Delivering cost data to the mod to support business cases
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Delivering Cost Data to the MoD to Support Business Cases. Paul Duvall Deputy Team Manager HVR Practice – Through Life Cost Modelling Association of Cost Engineers 3 Nov 09. Contents slide. 1 Process and Requirements 2 Modelling Examples. 1 Process and Requirements.

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Delivering cost data to the mod to support business cases

Delivering Cost Data to the MoD to Support Business Cases

Paul Duvall

Deputy Team Manager

HVR Practice – Through Life Cost Modelling

Association of Cost Engineers

3 Nov 09


Contents slide

Contents slide

  • 1 Process and Requirements

  • 2 Modelling Examples


Delivering cost data to the mod to support business cases

  • 1Process and Requirements


Generic process

  • SME Cost Assessments

  • Supplier Cost Data

  • Equipment Reliability Data

  • DLOD Base Assumption

  • SME Risk Assessments

MDAL

(Master Document Assumptions List)

Risk Register

Whole Life Cost Model

(Deterministic)

£

Probabilistic Risk Model

£

£

£

£

Whole Life Cost Model (Probabilistic)

Captures

Risk

Captures

Uncertainty

Provides 10, 50, 90%

Confidence Figures

Generic Process?


Risk modelling terminology

Risk Modelling Terminology


Measuring confidence optimism bias

Measuring Confidence/Optimism Bias


Delivering cost data to the mod to support business cases

CMTL

  • Allocation of Cost

    • Input

      • Defence Lines of Development

        • TEPIDOIL (I)

          • Training, Equipment, Personnel, Infrastructure, (Concepts &) Doctrine, Organisation, Information, Logistics………………… (Interoperability).

      • Cost Resource Breakdown Structure (CRBS)

        • PBS/WBS/BOM etc

    • Output

      • Budget Holder

      • EPP/ESP

      • RDEL/CDEL

      • TLF

        • Procurement, Upkeep, Update, Upgrade, Capital Spares, Fuels, Other Costs


Current issues

Current Issues

  • Allocation of Uncertainty

    • Use of Global Uncertainty Factors

      • Impact:

        • uncertainty applied across ALL elements of model

        • Does not reflect increasing uncertainty as estimate extends into the future

    • Identification of Uncertainty

      • Annualised or Totals?

  • Allocation of Risk

    • Foreign Exchange Risk

      • Correlation?


  • Global uncertainty

    Global Uncertainty


    Delivering cost data to the mod to support business cases

    • 2Modelling Examples


    Through life costing capability case study

    Concept

    Demonstration

    Assessment

    Manufacture

    In-Service

    Disposal

    Cost Requirement

    Earned value Measurement

    Whole Life Costs

    Cost of Ownership

    Trade Studies

    Support Strategies

    Costing Requirements

    BOI Studies

    Cost of Ownership

    Trade Studies

    Options Analysis

    Affordability Analysis

    Risk Assessment

    Costing Requirement

    Earned Value Measurement

    Cost of Ownership

    Upkeep Strategies

    Costing Requirements

    BOI Studies

    Cost of Ownership

    Trade Studies

    Options Analysis

    Strategies

    Risk Assessment

    MG

    Cost Forecasting Tools

    FACET

    OSCAM

    EVM tools

    Portfolio

    Bespoke WLF models

    CRBS, DLODS

    IG

    Cost Forecasting Tools

    FACET

    OSCAM

    Portfolio

    Bespoke WLF models

    CRBS, DLODS

    Cost Forecasting Tools

    OSCAM

    Portfolio

    Through Life Costing Capability (Case Study)

    FACET


    Concept phase exemplar

    Concept Phase - Exemplar

    • Exemplar: Assessment of Options for Auxiliary Warship

    • Family of Advanced Cost Estimating Tool (FACET) used to generate the acquisition cost for the development and manufacture of 6 ships.

    • Using the established performance criteria key Design inputs were identified and agreed.

      • Excursions:

        • reduced displacement

        • smaller helicopter or fewer larger helicopters

        • fewer (vertical) replenishment points


    Delivering cost data to the mod to support business cases

    1078

    1220

    940

    753

    1027

    1166

    1310

    838

    1114

    1254

    1400

    923

    Through Life Costing Capability (Concept)

    FACET provides the capability of generating iterations against variations in performance and design rapidly

    Programme cost (2009 prices)

    Budget £1100 m

    Iteration 1

    Iteration 2

    Budget

    Iteration 3

    Budget Line clearly indicates the difficulty of procuring 6 Auxiliary warships to meet the original KURs

    Iteration 4

    £900M

    £1100M

    £1200M

    £800M

    £1000M

    £0M

    £500M

    £700M

    £1400M

    £1300M


    Historic trend analysis facet

    Historic Trend Analysis - FACET


    In service phase exemplar

    In-Service Phase Exemplar

    OSCAM -

    Operational Support

    Cost Analysis Model

    Can provide detailed analysis of support costs

    Can provide rapid cost assessment

    Can show effect of running options and allows comparison


    In service cost option analysis

    In-Service Cost Option Analysis

    • Running Options (Exemplar)

    • Baseline: aircraft maintenance based on three lines of maintenance

    • Excursion: actions previously handled by the intermediate level are split between Govt (Organic) and Contractor Depots


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