CONCEPTS AND TECHNIQUES FOR SUMMARIZING DEFENSE SYSTEM COSTS

Some techniques used to summarize total costs employed in systems analyses are classified, described, and compared. Their respective advantages and disadvantages are given, and some implications of each are brought out. Five cost-summarizing techniques are selected and distinctions between them are based on common usage. The procedures are termed: Five-Year System Cost, period outlay, net cost, present cost, annual cost. Necessary to their discussion is an understanding of the major types and general content of defense system cost analyses, the concept of remaining value, and the principle that money has time value. A brief section on each of these subjects with appropriate references precedes the discussion of the methods for summarizing costs.