1. Intermediate Cost Analysis and Management
Apply Role-Based Cost Control Principles to a Real World Scenario: M1A2 Main Gun Qualification Cases
Intermediate Cost Analysis
and Management
13.3

2. Training has its Costs

3. Terminal Learning Objective
Action: Apply Role-Based Cost Control Principles to a Real World Scenario
Condition: You are training to become an ACE with access to ICAM course handouts, readings, spreadsheet tools. and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy:
Determine appropriate characteristics of cost measurement and control process for case study scenario
Prepare cost measurement and reconciliation for AAR
Discuss requirements of cost management and control in context of case study scenario

4. Call to Action: Ft Hood Campaign Plan for Improving Training Cost Effectiveness
Fort Hood 2011 Campaign Plan
Item P 1-2: “effectively and efficiently manage, synchronize and resource training”
This case exercise provides a hypothetical response to the III Corps’ strategic intent
It outlines a Battalion level role based process
Your tasks are to build and deliver the AARs for the various roles represented in training

5. M1A2 Abrams Main Battle Tank
© Dale R. Geiger 2011

6. M1A2 Abrams Main Battle Tank
The main armament is the 120mm M256 smoothbore gun. The 120mm gun fires the following ammunition: the M865 TPCSDS-T and M831 TP-T training rounds, the M8300 HEAT-MP-T and the M829 APFSDS-T which includes a depleted uranium penetrator.

7. Starting Point: Commander’s Intent
Develop an intent statement for your Battalion M1A2 main gun qualification training that meets the Corps’ intent
Make sure you address the two key goals of AAR processes:
Understanding the costs of their mission
Driving continuous improvement in cost effectiveness

8. Design Issues to Consider: How Often Should this Review Occur?
Remember the frequency issues:
The cost of the control process is the sum of the measurement cost and the process cost
More frequent meetings increase both
Should the training costs be review be:
Event driven (after every training event?)
Daily? Weekly? Monthly? Quarterly?

9. Design Issues to Consider: What Costs Should be Measured?
Remember scope issues
There is a point where the cost of greater detail exceeds the value of greater detail
The goal is to reasonably approximate the cost of things that matter
Choices:
Soldier, Squad, Platoon, Company, Battalion
The “significant few” cost elements
The “trivial many” cost elements

10. Design Issues to be Considered: What Types of Costs Should be Included?
Remember cost flavor issues:
Different cost views exist to fill different intelligence need
What cost view provides best intelligence in support of Commander’s Intent?
Choices:
Controllable vs. Non-controllable
Total vs. Incremental
Fixed/Variable vs. Direct/Indirect

11. Design Issues to be Considers: How Full Should Cost be?
Remember fullness issues:
Cost considerations must be bounded to exclude elements that don’t support goal
Example: every cost in the Army could include an allocation from the Commander in Chief if truly “full”
Choices:
Allocations from Brigade, Division, Corps, etc.
Allocations from personnel, resource management, chaplain, etc.

12. Potentially Key Support and Consumable Cost Elements for Training
The following is a list of major training costs
Soldiers military pay
Range: personnel, targets, power, etc.
Class I: food, food preparation, delivery
Class III: petroleum, oil, lubricants
Class V: ammunition acquisition and issue
Class IX: maintenance: operator level, organization level, depot level

13. Who Should Speak for the Cost Elements
Who Should Speak for the Cost Elements? Defining the Cost Chain of Command
The focus of Commander’s Intent is on the Battalion Commander
Think of the Battalion CO as the customer of the process
Who should the Battalion Commander assign the role to speak for each cost element?
These will be the presenters at the cost AAR
This is the subordinate Cost Chain of Command

14. LSA #1 Check on Learning
Q1. How does the use of the cost information affect the flavor of cost measurement? A1. Q2. How should reporting roles be assigned? A2.
Q1. How does the use of the cost information affect the flavor of cost measurement?
A1. In general, fixed/variable views of cost are more suitable when looking at units of output. Direct/Indirect views are more likely to reflect the core mission and support functions that are the focus in role-based cost management and control.
Q2. How should reporting roles be assigned?
A2. The senior leader who is the “customer” of the support services should assign reporting roles to subordinate leaders responsible for each of the major cost elements.

