Professional Documents
Culture Documents
Morteza Anvari
MS 0
O L D
MS I
Program Definition & Risk Reduction
MS II
Engineering & Manufacturing Development (EMD)
MS III
Production, Fielding/ Deployment
Concept Exploration
B
Component Advanced Development System Integration System Demo
C
Production Readiness & LRIP Rate Production & Deployment
Review
Review
Review
Support
Pre-Systems Acquisition
Systems Acquisition
(Engineering and Manufacturing Development, Demonstration, LRIP & Production)
Sustainment
Estimate Formulation
Review/ Presentation
Final Document
DOCUMENTATION
Start
Prepare Documentation
Situation
You have just been tasked to develop a cost estimate, that is, a professional opinion about the cost of an item, a service or a thing. Lets discuss a process for organizing and developing this estimate.
Questions
Why is this cost estimate needed? What decisions are pending on the results of this estimate? Will the estimate be briefed and to whom? Will the results be incorporated into some document? What does the recipient expect to have included or excluded? What excursions or variations from the baseline are anticipated?
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Questions Continued
What are the program and funding constraints especially if the program is a Joint Program? What are the time constraints for this estimate? What is the acquisition phase of the program? Is the program definition mature? Does technology exist today to design, develop, test and manufacture the system? What is the interrelationship with other systems? Are there previous contracts? How many? What type? How have the contractors performed to date?
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1993
LLTI PEO IPR
1994
LRIP DECISION
1995
1996
MRRB
J A S O ND J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
TODAY
1997
1998
1999
2000
MILESTONE III
TECH SUPPORT
DEVELOPM ENT
IOTE
LUT
(3)(6)
LFT (A)
(26)
LFT
(B,C) (8,4)
I LD II
PVT
(25 MS L + 10 CLU)
LEGEND
MSL CLU
(28) (9)
CA
LLTI CA CA
LEAD TIME
QUICK LOOK FIELD TACTICAL TRAINER USER EVALUATION LIMITED USER TEST CONTRACT AWARD MATERIEL RELEASE REVIEW BOARD
CA
PRODUCTION CA M YII
FIELDING AWE
FUE USA
FUE USMC
13
WBS
15
ELEMENT:
DEV. ENG. PEP DEV. TOOL. PROTO MFG. SEPM SYS T&E TRAINING DATA SUPP EQUIP. DEV. FACILITIES OTHER
FY00C$M
$ 39.039M 0.408 0.457 110.421 78.266 11.112 1.989 3.439 4.897 0.0 0.968
TY$M
$38.260M 0.386 0.450 107.724 76.363 10.927 1.954 3.413 4.758 0.0 0.928
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ELEMENT:
NON REC PROD. REC. PROD ENG. CHG SEPM SYS T&E TRAINING DATA SUPP. EQUIP. OPER./SITE/ACT. FIELDING TRAIN. AMMO/MSLS WAR RESV. MODS OTHER
FY00C$M
$ 16.110M 1,169.348 0.0 116.637 12.564 28.880 2.073 146.460 0.0 89.525 59.001 0.0 236.619 51.739 $
TY$M
16.583M 1,312.377 0.0 132.258 14.437 31.499 2.300 158.304 0.0 101.635 79.482 0.0 280.729 64.129
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19
20
21
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Ground rules and assumptions must be documented since changes in these areas provide an audit trail for changes in the cost estimate.
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Data Problems
Wrong Format Matching up Definition Temporal Factors - comparability
PROC
MILCON
MILPERS
O&M
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Disposal
x y 0
x y z
x y z
0 y z
Cost estimates based on confidence intervals Parametric analysis based on similar systems and similar attributes (regression) Engineering data based on reliability projections used for bottoms-up estimate Actual system costs used to extrapolate future system costs Cost estimate revised every two years after production Weights associated with non-actuals decrease as system matures MS B is a true hard stop for systems
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Avionics
Payload
$3K/lb
$2K/lb
$4K/lb
1.0*S2
.65*S1
35
Weaknesses
Less detailed Getting accurate data
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38
Weaknesses
Requires a lot of time Cost Cannot be used until system well defined
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%*rate
$1.37 $3.48
500 5000
9500
$11 $9
5.3 52.6
$.58 $4.73
$10.16
44
As the quantity of a product produced doubles, the man-hours- per-unit expended to produce the product decreases at a fixed rate or constant percentage (usually 10% to 15%).
45
Unit No. 1 2 4 8 16 32 64
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48
10
70%
1 1 10
100
1000
10000
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Estimate Formulation
We have defined our tasks, planned the estimate, assigned cost responsibilities, and performed data collection and analysis. Here we apply our estimating methodologies and tools: develop the factors, analogies, CERs, and learning curves. We will aggregate the various cost elements into development, production, and O&S estimates, fiscally spread the costs, and apply inflation.
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The realism test checks to see if the assumptions and ground rules are consistent with the statement of work and if the costs are in line with historical data. We evaluate completeness by determining whether the estimate includes all the work stated in the request for proposal and whether the costs are traceable and reconcilable.
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Total Cost
+
Confidence
Sum PE
MLC (Mode)
P.E.
CDF 50%
20%
Sum PE MLC
P.E.
+ Many More
Frequency Chart
C um ul a ti v e C ha rt
4 , 9 7 7 Tri a l s S h ow n
4977
Programmatic
Material Availability Skill Requirement Environmental Impact Contractors Stability
Cost
Sensitivity to Assumptions Sensitivity to Technical Risk Sensitivity to Programmatic Risk Sensitivity to Schedule Risk
Schedule
Degree of Concurrency Sensitivity to Technical Risk Sensitivity to Programmatic Risk Number of Critical Path Estimating Errors
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Min
Optimal
Development Schedule
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Typical
Development Schedule
Mean Cycle Time to IOC DoD
Pre-1992 Starts Post-1992 Starts F-22 Comanche 132 months (11 years) 89 months (7.4 years) on-going 216 months (18 years) IOC 2004 264 months (22 years) IOC 2006
Commercial
Boeing 777 54 months (4.5 Years)
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Schedule Goals
Commercial Drivers Technology Drives Schedule Constraint Schedule Goal is ROI Maximization
Cost
Defense
Commercial
DoD Drivers Funding Drives Schedule Unconstrained Schedule Goal is Cost Reduction
Development Schedule
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Funding Allocation
Cost
Acquisition Process
Program Execution
Development Schedule
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Final Documentation
Provide the means for other analysts to get the same results that we have in our cost estimate. Providing good directions and a clear trail to follow are essential in having an estimate that can be replicated. Provide step-by-step documentation of the methodologies, supporting data, ground rules, and assumptions, equations, examples, etc., Ability to interpret or evaluate someone elses cost documentation is as important as ability to prepare good cost documentation.
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CAIV Process
Set realistic but aggressive cost objectives early in acquisition program Manage risks Track progress using appropriate metrics Motivate Government and industry managers to achieve program objectives Incorporate incentives to reduce O&S costs for fielded systems
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Process (Models)
Cost Analysis Process
Databases, Tools, & Models
Outputs (Costs)
ASARC CAIG, DAB APB PPBES AOA
Should be Known
Descriptions, Models Description, Historical Costs Cost Goals, Models
Unknown
Costs Models Descriptions ( Design and Performance Parameters)
Class
Analysis Synthesis Control
Needed Capability
CAIV
Performance Based and Design Based Cost Models Currently do not Exist
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Analysis of Alternatives
Set realistic, aggressive cost objectives early in development Manage risks Track progress with appropriate metrics Motivate government/industry managers to achieve program objectives Incorporate incentives to reduce O&S costs for fielded systems.
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