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5 Recurring and Nonrecurring Cost Estimations
Pages 55-68

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From page 55...
... The NPV analysis does, however, look at the recurring and nonrecurring costs as well as the benefits that result from engines having improved reliability and specific fuel consumption (SFC)
From page 56...
... , testing amd evaluation efforts associated with airframe modification, engine modification, nacelle redesign, pylon redesign, other subsystems redesign, flight testing, weapons separation design efforts related to new tooling requirements, and all systems engineering and program management by contractors and the government. Recurring Costs The recurring costs would include the unit cost of new engines, of installation hits (engine amd airframe modifications)
From page 57...
... For the purposes of this analysis, the committee assumes that the re-engining effort amounts to only 10 percent of the costs estimated by IFcr the prepublicrtion version of this report, the committee estimated the recurring costs for the various rircrafVengine combinations using the RAND CER for recutting unit costs (Table 5-2) or, for those cases for which it was available; the committee used market data to estimate recurring costs.
From page 58...
... This amount estimated is thereby intended to account for the integration amd additional testing efforts only.2 Fuel Consunilption The usual practice in figuring fuel consumption, particularly in the case of acquiring a new system, is to specify a spectrum of mission profiles and meticulously calculate the fuel burn rate averaged over that spectrum. For new system acquisition, there is little alternatne to this procedure since there is no experience base for ;m aircraft that does not yet exist.
From page 59...
... a fuel cost of $2.50 per gallon was assumed, and the committee performed sensitivities using 3, 6, and 9 percent fuel cost escalation rates to demonstrate the influence of potentially rising fuel costs.5 Maintenamce costs were assumed to grow at 3 percent per year. -To complete its analysis, the committee used the simplifying assumption equating fuel burn improvement to TSFC imprcvement.
From page 60...
... A positive improvement figure indicates that the re-engined or modified aircraft/engine configuration candidate is more fuel efficient than the current configuration. A negative improvement figure indicates that the re-engined or modified candidate engine is less fuel efficient.7 Table 5-5 lists the data used as inputs to the estimating relationships for recurring and nonrecurring costs, fuel costs, and repair costs.
From page 62...
... Aviation Assumption CFM engine Aviation Week Assumed same Week fact sheet as F 117 C-5/CF6-80C2 (F103-GE -102) b KC-135R/T/CFM56-A2 B-l/F101 Mod KC-10/CF6-50 Mod Contractor estimate Contractor estimate Contractor esti m ate Contractor estimate Contractor Contractor estimate Contractor NOTE: Shaded cells indicate data not used in analysis.
From page 63...
... NET PRESENT VALUE ANALYSIS The partial NPV model calculates the costs and benefits of modifying or replacing an engine for an entire fleet of aircraft, with the costs being the nonrecurring amd recurring costs for development, installation, and testing of the new engine amd the benefits being the savings due to lower fuel consumption and less maintenance. These costs and benefits are calculated annually, permitting the construction of a cumulative discounted cash flow profile.
From page 64...
... , annual fuel consumption of the original fleet, fuel savings as a percentage and in millions of gallons of fuel saved per year for the re engined fleet; estimated savings on maintenance cost as a percentage and in millions of dollars per year; the production costs for each engine replaced; and the total development cost. The next three columns list the number of years to recoup the investment if fuel costs increase uniformly at 3 percent, 6 percent, and 9 percent per year.
From page 65...
... Before making actual re-engining decisions, the Air Force would have to do much more thorough and detailed amalysis them that done by the committee. The Air Force amalysis would require higher confidence estimates of input values—for example, for fuel burn improvement and recurring costs—and it would include considerations not dealt with by the committee's amalysis—for example, mission impacts.
From page 66...
... KC-135 R/T/CFM56-2B-1 (Mod) 420 147,495 0 359 2.1 7.6 C-130H/T56-A427 Mod' 272 132,262 N/A 189 13.0 24.6 C-130H/T56-S3.5 Mode 272 132,262 N/A 189 8.0 15.1 B-l/F101 Mod 67 23,356 0 109 10.0 10.9 KC-10/CF6-50 Mod 59 51,237 0 177 0.3 0.5 NOTE: The engine cost estimates presented are derived from correlations developed for historical military engines and may not reflect the current fair market prices of commercial engines considered in this study.
From page 67...
... 'The fuel savings noted for the C-130 with new or modified engines are based on the aircraft being flown at the optimal a Etude and airspeed forthe selected engines and propellers The flexibility exists in most C-130 missions for the aircraftto be operated at the best range or fuel consumption conditions. The other aircraft and engines considered in the study are operated at their prescribed mission conditions.
From page 68...
... C-5/CF6-80C2 (F103-GE-102) ~ Engine modification KC-135 R/T/CFM56-2B-I Mod C-130H/T56-A427 Mod' C-130H/T56-S3.5 Mod' B-l/F101 Mod KC-10/CF6-50 Mod 17.7 10.9 7.3 4.2 2.5 19.5 11.7 7.9 4.8 3.1 >60 55.7 24.4 12.9 7.8 22.2 15.7 10.5 7.2 5.2 36.3 26.2 1 17.5 11.3 7.5 16.~ 8.0 5.7 4.0 45.1 >60 31.6 20.6 28.4 1 13.5 13.2 8.7 20.0 1 13.3 11.0 16.3 8.8 6.1 8.9 5.6 7.4 10.0 6.2 3.9 6.3 3.6 9.5 3.1 4.1 4.1 3.0 NOTE: The engine cost estimates presented are derived from con clarions developed for historical military engines and may not reflect the current fair market prices of commercial engines considered in this study.


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