by Bob Koury
| September 25, 2014
Over the past year and half of customer mentoring, I have been responding to more and more requests regarding how to represent the DoD Acquisition Phases in the development of TruePlanning® cost estimates. With the renewed interest in Total Ownership Costs, there appears to be a desire to have greater visibility into costs by appropriation over a well-defined / understood schedule. This need to estimate and report out on cost by appropriation and schedule has been a driver behind the need to represent the acquisition phases more explicitly within TruePlanning® than is available using the “canned” phase report (see Figure1).
Figure 1 Consolidated Product Break Structure Report by Phase
Although the report provides summary data by phase over the fiscal years of interest the pieces attributed to Technology Development (TD) , Engineering & Manufacturing Development (EMD), Production & Deployment (PROD), land Operations & Support (O&S) are not explicitly called out. With an order to obtain a clearly breakout of each of these phase costs the analyst can, with a little planning, create a TruePlanning® product breakdown structure that allows for a clearer delineation of costs by phase. Figure 2 is the same program but with a different breakdown structure that groups cost objects to
Figure 2 Acquisition Phase Product Break Structure (Report by Phase)
facilitate the allocation of cost by phase. One of the advantages of doing a structure like this is that you can control the representation of the work more directly. For example, in this case the majority of the software development will be done in the TD phase. We use a software component to estimate the cost. However, EMD which for Software Program X (our example) is a modification or enhancement of the work done in TD is represented by a COTS Cost Object. This allows the analyst to represent the actual work more accurately as a modification of existing code. Software Program X EMD is not an additional full blown development but a modification of the code developed during the TD phase based on lessons learned from TD testing. Furthermore we represent deployment and O&S with a repeat of the COTS objects but with a different worksheet set (turning off development activities) and input values (deployment spread and number of operational hours). By adding folders and using different cost objects with different input values we have much finer control and granularity of the cost estimate. Finally, using a multiple system and assembly cost object structure along with schedule inputs matching the program plan we can more accurately represent and cost the program. By doing this type of structure we can see the effect of prototyping and EMD integration as separate activities. For Software Program X this consists of a little over 5 million dollars of “lost” cost.
This discussion is just one example of how an analyst using folders and different cost objects in a flexible manner can increase the accuracy of his or her representation of the program costs over time. Hopefully through this example the reader will see multiple approaches to solving their program cost needs.