speaking, costs are another element besides reliability for which one acquires and updates information. This computation is very similar to those used in PREDICT. One complication is that reliability and costs are related, so a bivariate model may be needed (see, e.g., Press and Rolph, 1986). Given today’s computing capabilities and the recent development of powerful new ways to carry out Bayesian computations, this approach is likely feasible. Thomas and Rao (1999) can serve as an excellent introduction to many of these ideas. Finally, to support this approach to life-cycle costs and warranties, information on systems, tests, costs, and reliabilities all must be maintained in an accessible form.
Frank Camm outlined some management hurdles that complicate the application of life-cycle cost arguments in DoD acquisition. Camm made four major points. First, the policy environment provides an important context for examining system life-cycle costs. Second, improved tools for assessment of life-cycle costs can aid DoD decision makers in their pursuit of priorities relevant to reliability as a goal in system development. However, those tools cannot change the priorities themselves. Third, as systems age the demands for reliability seem to increase, probably because of changes in the way systems are deployed. Fourth, initiating a formal maturation program provides a setting in which to conduct reliability analysis, as well as an element of acquisition planning important to the projection of future system reliability.
Most expenditures per unit time of a defense system in development are paid out during production, and the fewest are made during the initial design phase. However, the majority of expenditures for a system are postproduction, including operations and related support as well as modifications. Because these costs are viewed as being far in the future, they are to some extent ignored during acquisition.
In producing estimates of life-cycle costs for a system in development, it is usually necessary to base the analysis on several assumptions, some of which are tenuous. For example, the years for which a system will be in operation are difficult to predict. The Air Force currently has weapon systems that are expected to be in use well past their intended length of service. Further, various complicating factors that are difficult to incorporate into an analysis should be taken into account when estimating life-cycle costs. Some examples are use of the system for purposes not originally