15. LSA #1 Summary
We discussed how to create an After Action Review to create continuous improvement for cost relating to training events. We also discussed what should be included during the AAR’s to foster learning at all levels of leadership.

16. Case A Let’s start with a relatively simple case:
Frequency After each training event
Scope Class III, V, and IX only
Flavor Direct cost
Fullness No allocation of higher HQ No allocation of support
Simple measurement process assumptions:
Class III and IX cost calculated as actual tank miles at FORCES estimate of $/mile
Class V cost calculated as actual main gun rounds expended at cost published in FORCES (use CTG 120MM TANK TP-T M831A1)

17. Using FORCES Model www.osmisweb.army.mil
Tank cost per mile:
Go tab CFH Operating Tempo/Flying Costs
Select Replenishment Parts & Fuel Cost by LIN
Select T13305-TANK COMBAT 120MM M1A2
Ammo cost per round
Go to tab CFH Unit Support Costs
Select Ammo and Missile Unit Cost from menu
Select 1315C784-CTG 120MM TANK TP-T M831A1

18. CFH tab
Tank cost per mile = $288.37

19. CFH tab
Ammo cost per round = $708.00

20. Case A Data: This Training Event
44 tanks drove 20 miles to the range, 5 miles on the range and 20 miles returning
Each tank expended its allotment of 10 rounds
Performance: qualification requires 7 bulls eyes
30 tanks qualified with first 7 rounds
10 tanks qualified on the 8th round
2 tanks qualified on the 9th round
2 tanks qualified on the 10th round

21. Case A Data: Last Training Event
The last training event
42 tanks drove 20 miles to the range, 10 miles on the range and 20 miles returning
Each tank expended its allotment of 10 rounds
Performance: qualification requires 7 bulls eyes
25 tanks qualified with first 7 rounds
10 tanks qualified on the 8th round
5 tanks qualified on the 9th round
1 tank qualified on the 10th round

22. Individual Exercise Requirement
The AAR presentation has been assigned to you as the Brigade S-4
Prepare your presentation:
Showing and explaining costs and performance compared to expectation (prior training event)
Several suggestions for continuous improvement
(One hint: look up cost per mile for heavy equipment transporter T59048-TRUCK TRACTR HET M1070)

23. Student Presentations

24. Teacher’s Notes: Both Training Events
last training event
per tank
tanks
cost per $K
miles to/from range 40 42
1680
288.37
484
miles on range 10
420
121
rounds per tank
708.00
297
903
qualifying rounds 7 25
175 8 80 9 5 45 1
did not qualify
320
227
Cost Data
Performance Data
this training event
per tank
tanks
cost per $K
miles to/from range 40 44
1760
288.37
508
miles on range 5
220 63
rounds per tank 10
440
708.00
312
882
qualifying rounds 7 30
210 8 80 9 2 18 20
did not qualify
328
232

25. Teacher’s Notes: Reconciliation$K
this training event
882
last training event
903
variance 20
reconciliation
2 more tanks firing
(14)
2 more tanks to range
(23)
fewer miles on range 58

26. Teacher’s Notes: Performance
performance: cum min rounds to qualify
last time
cum
this time 7
59.5%
68.2% 8
23.8%
83.3%
22.7%
90.9% 9
11.9%
95.2%
4.5%
95.5% 10
2.4%
97.6%
100.0%
dnq
0.0%

