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Cost Analysis for the NATO ALTBMD Feasibility Study

Contents . Introduction ALTBMDIntroduction ALTBMD Feasibility studyIntroduction Cost Analysis Team (CAT)Tasks and activitiesChallengesResults Lessons learned . Introduction ALTBMD. ALTBMD: Active Layered Theatre Ballistic Missile Defence Main objective:

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Cost Analysis for the NATO ALTBMD Feasibility Study

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    1. Cost Analysis for the NATO ALTBMD Feasibility Study M.C. Smit (TNO-FEL, The Netherlands) D.J. Brown (MOD DPA PFG, UK) SCEA conference June 15th - 18th, 2004 Manhattan Beach Marriott Los Angeles, California, USA

    2. Contents Introduction ALTBMD Introduction ALTBMD Feasibility study Introduction Cost Analysis Team (CAT) Tasks and activities Challenges Results Lessons learned

    3. Introduction ALTBMD ALTBMD: Active Layered Theatre Ballistic Missile Defence Main objective: “Protection for deployed NATO-forces” Defence against Theatre Ballistic Missiles To provide an integrated NATO “systems of systems” based on National components Layered to give very low “leakage” rate defence in depth: lower layer (e.g. Patriot), upper layer (e.g. THAAD)

    4.

    6. Introduction ALTBMD Feasibility Study Two contractor teams headed by Lockheed Martin (JANUS-team) and Science Applications International Corporation (SAIC) Principle objectives: Analysis on the feasibility of meeting the requirements set out in NATO Staff Targets (system requirements) Recommend the architectural (systems of systems) solution that achieves a balance among performance, time schedule, costs and risks Task description in Statement of Work (SOW) with EEAs and MOEs.

    7. Example EEAs and MOEs

    8. NATO- Organisation ALTBMD FS

    9. Contractor Teams ALTBMD FS

    10. Feasibility Study Timeline . .

    11. Introduction CAT Established in April 2001 Participating nations: NL, US, UK, GE. DK withdrew, FR participated incidentally, IT joined in January 2004. General tasks CAT: Support TMD PG and Study Support Group (SSG) on Cost issues Support NATO Studies Management Team (SMT) Report progress activities at SSG-meetings. Comment on results of contractor teams Develop independent Cost estimate . .

    12. Preparation Phase (until mid 2001) . .

    13. Tasks and Activities Preparation Phase Produce Cost Breakdown Structure (CBS) and Cost Format to be used by Contractor Teams Definition of Cost Elements as part of CBS (based on OSD CAIG) Provide general ground rules and assumptions to be used and constraints to be taken into account by Contractor Teams Decide on cost estimating approach by CAT Agree on methods, techniques and tools to be used. Assign responsibilities to participating nations, decide on work share

    14. Challenges in Preparation Phase Models from earlier studies could not be used. No existing cost model that satisfied all needs --> new models(s) need(s) to be developed. No relevant cost related data in data packs No direct contacts possible with Cost Experts of Contractor Teams, to agree on approach, models, data to be used Only indirect contacts via Study Management Team.

    15. Results of Preparation Phase Document with Cost Format and Ground rules and Assumptions. Requirement for following CAT models: Interoperability (mainly BMC3I) (US), System development and production (UK-GE), Operation and Support Cost (US-NL), System level spreadsheet(s) (UK) Architecture level spreadsheet (NL-UK) All data and assumptions are recorded in Master Data and Assumptions List (MDAL)

    16. Study Phase (mid 2001 - early 2003)

    17. Task and Activities Study Phase Development spreadsheet models to be used for independent cost estimate CAT Gather cost related information on systems, potentially part of architecture (continuing effort) Independent Cost estimate of potential ALTBMD system configurations and architecture Evaluate interim and final reports contractor teams

    18. Challenges in Study Phase Referring to independent cost estimate Lack of data!! Some nations contributing systems were not involved in CAT At that time: No agreed composition of systems No generic architecture available Delivery of contractor databases to CAT was difficult

