Economic Analysis Manual - U.S. Army Cost and Economic Analysis Center

This publication, the Economic Analysis Manual, is produced by the U.S. Army Cost and Economic Analysis Center. The purpose of this manual is to provide guidance to analysts who prepare or review economic analyses (EA) in support of the decision making process. Increasing the quality of EA's should increase the likelihood of project approval. This manual provides a basic framework for implementing the policies of EA concepts, methods, and procedures. This manual provides detailed guidance for preparing an EA. It addresses EA terminology, the EA process, and overall policy. Chapter 1 is an introduction to economic alalyses Chapter 2 provides a basic definition of EA and the EA process. Each step in the process is explained in detail. Chapter 3 discusses cost estimating methods, data collection and analysis, and estimating considerations. Chapter 4 defines the types of benefits, and shows methods of identifying, quantifying, and evaluating benefits. Chapter 5 identifies methods for comparing alternatives in an EA and developing economic indicators for a system or project. Chapter 6 describes techniques and considerations for the handling of sensitivity, risk and uncertainty. Chapter 7 discusses the proper methods of documenting an EA and provides a checklist for documentation. Chapter 8 provides special guidance on preparation and approval of EAs for Major Command, Control, Communications and Computer/Information Technology (C4/IT) Systems. Appendices provide additional details on special topics, including the required cost cell structure and cost element definitions for C4/IT System EA's, examples of EA quantitative methods, an EA example which illustrates common EA techniques and documentation methods, and a listing of economic analysis- related web sites.