Cost analyses

In order for the Ministry of Defence to be able to ensure sound long-term planning for the defence sector, it is crucial to understand the cost development in the sector.

We therefore have a separate project in which we estimate what various defence structures will cost over time. For instance, what will a plan that strengthens land forces cost compared to a plan that prioritises unmanned systems in the air and sea?

In order to answer this, we use KOSTMOD, an in-house-developed tool to model costs of the defence structure in a long-term perspective. The costs are modelled from the bottom up. This means that we begin by determining costs for one officer, one missile, one tank, one square metre of barracks and so on.

We then place these data into various divisions of the Armed Forces according to the current structure, or based on plans for new and alternative defence structures. This gives us the opportunity to compare possible structures and is a prerequisite for good long-term planning in the sector. 

We also use our competence to perform cost estimates for various procurement projects, including fighter aircraft and new underwater vehicles.

Distinct cost drivers must be offset

In the project, we also conduct research on the special cost drivers entailing that the Armed Forces are facing a distinct cost growth. This cost growth must be offset so that the relative defence capabilities are not reduced over time, and our findings have contributed to generating room for manoeuvre in this regard.