Obtaining Life-Cycle Cost-Effective Facilities in the Department of Defense

Obtaining Life-Cycle Cost-Effective Facilities in the Department of Defense

Constantine Samaras
Abigail Haddad
Clifford A. Grammich
Katharine Watkins Webb
Copyright Date: 2013
Published by: RAND Corporation
Pages: 80
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  • Book Info
    Obtaining Life-Cycle Cost-Effective Facilities in the Department of Defense
    Book Description:

    The Department of Defense (DoD) constructs, operates, and maintains a large number of facilities. DoD incorporates life-cycle cost-effective practices into many aspects of the military planning and construction processes. This report provides RAND’s description and assessment of the process used to obtain life-cycle cost-effective facilities and how that affects DoD construction options and choices.

    eISBN: 978-0-8330-8002-8
    Subjects: Business, History

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures
    (pp. vii-viii)
  5. Tables
    (pp. ix-x)
  6. Summary
    (pp. xi-xvi)
  7. Acknowledgments
    (pp. xvii-xviii)
  8. Abbreviations
    (pp. xix-xx)
  9. CHAPTER ONE Introduction
    (pp. 1-4)

    The Department of Defense (DoD) manages the largest facilities portfolio in the United States, including more than 400,000 buildings and structures worth more than $620 billion (DoD, 2013). The DoD military construction (MILCON) program is the primary process for constructing new facilities for the armed services and other DoD supporting functions. In fiscal year (FY) 2013, DoD budgeted about $9.6 billion for the MILCON program.¹ DoD will spend an additional $10.2 billion maintaining and reinvesting in its existing facilities through Sustainment, Restoration, and Modernization (SRM) and Demolition funding. These amounts have varied in recent years but, combined, generally represent 2...

  10. CHAPTER TWO The DoD Facility Development, Construction, and Operating Process and Barriers to Life-Cycle Cost-Effectiveness
    (pp. 5-26)

    The life cycle of a DoD facility generally consists of planning, programming, design, construction, operation, maintenance, renovation, and decommissioning. In this chapter, we describe the points in a facility’s life cycle at which barriers to life-cycle cost-effectiveness might arise. To determine the possible barriers to obtaining life-cycle cost-effective facilities, we first characterized the major steps in obtaining and operating DoD facilities that influence costs, shown in Figure 2.1, and then examined the different entities, roles, and incentives associated with each step. We did this through our interviews and analysis of literature on the MILCON process.¹

    The process generally begins at...

  11. CHAPTER THREE The Role of Building Codes in Determining Construction Material
    (pp. 27-32)

    DoD, as noted earlier, constructs a wide variety of buildings. Between FY 2011 and FY 2013, DoD will construct nearly 1,000 new facilities and spend more than $25 billion to construct them (DoD, undated[a]). Table 3.1 lists the ten facility categories for which DoD appropriated the most construction funding between FY 2011 and FY 2013. Four facility categories of which DoD builds considerable numbers and to which it dedicates considerable construction appropriations are training buildings, enlisted unaccompanied personnel housing, airfield operational buildings, and aircraft maintenance facilities.

    In this chapter, we examine the relationship between the facility category constructed and the...

  12. CHAPTER FOUR Trade-Offs Between Annual O&M Costs and Initial Capital Costs
    (pp. 33-34)

    Analysts conducting life-cycle cost analyses estimate financial flows for a facility over its life and convert these flows into a present value.¹ This accounts for the time value of money, allowing decisionmakers to compare future financial obligations and current financial obligations among different projects. The value of future financial flows depends on the discount rate used in the analysis. For federal projects, the discount rate is set annually for various analysis periods by OMB (OMB, 2011), as well as by the National Institute of Standards and Technology and the DOE for energy and water conservation and renewable energy projects in...

  13. CHAPTER FIVE Conclusions and Observations
    (pp. 35-42)

    Given the funds required to design, construct, operate, and maintain DoD facilities, Congress has issued statutory and regulatory guidance on obtaining life-cycle cost-effective facilities, and it recently expressed concerns that DoD construction methods and techniques may not obtain the most life-cycle cost-effective facilities. Our report provides a description of the process that DoD uses to obtain life-cycle cost-effective facilities and how that process affects DoD construction options and choices. The focus of our report is how the incentives and barriers of various actors involved affect the overall objective of obtaining life-cycle cost-effective facilities.

    DoD, through its written design and acquisition...

  14. APPENDIX A. RAND Interview Protocol Used in this Research
    (pp. 43-46)
  15. APPENDIX B. Navy MILCON Team Planning and Programming Process Diagram
    (pp. 47-48)
  16. APPENDIX C. Sample U.S. Army DD Form 1391
    (pp. 49-52)
  17. Bibliography
    (pp. 53-60)