Deputy Assistant Secretary of the Army for Cost

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Schedule Risk Mort Anvari Acquisition Costing Directorate http: //www. asafm. army. mil

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) When to do Risk Analysis Risk analysis reduces the uncertainty between requirements and funding 2

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Project Management Schedule Curve 3

Fixed Cost Technology Outdate Parallel Effort More ECP Less Mature Design Typical Cost Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Cost Schedule Curve Minimum Optimal Development Schedule 4

Commercial Drivers • Technology Drives Schedule • Constraint Schedule • Goal is ROI Maximization Defense Cost Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Schedule Goals Commercial Development Schedule Do. D Drivers • Funding Drives Schedule • Unconstrained Schedule • Goal is Cost Reduction

Funding Allocation Cost Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Do. D Program Schedule Drivers Acquisition Process Program Execution Cycle Time Reduction Goal Development Schedule

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Development Schedule Mean Cycle Time to IOC Do. D Pre-1992 Starts 132 months (11 years) Post-1992 Starts 89 months (7. 4 years) F-22 216 months (18 years) IOC 2004 Comanche 264 months (22 years) IOC 2006 Commercial Boeing 777 54 months (4. 5 Years) 7

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Example of R&D Funding Profile TOTAL ENGINE IN-HOUSE FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 8

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Historical Perspective 78% of Programs had less than 10% Schedule Slippage 92% of Programs BAFO had Raised no Issue with the Government Proposed Schedule Program Managers’ Priority • Superior Performance • Low Acquisition Cost • Low Operation Cost Shortening the Cycle Time Provides Opportunity for Cost Reduction • Shortened Schedule 9

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Reasons for Risk 10

Business Case AS-IS TO-BE Program 1 Program 2 Program 3 Program 4 Program 5 Program 6 x Program 1 Cost Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Reduced Cycle Time Opportunity Program 4 Program 2 Program 5 Program 3 Program 6 x/2 Cycle Time Result From: Reduced Cycle Time will Result In: - Starting Programs too Soon - Fielding of Newer Technology - Starting Too many Programs - Lower Cost per Project - Inefficient Acquisition Process - Reduced Exposure to Annual Funding Reduction 11

Deputy Assistant Secretary of the Army for Cost & Economics (DASA-CE) Summary • Funding Allocation Puts more Constraint on the Program Schedules than Acquisition Process and Program Execution • Shortening the Cycle Time Provides Cost Reduction Opportunity with Greater Operational Capability • Cost Schedule Risk Analysis Tools and Techniques Should be Utilized to Demonstrate the Effect of Schedule Trade-off 12