Cost of Compliance on Munitions Consolidation From Lualualei to West Loch

Abstract

With the object of ensuring that all ordnance magazines in Hawaii are in compliance with NOSSA regulations, this project conducts a systematic cost of compliance analysis to identify the pros and cons of either constructing new magazines at West Loch and consolidating ordnance operations from Lualualei to West Loch, or only upgrading the ordnance magazines in Lualualei. This analysis is performed from the perspective of the Department of Defense in order to capture all costs and benefits associated with the Army and Navy, the main stakeholders in this study.

The project developed a cost of compliance decision support model in Excel to systematically examine the relative strengths and weaknesses of the available alternative options. The model identifies tangible costs and benefits to estimate a net present value for each option. To account for uncertainty, the researchers used Crystal Ball to implement simulated values for cost variables used in the Excel based model to validate the robustness of the average net present value and to show the probability of net costs exceeding the net benefits. The analysis conducted in this project point to consolidation as a better course of action to take in the long term.