Navigating the Business Case Analysis (BCA) Minefield

1. Navigating the Business Case Analysis (BCA) Minefield By Thomas J. Barthel Belzon, Inc.

2. The BCA – What does this guy know? Member of the AMCOM IMMC Maintenance Directorate PBL and Analysis Branch AMCOM Alternate PBL Coordinator Logistician w/combat experience Maintenance and Operations Background Infantry & Aviation Officer Working on PBL / BCA development Developing BCAs for legacy systems and assisting PM FCS PBL

3. The BCA – A Support Tool • Decision support and planning tool • Projects financial and non-financial (Log/Risk) consequences of recommended alternatives • Each Cost/Benefit has logistics impact and risk factor • Basic risks include Cost/Schedule/Performance/Supportability • Build and support “your case” • Cost data and Non-Cost data Supports Recommendations

4. The BCA - Let’s discuss • What type of BCA must we do? • Who Needs to be on our BCA Team? • We have numerous outlines...Now What? • What should our timeline be for BCA completion? • Do we NEED weapon system experts? • What are adequate assumptions? • Are our BCA statements and findings flowing back to the supporting data? • Have we identified and verified applicable risks? • Who should validate our BCA? • The BCA is completed...NOW WHAT? • Questions and answers!

5. The BCA - What type of BCA must we do? • EA vs. Cost / Benefit comparison • Need a waiver from DA (ASAALT) • Type I BCA • Type II BCA • Requirement is to adapt pre-policy EAs to Type II BCA after five years • This means LOGISTICS IMPACTS and applicable assumptions are included with cost and risks

6. The BCA -Who needs to be on our BCA team? • Perfect World - Same members as Supportability IPT • The Lead for the BCA – A PM designated decision maker The Team Logistics Acquisition Cost Analysis Directorate (CAD) Army Working Capital Fund (AWCF) Item Managers Depots PBL / BCA SMEs – PBL Branch Engineering OEM • Dedicated staffing until completion • Complexity drives membership • Cross-Organizational Input/Ownership/Communications

7. The BCA -We have numerous outlines...Now What? • DAU / WWW / Everyone Else’s Interpretation • The Main Focus is: Sequence/Flow - Relevant Data (from Scope) – Valid / Executable Recommendations • Intro - Subject/Purpose/Scope • Methodology and Assumptions • Logistics Considerations • Cost • Risk/Sensitivity Analysis • Conclusion • Recommendation • Implementation Timeline

8. The BCA - Format Sequence / Flow / Data (from Scope) / Recommendations • Is the BCA readable? • Can the preceding section segue into the next? • Does data relate to each section or is a search required? • Is their TOO MUCH data that is simply noise? • Can the decision maker determine if recommendation is appropriate w/o re-reading?

9. The BCA - Introduction The X Program BCA Introduction Section • Subject: What is this case about? This is important – Drives the initial focus for data • Purpose: Why, for whom, and for what use Decisions from results will be used to... • Scope: Drives what specific data will be utilized Who, what, when, where and how – period

10. The BCA -What are adequate assumptions? • The scope determined the focus of assumptions - what we studied, i.e. SC, TMs, Test Equipment, Infrastructure, etc. • What Programmatic changes / business rules / case foundation / etc. will invalidate the BCA outcome if altered • The results of the BCA will now require BCA update and validation • Changes in Assumptions This change affects costs and support (LOG) Use Sensitivity Analysis and Weights to determine impact • How sensitive are results to assumptions >10% - noise? • Major Assumptions change is a BCA schedule killer!

11. The BCA -Logistics Considerations • Cost is important but so is non-cost • We are dealing with PB “L” Subaru vs. Ford PM VS OEM as PSI • Compare cost and benefits – Weight? • Now look at the “The rest of the story.” • Will ALSO affect: gas mileage, speed, what else? Staffing/transportation/engineering/contracts/IT/ funding stream/training/SMEs/etc.

12. The BCA - Cost • The EA fits nicely when placed here • Cost data collection is determined by the scope of the BCA • Modeling & Methodology for Costs • Validation • Other costs • Very difficult if scope is moving • BCA is OBJECTIVE – cost data is revealing!

13. The BCA - Risk/Sensitivity Analysis • Identify Major Risks Cost / Schedule / Performance / Supportability • Cost/Schedule/Performance/Supportability • The sensitivity analysis shows weighted risks • Use to determine effects of assumptions change • Weight and sensitivity determined by the PM

14. The BCA – Other Risk? • Don’t forget to consider other Risks? • Whose Risks – Programmatic / PMO • Contractual • Budget • Political • Methodology • Unknowns • Experience • Transition

15. The BCA - What should our timeline be for BCA completion? Type I BCA – 4 mos. (2) Limited Scope Type II BCA – 3 mos (1.2) 23 System BCA – 6 mos. (5 FT) New System Type II 6 Sub-BCAs to 1 – 2yrs+ (1.2) The Scope (Depth & Complexity) of the BCA will drive the Time and Resource Requirements

16. The BCA - Do we NEED weapon system experts participating? • Who will write to the Logistics, and Risk Sections? • The BCA should address (assess) the Logistics process of the Status-quo and the effects on Logistics for each Alternative • Co-Locating within the PM organization

17. The BCA -Are BCA statements and findings flowing back to the supporting data? • Lack of Supporting data is like handing in a Master Thesis with no Reference Pages • This is a business CASE...where’s proof? • Sometimes the comparisons are not as close as you would like. • C13O wing data is not the same as C17 wing data but may be all you have, especially new acquisitions! • Sometimes data doesn’t even exist...don’t waste extra time looking (alter estimating technique...corollary COST, Future RAM-T estimates, etc.)

18. The BCA - Who should validate our BCA? • CAD validates the EA and Cost Sections of the BCA • Based upon policy – ACAT Army Acquisition Exec (AAE) • Here’s the twist...Who Validates the Logistic Impacts, Risks, Sensitivity Analysis and... • Can you validate your own costs?

19. The BCA - The BCA is completed...NOW WHAT? • Remember – Recommendations Does data support the reason for recommending? • The implementation Plan and Timeline should be developed for EACH alternative The decision maker needs to know how long to implement after he makes a decision • The BCA approval process - Takes time

20. What is a “good” BCA – Tom’s Opinion • Well defined Subject/Purpose/Scope • Clear, relevant and up-front • Logistics Section will detail consequences of actions/decisions for each alternative • Rationale/supporting methodology for cost and non-cost inclusion • Determines what needs to be managed to achieve outcome • (predicted results) • Makes a valid recommendation supported by all data (cost/non-cost) with timeline for implementation • Recommendations showed success when implemented that aligned withBCA data

21. The BCA – Lessons Learned • The BCA process is difficult w/o timelines • Determining proper scope w/o requirements creep • Data Collection will be difficult • Teams not staffed for Full Time BCA work • An Objective PBL BCA is difficult in a Transaction based environment • Who and how do we pay for the BCA? • You can collect too much data • You can do too much modeling • Who is tracking BCA Lessons learned?

22. The BCA Questions ! THANK YOU FOR COMING! Contact: Thomas J. Barthel Belzon, Inc. 256-461-6039 Huntsville, AL thomas.j.barthel@conus.army.mil