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Valuing Programmed Depot Maintenance Speed

An Analysis of F-15 PDM

by Edward G. Keating, Elvira N. Loredo

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Part of a larger RAND Project Air Force study on capability-based programming, this report introduces a revealed preference methodology to estimate the value to the United States Air Force of expediting F-15 fighter jet programmed depot maintenance (PDM). Such a valuation estimate would be useful in depot-level cost-benefit analysis. The authors rely on the fact that the Air Force has chosen to pay for intermittent PDM on F-15s to assert that F-15s must have enough value after PDM visits to justify PDM costs. Air Force expenditure data suggest that a typical fiscal year 2005 PDM visit cost about $3.2 million. Using the aircraft valuation curves consistent with PDM being worthwhile, the authors find that expediting an F-15’s last PDM visit by a month must be worth at least $60,000. However, using a plausible annual aircraft valuation decline rate, they find that expediting an old F-15’s last PDM visit by a month would be worth around $75,000, while expediting a new F-15’s first PDM visit by a month would be worth more than $180,000. This report also explores various robustness enhancements. Consideration of aging aircraft issues, for instance, tends to increase the estimated value of expedited PDM.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    The F-15 and Its Programmed Depot Maintenance

  • Chapter Three

    A Simple Valuation of Expedited PDM

  • Chapter Four

    Valuing F-15 PDM Speed with Declining Aircraft Valuation

  • Chapter Five

    Robustness Explorations

  • Chapter Six

    Conclusions

  • Appendix A

    Calculating PDM Acceleration Valuations

  • Appendix B

    PDM Speed for New Military Aircraft

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The research described in this report was sponsored by the United States Air Force and conducted by RAND Project AIR FORCE.

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