Budget Forecasting for US Marine Corps Corrective Maintenance Costs

Abstract

This project develops methodologies to better forecast corrective maintenance costs of the 1st Marine Division. Nearly half of 1st Marine Division’s budget, approximately $25 million, is used for maintenance. The current budgeting process has a number of weaknesses, which includes insufficient detail to defend against funding cuts, and over reliance on historical execution and expert opinion, and is therefore ill-equipped to adapt to changing requirements or communicate impacts on readiness. This project identifies quantitative forecasting methodologies to improve accuracy of budgeting corrective maintenance costs. By combining and analyzing data from a variety of independent sources, including financial, maintenance, and transportation data, two classes of models were developed to assist maintenance budget planners develop accurate forecasts of corrective maintenance costs. The first class, consisting of causal models, is used to identify cost drivers impacting corrective maintenance costs of two vehicles among the 20 most expensive vehicles used by the Division.. The second class, consisting models consisting of time series techniques, is used to forecast corrective maintenance costs of the Division’s Type A items (or items consuming 80% of the maintenance budget). The analysis indicates the models can provide a more quantitative and accurate methodologies for 1st Marine Division planners to build, justify, and defend its corrective maintenance budget.