Unit Cost Analysis

This report documents an executive briefing of a methodology for estimating the annual operating and support costs for similar units in the Active and Reserve components of the military services, and the results of case studies to which the methodology was applied. The methodology was developed to acquire an initial understanding of the potential budget implications of force mix decisions. It estimates the annual recurring incremental costs of unit personnel, peacetime equipment operations and peacetime base support. The accuracy of the cost estimates depends on the quality of the available data, which varies across the services and the different categories of cost factors. While the costing methodology developed under this research provides the necessary tools to estimate the annual recurring costs of specific types of units, further analysis in the areas of non-recurring transition costs and the difference between average and marginal personnel and equipment costs for force mix changes will be needed to understand the full budget impact of force mix decisions.