The United States Marine Corps believes that a condition-based maintenance (CBM) philosophy is a potentially better alternative to the Corps' current timebased preventive maintenance policy. The Advanced Amphibious Assault Vehicle (AAAV) will become the first trial platform for the implementation of a prognostics and CBM maintenance policy. This vehicle will revolutionize every facet of Marine Corps ground combat operations, providing improved speed. cross-country mobility, survivability. and firepower. However, the cost of the AAAV is substantial. with life cycle costs estimated at 1 1B over its service life. Accordingly, the Corps is making every attempt in the design stage of the AAAV to implement effective procurement and management practices to control life cycle costs and increase reliability. Maintenance is one area that, if effectively managed, offers the potential for significant cost savings and improved readiness thru CBM. A study was conducted to assess the cost of a prognostics and CBM system for the AAAV, its effect on life cycle costs. resulting return on investment, qualitative risk factors, and application in a military environment. This analysis was conducted on the present day Amphibious Assault Vehicle (AAV). since only three AAAV prototypes presently exist and usage data would he of limited value. This study fmds that there is an attractive return on investment that increases with increasing life of service. There is a quantifiable improvement of reliability and operational availability of the vehicle in addition to the qualitative advantages to commanders and staff planners afforded by the implementation of CBM.