This thesis is part of a continuing project at the Naval Postgraduate School attempting to validate the cost effectiveness of the Aircraft Engine Component Improvement Program. It focuses on the costs and benefits derived from Power Plant Changes 159 which improved High Pressure Turbine, Second Stage blades on the Harrier (AV-8B) aircraft's Rolls-Royce Pegasus (F402-RR-F406A) engine. Because sufficient failure rate date for the improved blades was not available, the analysis considers a range of costs/benefits based on two different projected blade reliabilities. The improvement to the High Pressure Turbine, Second Stage blades was found to be cost-effective from both a financial break-even point, in that the cost to produce the improvement will be recovered by the end of 1996 for the full range of blade reliabilities and from a Net Present Value analysis which shows that this improvement will save the Department of the Navy between $17,192,827 and $38,639,494 (in 1992 dollars) over the projected life cycle of the enginehttp://archive.org/details/analysisofcostsb00waltMajor, United States Marine CorpsApproved for public release; distribution is unlimited.