    19. Results of Study Phase Cost information mainly gathered from limited sources. For non-US/UK systems assumptions had to be made Findings evaluation reports contractor teams: Most EEAs/MOEs were answered sufficiently No general overview and no systematic set-up of cost information in reports (Cost Volume is missing) Contractors used different set-up of systems Traceability (references, assumptions, clarification, calculations) results were hard to find in reports Not possible to perform excursions with results contractor teams by changing inputs (only numbers, no process)

    20. General Overview Model Requirement

    21. Common Issues

    22. Cost Modelling Structure

    23. Component/System Cost Model Linked Excel-spreadsheets First version realised in study phase, further refined in consolidation phase. Combines estimates for individual systems development and production operation & support Building blocks used for components sensors launchers interceptors Allows numbers of building blocks to vary

    24. Component/System Cost Model (cont’d) ‘Three point’ estimating based on @RISK simulation tool Problem: Different generic Types of component/system Different Source countries Lack of verified data (audit trail) System Configurations were variable UPC used in Operation & Support Cost CER System level interoperability hardware cost Common Cost elements Estimates based on own assumptions and available data Operation and support costs integrated at system level.

    25. Example Component/System Output

    26. Operation & Support Cost Model Excel-spreadsheet, based on OSD CAIG cost elements Data obtained from open sources Problems: Some components/systems are in early stages of development. Some component/systems are multi-role. Different Source countries Lack of verified data (audit trail) UPC based CERs for some aspects Operation and support costs incorporated at system level.

    27. Interoperability Model Software intensive systems integration into NATO C2 Excel-spreadsheet Problem: no details on costs available Estimates required numerous assumptions Main effort: SLOC count

    28. Description Arch Level Spreadsheet Not realised during study phase, but in consolidation phase Combines estimates for interoperability individual systems development and production operation & support Allows numbers of systems in architecture to vary Makes a distinction between cost to NATO contributed value by Nations

    29. Example Output Architecture Costs

    30. Consolidation Phase (early 2003 - early 2004)

    31. Tasks and Activities Consolidation Phase SMT: to develop consolidated architecture from contractor teams results Calculate costs recommended systems Calculate costs recommended architecture(s) Calculate costs for excursions on architectures Contribution to recommended architecture report

    32. Challenges in Consolidation Phase Rationalising results Contractor teams difficult: Both Contractors and CAT used different compositions of systems No ability to change inputs in Contractor models Tasks of Working groups were performed in parallel. System composition became available late Architectures subject to many changes Composition of systems and architectures caused changes in CAT systems and architecture models

    33. Results of Consolidation Phase Cost estimates from Contractor teams were of limited use CAT provided input to recommended architecture report (answering EEA/MOE table 21) CAT Cost results make a distinction between Cost to NATO Value of systems contributed by Nations

    34. Final Results Cost analysis report description of all CAT activities in ALTBMD FS provision of results cost model descriptions description of data used and assumptions made (MDAL)

    35. Lessons Learned Ask contractor for separate Cost Volume as a deliverable with a systematic set-up of cost information To have discussions with cost experts Contractor Team Closer co-operation with cost experts Contractor Team Ask specifically for calculations and formulas in spreadsheets to be provided (allows for excursions through changes in inputs). Ask for MDAL or CARD that summarises all data, assumptions and formulas used.

    36. Follow-on activities: Missile Defence study New FS (Missile Defence study) started early 2004 Initiated at NATO summit in Prague Main objectives: Examine options for protecting NATO territory, forces and population centres against the full range of missile threats Recommend options and configurations for system elements, including sensors and Command & Control Determine the best mix of systems and capabilities to obtain a NATO missile defence architecture to meet MOR, considering performance, cost and risk

    37. Lessons Learned Taken Into Account Closer contact with cost estimator contractor team but not a common effort Meetings with cost estimator cost team: First meeting already held to discuss way ahead: Common understanding of approach, ground rules and assumptions Contractor agreed to produce separate Cost Volume All assumptions are recorded in an MDAL

    38. Health Warning Please note: The contents of this presentation provide the views of the two authors and should not be taken as the official views of NATO, UK MoD or NL MoD.

    40. NATO-organisation MD-study

    41. Missile Defence FS Timeline

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