An Economic Analysis of the Transition of a Contingency Military Installation to an Enduring Status Using Monte Carlo Simulations

The construction of expeditionary bases is central to Department of Defense’s (DoD) responses to contingency operations. Usually expected to be transitory, expeditionary bases are constructed with temporary materials that can be erected quickly. The Global War on Terrorism is entering its fifteenth year and bases within Central Command that were expected to be temporary have provided an enduring presence. The decision to transition a base from temporary to semi-permanent or permanent is difficult, as it requires substantial capital investment for facility construction. This decision is further complicated by unknown mission durations. The DoD has attempted to reduce the decision’s complexity with a model that guides the development of a base with a set of construction standards with suggested time horizons. This study improves the model by evaluating its validity through an economic analysis with the assumption that mission durations are unknown. A life-cycle cost model is developed to evaluate investments in temporary and permanent construction designs to determine when or if permanent construction is fiscally advantageous. Despite limitations in the availability in cost data, the results show that semi-permanent construction is preferable for contingency operations lasting up to twelve years, while permanent construction is preferable after twelve years