A Method of Estimating Cost-Effectiveness

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50
AFM 91-19 / TM 5-629 / NAVFAC MO-314
24 May 1989
a. The information in document C can also
(1) On line 1, the effectiveness-period of the
be used to develop a table of costs that give a
PGR is shown in weeks. It is obtained from
quick estimate of when it would be cost-effective
table 6-2.
to use regulators. For our example at Air Base
(2) Line 2 shows that the parcel would
Somewhere, we have used costs in document C
normally be mowed every 2 weeks. The normal
(figures 6-3 and 6-4) to develop table 6-3,
number of mowing operations during the
showing the costs of individual mowing and
effectivness-period of the regulator is then calcu-
spraying operations.
lated by dividing line 1 by line 2, and the result
b. In table 6-3, it can be seen that it costs
is entered on line 3.
\$19.13 an acre to apply the PGR, and it costs
(3) The total cost of each mowing operation
\$14.27 to mow the large grassy area with tractor
is found on line 5f of figure 6-3 to be
mowers. The mowing costs increase signifi-
\$53,928.91, and this is recorded on line 4. The
cantly, however, as the cutters become smaller.
cost of the 4 normal mowing operations during
When an effectiveness-rate of 50 percent is used,
the effectiveness-period is computed to be
we can estimate that PGRs can save about half
\$215,715.64 on line 5. The effectiveness-period is
the mowing cost. The question is whether this
based on an effectiveness-rate of 50 percent, so
cost reduction be greater than the cost of
the PGR is expected to reduce growth, and thus
applying the PGRs. With table 6-3, the manager
the number of mowings, by 50 percent during
can quickly estimate the cost-effectiveness of
this 8 week period. The expected savings in
using PGRs in a given parcel.
mowing costs because of using the PGRs is,
c. For example, using growth regulators in the
therefore, found by dividing line 5 by 2 and is
large grassy area along the runways and taxi-
entered on line 6. Comparing the savings of
ways, which are normally mowed with tractor
\$107,852.82 with the \$49,397.33 cost of the
mowers, would require a savings of about two
regulator application (line 5f in figure 6-4),
mowing operations to be cost-effective. (Actu-
shows a net savings on line 8 of \$58,460.49. The
ally, it would require \$19.13 divided by \$14.27,
use of the PGR, therefore, appears to be cost-
or 1.34 mowings). If the mowing operation were
effective in this example.
normally carried out every 4 weeks, there would
(4) The manager should consider his or her
be two mowings during the effectiveness-period.
project priority list and determine if the freed
One of those mowings would be eliminated, for
assets can be usefully employed elsewhere. On
a savings of \$14.27 per acre. Inasmuch as the
line 9, a recommendation is made to use the
cost of applying the regulator is calculated in
anticipated savings to increase the frequency of
this illustration to be \$19.13 per acre, it would
mowing obstructed areas and fenced borders on
not be cost-effective to use PGRs in this case. If
the base. It is explained that those areas could
the mowing frequency were every 2 weeks,
be maintained every week during the rapid
however, then there would normally be four
growth season rather than once every 2 weeks.
mowings during the 8-week effectiveness-period.
Two of these mowings would be eliminated, for
6-9. A Method of Estimating Cost-
a savings of \$28.54 per acre, if the regulator
Effectiveness:
were used. In this case, the \$19.13 per acre cost
of applying the regulator would be offset by the
\$28.54 savings per acre, and it would be margin-
ally cost-effective.
Table 6-3. Costs of Operations for "Air Base Somewhere."
cost
Tractor
Riding
Power
Source
Spray
Category
PGR
Mower
Mower
Mower
Weedeater
Dot. C
Equipment
\$4,038
\$14,768
\$3,512
\$3,362
\$126
line
1d
Chemicals
35,880
line
2d
5,100
9,360
843
line
3g
12,290
Operators
7,079
Vehicles
118
8
line
4e
162
1,473
143
888
Drivers
646
46
line
4i
784