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Changes in Cost Estimating

Changes in Cost Estimating. John Cargill, GS-1515 AFCAA/FMAE ASMC RPDI March 8, 2012 Version 1.0.2. Climate. Times they are a’changing There is a s trong movement towards data driven estimates require databases

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Changes in Cost Estimating

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  1. Changes in Cost Estimating John Cargill, GS-1515 AFCAA/FMAE ASMC RPDI March 8, 2012 Version 1.0.2

  2. Climate • Times they are a’changing • There is a strong movement towards • data driven estimates require databases • increased use of CERs (cost estimating relationships) in addition to analogies and engineering estimates • All three serve as independent crosschecks to each other • Depending upon the center, one may be favored over the others • Defense Cost Analysis and Resource Center (DCARC) has become the big data repository in the sky • MilStd 881 Work Breakdown Structure • Quality of data in the 1921’s and 1921-1’s have greatly improved

  3. Acknowledgements:Collaboration • Thanks to • Kristy Golden (AFCAA/FMAE) for her letting me take on the Missile Sufficiency Review Handbook and Database update • Dr. Lew Fichter and Jeff McDowell, of Tecolote Research, for providing extensive input for potential improvements to the previous editions of the MSSRHbk and accommodated most of my “druthers.” • John Odum (AAC/EBJ) and Bill Bolen (AAC/FMC) for their “wouldn’t it be nice if…” comments during the JASSM/JASSM-ER cost estimate. They will notice some of their wishes have been incorporated • Ron Forch (AAC/FMC) for spending three months digging through Air Force technical manuals for specifications, weights and exploded diagrams

  4. Example Databases That Can Be Queried Parametric query In a nutshell, we want something like this for costing missiles • Unmanned Spacecraft Cost Model – now up to USCM9 • NASA-Air Force Cost Model – NAFCOM • Civil Engineers have many cost models and databases • Realtors have updated models for various neighborhoods all around the country – independent variables: • Neighborhood • Bedrooms • Sqft • Age • Number of cars in garage

  5. Fearlessly Going Where No Man Has Gone Before Database & Viewer Outcomes Bucketing, spreading & splitting Happy, happy, happy Hollering, yelling, swearing & going blind Fewer sleepless nights Purifying, inflating & normalizing Relatively easy access to structured data Multiple sources of conflicting data Structured query capability

  6. Background:Building the Database MSSRHbk is no longer a local product – it has become the standard with the U.S. Army and the U.S. Navy as well will us at AAC in the Air Force • History: • CR-1147 July 2002 • CR-1461 “Missile Systems Sufficiency Review Handbook” January 2010 • CR-1461/1 “Missile Systems Sufficiency Review Handbook” October 2011

  7. Acknowledging the Graphics • Where you see pretty pictures, I got them from my Tecolote cohorts in the MSSRHbk update project • Where you see ugly pictures, those are mine

  8. Most Data Came from DCARC

  9. Nothing in Isolation! • All the Acronyms you’ll ever need: • DCARC – Defense Cost & Resource Center (DoD) • JCARD – Joint Cost Analysis & Research Database( NAVAIR) • CRUAMM – Air Force Cost Risk and Uncertainty Metrics Manual (AFCAA) • ACDB Automated Cost Database (AFCAA)

  10. Acquisition Phases • Each Development phase data point is named using the current DoD 5000 series phase terminology of the respective period • Efforts typically performed between Milestones B and C (SDD, EMD, FSED, FSD, Engineering Development, etc.) represent costs of an EMD/SDD phase • Efforts typically performed between Milestones A and B (Dem Val, PDRR, Risk Reduction, Advanced Development, etc.) are deemed to represent the cost of a Technology Development phase • Efforts typically performed beyond Milestone C (P3I and ECP) are deemed to represent the cost of a P3I phase • Schedules referenced to CDR

  11. Data Normalization & Mapping:Meticulous Pain and Agony Faux data

  12. Database • The work breakdown structure was significantly expanded to increase the granularity of hardware subsystems • New data incorporated • Air vehicle • weight • Length • Diameter (U.S. Army has found high correlation between diameter and cost) • Fly-out Range • Speed • “Box-level” “SWAP” and cost • Data to support analogies, CERs, and output based simulation • Schedule database