27. Teacher’s Notes: Performance
Cumulative Minimum Rounds to Qualify
This Event
Last Event

28. Teacher’s Notes: Potential Savings
Use heavy equipment transporters (HETs) to move tanks to and from the range
potential savings
HETs cost per mile
6.17
tank cost per mile
288.37
savings/mile from HETs
282.2
miles to/from range
1760
savings from HETs $K
497

29. Teacher’s Notes: Potential Savings (Cont.)
Return rounds not needed for qualification
potential savings
rounds fired
440
rounds needed
328
rounds over need
112
cost per round
708.00
savings from returns $K 79

30. Case B: A More Complex Scenario
It is possible to make the training AAR scenario much more realistic and complex
First, let’s consider the four requirements for cost control
Leadership
Staff
Process
Measurement
How might each work in this scenario?

31. Requirement: Leadership
Battalion Commanders and Deputy Brigade Commander drive the AAR
Interact with support providers who:
Explain cost and performance compared to expectations
Develop continuous improvement initiatives that improve cost and performance

32. Requirement: Staff Support
The Brigade Assistant to the Commander for the Enterprise (ACE)
Supports Brigade and Battalion leadership as well as subordinates with
Credible cost measurements, analyses, insights
Constructive questions, suggestions, and ideas
Reports directly to Division ACE
Works for Brigade Deputy Commander

33. Requirement: Process
The Cost and Performance After Action Review (CPAAR)
Occurs monthly, quarterly or as needed
Brigade DCO establishes meeting schedule
Brigade ACE defines meeting format
Providers present cost and performance by Battalion
Battalion COs critique presentations and continuous improvement results

34. Requirement: Measurement
Providers (with the help of the ACE) develop suggested measures and methods
Leaders approve measures and methods
Measurement goals
Credibility: actionable, understandable
Usefulness: continuous mission improvement
Affordability: perfect is too expensive

35. LSA 2 Check on Learning
Q1. What is the role of the ACE in staff support? A1. Q2. What is the role of the ACE in the AAR? A2.
Q1. What is the role of the ACE in staff support?
A1. Supports Brigade and Battalion leadership as well as subordinates with credible cost measurements, analyses and insights. Reports directly to Division ACE.
Q2. What is the role of the ACE in the AAR?
A2. Defines the meeting format. Helps develop measurements and methods for each support provider.

36. LSA 2 Summary
We reviewed the FORCES website to download the replenishment parts & fuel costs by LIN as well as ammo & missile unit price. We then completed cases A and B briefing total cost for multiple courses of action and discussed what requirements were needed.

37. Case B: Expanded Complexity
Let’s evolve to a more complex scenario:
Frequency Quarterly training brief
Scope Class I, III, V, and IX (food, POL, ammo, maintenance)
Flavor Direct cost and indirect cost
Fullness No allocation of higher HQ Garrison allocation of support
Additional measurement process assumptions:
Class I cost calculated from MRE cost per serving data: FORCES CFH Unit Support Cost  Subsistence Data
Garrison support costs for food handling, ammunition issuance and range management must be allocated

38. Case B: Expanded Complexity (Cont.)
Key Support Providers: i.e. AAR Presenters
Class I, III, V, IX Brigade S4
Range: Garrison Range Manager
Food Prep: Garrison Dining Facility Mgr
Ammo Issue: Garrison Ammo Supply Mgr

39. Garrison Support - Food
Food prep:
Manager estimates that 90% of her cost supports dining facilities and 10% support range ops
Total cost for last quarter was $420,000
Served 90,000 meals in dining facilities
Served 5,000 meals in field
Total cost for this quarter is $440,000
Served 95,000 meals in dining facilities
Served 4,000 meals in field

40. Garrison Support – ASP Ammunition Supply Point:
Manager estimates that 95% of cost supports ammo issuance and 5% supports ammo return
Total cost for last quarter were $120,000
Issued 5,000 main gun rounds
Returned 200 main gun rounds
Total cost for this quarter is $140,000
Issued 6,000 main gun rounds
Returned 300 main gun rounds

