Cost Benefit Optimisation to achieve Affordable Force ... · Cost Benefit Optimisation to achieve...

Cost Benefit Optimisation to achieve Affordable Force Structures

Dale Shermon, PRICE Systems (UK)

Zachary Jasnoff, PRICE Systems (US)

Original TruePlanning for Concepts task sponsored by Philip Weston, UK MOD/CAAS

Presented at the 2010 ISPA/SCEA Joint Annual Conference and Training Workshop - www.iceaaonline.com

© 2010 PRICE Systems, LLC. All Rights Reserved.

Objective

Review the TruePlanning for Concepts Catalogue

Consider the benefits of the Through Life Estimating capability of TruePlanning

Demonstrate the optimisation capability of Phoenix Model Centre with TruePlanning

Conduct a Combine Operational Effectiveness and Investment Appraisal (COEIA)

Case study



Agenda

TruePlanning for Concepts

Through Life Estimating (TLE)

Model Centre and TruePlanning

TruePlanning and Economic Analysis (EA)

Optimisation Case study - COEIA

CAVEATS

This is a case study for demonstration only.

•The data contained within it is example data only and does not represent any current or future projects.

•The names reflect type of platform and costs/ weights etc are altered and do not reflect anything other than ' gross order of magnitudes.

CAVEATS

This is a case study for demonstration only.

•The data contained within it is example data only and does not represent any current or future projects.

•The names reflect type of platform and costs/ weights etc are altered and do not reflect anything other than ' gross order of magnitudes.



TruePlanning for Concepts catalog

UK MoD and PRICE Systems Custom built conceptual models



Populating TruePlanning for Concepts from Excel



Importing MS-Excel Force Structure into TruePlanning

High level Force Structure built as a Product Breakdown Structure (PBS)



Agenda

TruePlanning for concepts







Analogy [near neighbour]

Parametric

[Extrapolation From] Actuals

Engineering [Bottom - Up]

Appropriate methodology for project phasePresented at the 2010 ISPA/SCEA Joint Annual Conference and Training Workshop - www.iceaaonline.com


DetailedDetailedDetailedParametricParametricTop-downTop-down

DisposalIn-ServiceManufactureDemonstrationAssessmentConceptPre-concept

TruePlanning for Concepts

TruePlanning for Manufacturing

TruePlanning for Hardware, Software, Information Technology, COCOMO

TruePlanning for Custom Models

TruePlanning framework

Adopting the right model for the correct phase in a single framework



Complexity generation in True ConceptsPresented at the 2010 ISPA/SCEA Joint Annual Conference and Training Workshop - www.iceaaonline.com


Populating TruePlanning for Hardware

Platform complexities from the True Concepts model



TruePlanning for Hardware - Complexity inputs



Through Life Estimating - Comparison of True Concepts and True Hardware



Agenda








TruePlanning – Enterprise capability




Agenda








Guidelines for conducting a COEIA

Combined Operational Effectiveness Investment Appraisal (COEIA) is a formal comparison of acquisition options on a cost versus effectiveness basis to satisfy a User Requirement.

The COEIA is an integral part of the Investment Approvals Board (IAB) procedure.

The COEIA may be considered an Investment Appraisal, used to assess the effectiveness of differing acquisition options in an objective and where possible, quantitative way. Its purpose is to select one of the acquisition options, before proceeding further.



Combine Operational Effectiveness and Investment Appraisal (COEIA)

Mea

sure

of E

ffect

iven

ess

(MO

E)

Total Whole Life Cost (NPV)WLCObjective

WLCThreshold

MOEThreshold

MOEObjective

Unacceptable MOE

Optimised Total Whole Life Cost

Unaffordable Whole Life Cost



1

3

4

5

1 34

Constant Cost Constant Performance

5 22

Mea

sure

of E

ffect

iven

ess

(MO

E)


WLCThreshold

MOEThreshold

MOEObjective

Mea

sure

of E

ffect

iven

ess

(MO

E)


WLCThreshold

MOEThreshold

MOEObjective

Simplifying the analysisPresented at the 2010 ISPA/SCEA Joint Annual Conference and Training Workshop - www.iceaaonline.com


TruePlanning Cost Benefit Capability

TruePlanning calculates Business Case statistics including the Net Present Value (NPV)



Agenda





Case study - COEIA



Scenario for Freedonia

The Freedonia Defence department has exceeded the budget for acquisition. It need to reshape the structure of its acquisition program within a number of constraints.

Constraints– It should be able to fight a small conflict outside its borders

within Freedonia’s maximum achievable MOE objective of 8,000

– Total Force Structure should not exceed £13bn in acquisition cost



Force Structure by Scenario Presented at the 2010 ISPA/SCEA Joint Annual Conference and Training Workshop - www.iceaaonline.com


Freedonia Measure of Effectiveness (MOE) Simulation Force Structure (EXCEL)



Force Structure Simulation - ModelCenter TruePlanning Plug In

TruePlanning Plug In for Model Center



Force Structure Simulation - ModelCenter EXCEL Plug-In

EXCEL Plug In for Model Center

Force Structure ScenarioV High



Force Structure Simulation - ModelCenter Scenario Linkage Between EXCEL Force Structure and TruePlanning model



Force Structure Simulation - ModelCenter ModelCenter Parametric Simulation Tool

Run Force StructureScenarios 1-5(VLow to VHigh)

For each Scenario-Estimate the cost of each asset in TruePlanning-Calculate the MOE-Plot the Results



Freedonia Force Structure Simulation – ModelCenter Parametric Simulation Tool - Results

VLow

Low

Medium

High

VHigh



Force Structure Simulation – Scenario Analysis

Each scenario represents a complete, detailed Force Structure solutions modeled through TruePlanning



Freedonia COIEA

Evaluation of the five Force Structure scenarios through Model Centre simulation and TruePlanning reveals:– Freedonia is only capable of supporting low to medium

conflicts given achievable MOE and budget constraints.

– Supporting a High Level Conflict Fredonia can achieve the MOE, but exceeds the budget.

– Supporting a Very High Level Conflict, Fredonia cannot achieve the desired MOE or budget.



Summary

The TruePlanning for Concepts Catalogue is applicable methodology for early program costing estimating

True Concepts generation of Complexities can feed True Hardware demonstrating the benefits of the Through Life Estimating capability

3rd Generation TruePlanning has significant enterprise capability including the quick optimisation capability of Phoenix Model Centre with TruePlanning

Demonstration of an optimised Combine Operational Effectiveness and Investment Appraisal (COEIA)


Cost Capability Optimization to Achieve Affordable Force Structures

Dale Shermon, PRICE Systems (UK)Zachary Jasnoff, PRICE Systems (US)

Original TruePlanning for Concepts task sponsored by Philip Weston, UK MOD/CAAS


Cost Benefit Optimisation to achieve Affordable Force ... · Cost Benefit Optimisation to achieve...

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