  13. Databasecontinued • Continued alignment with typical Air Force estimating structures • Completely mapable to MilStd 881 • Meets the requirements for electronic transfer to the Navy’s Joint Cost Analysis Research and Database (JCARD) • Viewer supports many sort, search, conversion and other functions • Automatically creates an extensive series of statistical summaries • Supports easy benchmarking by programs • Creates schedule graphs referenced to CDR for programs selected • Exports charts to MS Word

  14. The Magic Tool Contains most all the goodness known to man Better than sliced bread

  15. Program Selection Allows asking parametric questions like: What would a 1000lb class subsonic air to ground cruise missile that can go 300 miles cost? • Programs to be included in the data set for analysis can be selected on the basis of • Weight, length, diameter, range, speed • Platform • Air • Surface • Mission • Air • Surface • Missile Defense

  16. Program SelectionBy Type of Guidance • Laser • EO • Passive Radar • Laser • IIR • Pre-programmed • Semi-active Radar • Command • Guidance • Multi-mode • TERCOM • INS • Active Radar • Semi-active Laser • INS/GPS • IR • EO • Passive Radar

  17. Program SelectionBy Type of Warhead • Warhead • Blast/Frag • Nuclear • HE • Bomblets • Non-nuclear kill vehicle • Modular • General Purpose Bombs • Direct Frag • Penetration HE Blast • HETSC • HE Blast/Frag Penetrator • HE Tandom Shaped Charge • Varies • Penetrating Blast Frag • Penetrator • HESC • Shaped Charge • Explosively Formed Penetrator • Multi-effects • HEBF

  18. Program SelectionBy Propulsion, Lead Service, Control • Control • TVC • Aero Surfaces • None • Gas Reaction Control • TVC and Aero Surfaces • Fluid-injection Jet Vanes • Lead Service • Navy • Air Force • Army Selecting: 1. No propulsion Air Force yields Aero surfaces GBU-15, JDAM, SDB I and SDB II • Propulsion • Engine/Solid • Engine • Solid • None

  19. Program SelectionFrom Program List Fair warning: You MUST see a program in the “Systems to Include” list BEFORE you hit “Save Picks…” or no program will be selected.

  20. Program SelectionFrom Pre-determined Program Lists

  21. Of Course You Can Choose Any Base Year You Want Caveat: Currently, only DoD Inflation is automatically supported for 3600 and 3020

  22. Example:Air-To-Surface Weapons

  23. Air-To-Surface SelectionRDTE Burn Rate Synthesized Data • A good bench-marking chart • Compare program of interest against other programs in the database • Compare program of interest against programs selected • If your program is an outlier on burn rate, maybe you have ramped up too slowly, two quickly or have an extraordinary schedule • Compare by RDT&E Phase

  24. Air-To-Surface Selection:RDTE Nonrecurring Factor of Recurring Cost Synthesized Data

  25. Air-To-Surface Selection:RDTE Factor of System PMP Cost Synthesized Data Toggled for RDTE Factor of System PMP Cost Can toggle for RDTE Factor of Air Vehicle PMP Cost

  26. Air-To-Ground Selection:Production Non Recurring Factor of Recurring Cost Synthesized Data

  27. Air-To-Ground Selection:Production Non Recurring Factor of Recurring Cost Synthesized Data Toggled for Production Factor of Air Vehicle PMP Cost Can toggle for Production Factor of System PMP Cost

  28. Air-To-Surface Selection:Production Unit cost (T1-UC1000) Since T1 is often greatly affected by minor changes in CIC, options are provided for Unit Costs at 100, 500, 1000 or User Entered

  29. Air-To-Surface Selection:Production Unit cost (T1) Synthesized Data Toggled for Production Unit Cost (T1) Can toggle for Production Unit Cost Several Other Ways

  30. Air-To-Surface Selection:Production Unit Cost per Pound (T1-UC1000) Synthesized Data Toggled for Production Unit Cost (T1) Can toggle for Production Unit Cost Several Other Ways

  31. Air-To-Surface Selection:RDTE Nonrecurring Cost per Pound (T1-UC1000) Synthesized Data Toggled for RDTE Nonrecurring Cost per Pound (T1) Can toggle for RDTE Nonrecurring Cost per Pound Several Other Ways