41. Garrison Support – Range Management
Manager suggests allocating range cost on the basis of range days reserved by units
Total cost for last quarter was $320,000
90 days were available for range usage
90 days were reserved for range usage by units
70 days were used by units
Total cost for this quarter is $310,000
60 days were used by units

42. Case B: Additional Data Last Quarter
Last quarter training:
150 trips to and from range, 450 miles on range
Each tank expended its allotment of 10 rounds
Performance: qualification requires 7 bulls eyes
54% qualified with first 7 rounds
30% qualified on the 8th round
10% qualified on the 9th round
2% qualified on the 10th round
10 range days were reserved and 4 used
300 soldiers were fed four MREs each day

43. Case B: Additional Data Last Quarter (Cont.)
This quarter training:
180 trips to and from range on HETs, 1080 miles on range
Each tank was issued 10 rounds and unneeded rounds were returned to the ASP
Performance: qualification requires 7 bulls eyes
50% qualified with first 7 rounds
30% qualified on the 8th round
10% qualified on the 9th round
10% qualified on the 10th round
8 range days were reserved and 5 used
320 soldiers were fed four MREs each day

44. Team Exercise Teams Assign Members as Follows:
Battalion CO – most senior
Brigade ACE – elected by group
Range MGR
DFAC MGR
ASP MGR
Brigade S4
Prepare AAR briefings for Range MGR, DFAC MGR, ASP MGR, and Brigade S4

45. Team Presentations

46. AAR Briefings – Teacher’s Note
Last team’s Battalion CO (acting as Deputy Brigade Commander) and Brigade ACE (acting as Battalion CO) receive the AAR from the first team
First team’s Battalion CO and Brigade ACE receive the AAR from the second team, etc., etc.
(All team members including Battalion CO and ACE can help their team’s presenters answer questions)

47. Teacher’s Note: Range MGR
last qtr
this qtr
var
cost $K
320
310
reserved days 90
cost per $K
3.6
3.4
battalion 10 8
range cost $K
35.6
27.6
8.0
potential savings
used days 4 5
reserved days 10 8
unneeded days 6 3
unneeded cost $K
21.3
10.3

48. Teacher’s Note: DFAC MGR
last qtr
this qtr
var
cost $K
420
440
10% range 42 44
meals
5000
4000
cost per meal
8.40
11.00
battalion
soldiers
300
320
days 4 5
meals at 4 per day
4800
6400
cost of meals
40.3
70.4
(30.1)
potential savings
bas per soldier day
8.48
soldiers
300
320
days 4 5
recoverable cost $K
10.2
13.6

49. Teacher’s Note: ASP MGR
battalion
last qtr
this qtr
var
tanks
150
180
rounds issued 10
total rounds issued
1500
1800
cost of issues $K
34.2
39.9
(5.7)
last qtr
this qtr
cost $K
120.0
140.0
95% issuance $K
114.0
133.0
rounds issued
5000
6000
cost per issue
22.80
22.17
5% return $K
6.0
7.0
rounds returned
200
300
cost per return
30.00
23.33
tanks returning 3 90
rounds returned
270
tanks returning 2 54
108
tanks returning 1 18
total rounds returned
396
cost of returns $K
9.2
(9.2)

50. Teacher’s Note: Brigade S4
Class III POL IX Maint
last qtr
this qtr
var
tanks
150
180
miles to/from range 40
total miles to/from range
6000
cost per mile
288.37
tanks cost $K
1730.2
miles on range
450
1080
129.8
311.4
(181.7)
HETs
total miles
7200
6.17
HETs cost $K
0.0
44.4
(44.4)
Class I Food
last qtr
this qtr
var
soldiers
300
320
days 4 5
4 per
4800
6400
cost per meal
7.23
meal cost $K
34.7
46.3
(11.6)
Class V ammo
rounds issued
1500
1800
rounds returned
396
rounds used
1404
cost per round
708.00
ammo cost $K
1062.0
994.0
68.0

