Capital Asset Amortization Model (CAAM)

During the inception of Project Genesis, an initiative to streamline Air Force fighter operations and reduce the cost for the provision of a fighter capability, it was discovered that there did not exist a model to account for the total cost of this Air Force component. Models to account for the recurring expenses of personnel, operations and maintenance are available. However, there are no similar models to account for the capital cost associated with a capability. Life cycle costing models do exist, but they do not dynamically account for the effect of operational parameters on the overall annual capital cost of an Air Force capability. Operational Research was approached to devise a model which could determine the total amortized cost associated with fighter capability. The model must be able to account for all direct and indirect capital expenditures which support the provision of a Canadian Air Force fighter capability. The model must also be able to reflect the effect of changes to operational procedures on the total capital cost of this capability. The Capital Asset Amortization Model CAAM was developed to satisfy this requirement. The model spreadsheet which accepts as input the costs of all capital projects which support the retention of an effective fighter capability. From operational data, CAAM determines the approximate lifetime of the air fleet. For capital projects related specifically to the fighter fleet, the fleet lifetime is used to determine the appropriate amortization period for the projects. For non-airframe-specific projects, an associated technological lifetime is used for amortization calculations. CAAM provides a summary which identifies the total annual capital cost to provide a fighter capability based on the latest estimates of fleet lifetime. CAAM can be used to establish a baseline cost for fighter capability and measure the effect of changes to infrastructure and operations.