  32. Air-To-Surface Selection:RDTE Nonrecurring Cost per T1-T1000 Synthesized Data Toggled for RDTE Nonrecurring Cost per T1 Can toggle for RDTE Nonrecurring Cost Several Other Ways

  33. Air-To-Surface Selection:Crosschecks Synthesized Data Toggled for Default CIC Options and Default RDTE Phase Options

  34. Air-To-Surface Selection:Crosschecks continued Synthesized Data Toggled for Default CIC Options and Default RDTE Phase Options

  35. Air-To-Surface Selection:Crosschecks continued Synthesized Data Toggled for Default CIC Options and Default RDTE Phase Options

  36. Air-To-Surface Selection:Production Phase Cost Improvement Curves Synthesized Data Note for Regression Experts: Coefficient of Variation is greater for rate slope than learning – implies that economic order quantities are not being followed historically, or possibly there is multicollinearity between the rate and cumulative quantity. • Cost Improvement Curves • “Learning Curve” -- database uses unit theory • “Rate Surface” -- combination of learning and rate which is very important with lot buys of varying sizes

  37. Air-To-Surface Selection:Production Phase Proportions Synthesized Data Yes, Virginia! There are Non-Recurring costs during production, especially for the first lot

  38. Schedule Analysis It will not be explained why this button is called “Bonus Schedule Analysis” • This iteration of the MSSRHbk with its Database Viewer is • First version to reference program events to how much before or how much after CDR • CDR has the highest correlation with other events • Milestones and PDR move around a lot • New DoD guidance is that PDR will occur before MS B, whereas in the past it usually occurred after MS B • Program picking (selection) is separate from the programs picked for costs and the other metrics because it may be necessary to eliminate some programs for cost variances resulting from funding vagaries, etc., yet the schedule might be appropriate to retain

  39. Schedule AnalysisAir-To-Surface Same Air-To-Ground program picks as in the cost examples but with a slight twist: You get to select whether you want to work with Median, Mean or Lognormal Mean schedule durations

  40. Schedule Synthesized Data PDR MS A MS B

  41. Schedule: Synthesized Data CDR CDR is a real point in time independent of acquisition and milestone strategy – it is a time when most of the engineering drawings are complete and we are ready to start “bending tin”

  42. Schedule:CDR Reference Synthesized Data

  43. Schedule Analysis:MS B Referenced It will not be explained why this button is called “Bonus Schedule Analysis” • For planning, comparison and cost estimating purposes it is still important to be able to estimate times from MS B, even though the requirements to enter MS B have changed • Be careful how you use the MS B reference as it is more applicable for reviewing historic programs where PDR and CDR occurred after MS B • For modern programs where risk reduction efforts result in System-level PDR and Component-level CDR, you should use the CDR-referenced times • MS B referenced time lines can serve as a rough estimate of the ceiling, as one would expect modern programs to take less time post MS B because more is accomplished before MS B

  44. Schedule:MS B Reference Synthesized Data

  45. Exporting Summary Statistics • One of the new features of the viewer is the ability to export the entire set of summary statistics charts to MS Word, which may be subsequently pasted to MS Power Point briefing charts • Cell B2 of the Analysis tab has a button that causes exporting the summary charts to MS Word • One feature of this export is that tables are produced for the entire database and for the programs selected

  46. One Last Feature:Pages of Systems Descriptions

  47. One More Last Feature:Lots of Exploded Drawings

  48. Conclusions • User friendly database and viewer • More time analyzing and thinking • Less time grunting • With viewer, it is convenient to make comparisons and talk to Program Office • Ideally, database and viewer would be Oracle or Access based, however, Excel works reasonably well in the interim

  49. Take Home Message Early adoption of this database technology has brought us closer to our information sources and is allowing us to work smarter, not harder Working smarter, not harder Closer to data sources Early Adoption of Technology

  50. Questions and Point of Contact John Cargill GS-1515 Air Force Cost Analysis Agency Operating Location Eglin AFB, FL 850-883-3460(w) 703-371-0891(c) john.cargill@eglin.af.mil

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