51. Teacher’s Note: Summary$K
last qtr
this qtr
var
Class III IX to range
1730.2
44.4
1685.8
Class V Ammo
1062.0
994.0
68.0
Class III IX on range
129.8
311.4
(181.7)
DFAC cost
40.3
70.4
(30.1)
Range cost
35.6
27.6
8.0
Class I Food
34.7
46.3
(11.6)
ASP issues
34.2
39.9
(5.7)
ASP returns
0.0
9.2
(9.2)
3066.8
1543.3
1523.5
reconciliation
HET use
Return rounds plan
58.7
More miles on range
More soldier days
(41.6)
All other
2.3

52. Teacher’s Note: Performance
Cumulative Minimum Rounds to Qualify
This Event
Last Event

53. Case C – Individual Exercise
Add Military Pay for the Soldier days involved at an average cost of $65K per year and 250 work days per year
Discussion on materiality
How significant is Military Pay?

54. Teacher’s Note: Case C Summary$K
last qtr
this qtr
var
Class III IX to range
1730.2
44.4
1685.8
Class V Ammo
1062.0
994.0
68.0
Mil pay
312.0
416.0
(104.0)
Class III IX on range
129.8
311.4
(181.7)
DFAC cost
40.3
70.4
(30.1)
Range cost
35.6
27.6
8.0
Class I Food
34.7
46.3
(11.6)
ASP issues
34.2
39.9
(5.7)
ASP returns
0.0
9.2
(9.2)
3378.8
1959.3
1419.5
reconciliation
HET use
Return rounds plan
58.7
More miles on range
More soldier days
(145.6)
All other
2.3
Mil Pay
last qtr
this qtr
var
soldiers
300
320
days 4 5
soldier days
1200
1600
cost per day
260
soldier cost $K
312.0
416.0
(104.0)

55. Cost Elements - Budget
Soldier Cost: military manpower appropriation managed at Department of the Army level
Range Cost: Garrison Ranges (IMCOM)
Class I: Garrison DFACs (IMCOM)
Class III: Brigade budget
Class V: appropriation managed at Army level ammunition issuance is Garrison ASPs (IMCOM)
Class IX: split between brigade, Garrison DOLs (IMCOM) and OMA appropriation (DA)

56. Conclusion: Budget vs. Cost Views
Mil Pay $
Ammo $
Food $
Army
Battalion
AAR
FORSCOM
IMCOM
Brigade S1
Range Manager
DFAC Manager
Corps
Region
Range $
Ammo Issue $
DFAC $
Maint $
Brigade S4
Ammo SP Manager
Brigade S4
Division
Garrison
POL $
Repair $
Brigade
Battalion

57. Conclusion: Budget vs. Cost Crosswalk
Mil Pay $
Ammo $
Food $
Army
Battalion
AAR
FORSCOM
IMCOM
Brigade S1
Range Manager
DFAC Manager
Corps
Region
Mil Pay $
Range $
DFAC $
Range $
Ammo Issue $
DFAC $
Maint $
Brigade S4
Ammo SP Manager
Brigade S4
Division
Garrison
Maint $ Repair $ POL $
Ammo Issue $
Food $ Ammo $
POL $
Repair $
Brigade
Battalion

58. Conclusions
Role based cost management and control offers numerous opportunities to engage
In improving the cost effectiveness of complex processes
With many different types of cost
With many different supporting organizations and accountable personnel

59. TLO Summary
Action: Apply Role-Based Cost Control Principles to a Real World Scenario
Condition: You are training to become an ACE with access to ICAM course handouts, readings, spreadsheet tools. and awareness of Operational Environment (OE) variables and actors
Standard: With at least 80% accuracy:
Determine appropriate characteristics of cost measurement and control process for case study scenario
Prepare cost measurement and reconciliation for AAR
Discuss requirements of cost management and control in context of case study scenario