycle)

- Average manned fighter ratio = 11%

Our estimate for 11-12 systems (44-48 vehicles) would be $660 - $720M

At 3% inflation = $761M in FY99$



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System cost - summary

Airframe • Development - Equations 13.1 - 13.4• Procurement - Equations 13.5 - 13.10

Propulsion (procurement) - Eq 13.11

Ground Station + communications • Development - 70% air vehicle development• Procurement ≈ 1 air vehicle + sensor payload

Payload (procurement) - $5000/lb

Operations and support • Air vehicle & payload operators - estimate number• Maintenance personnel - chart 12-30• Other personnel - add 25%• Air vehicle operating costs (inc. engine) - chart 24-27• Ground station + communications - 8% procurement/yr• Payload - 8% procurement/yr



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Expectations

You should now understand the basic concept design cost issues including

• Development• Procurement• Operations and support



13-34

Reading assignment

Raymer, Aircraft Design - A Conceptual Approach

Chapter 3 – Sizing from a conceptual sketch

• Chapter 3.1 : Introduction• Chapter 3.2 : Takeoff weight buildup• Chapter 3.3 : Empty weight estimation• Chapter 3.4 : Fuel fraction estimation• Chapter 3.5 : Takeoff weight calculation*

Total : 25 pages

Note – Use Raymer as a reference book. It is not necessary to memorize or derive any of the equations. Read the sections over for general understanding of the concepts.



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Intermission

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