In my first blog of this series I introduced you to the Four Pillars of the Affordability Process. They are:

  1. Management Support
  2. Methodology
  3. Training
  4. Tools/Automation

In this third blog I will give you the benefit of my insight and experience by writing specifically about the Second Pillar; Methodology.

In my experience it is a written Affordability Methodology that is the heart of the Affordability Process. The Methodology breathes life into the process and details the specific requirements to implement and make an Affordability effort successful.

A written Affordability Methodology does this for you:

  1. Sets the Affordability Requirement
  2. Provides Legitimacy and Authority
  3. Defines Terms and Processes
  4. Establishes Responsibilities
  5. Standardizes the Process
  6. Provides an Affordability Plan Template

A written Affordability Methodology sets the requirement for Affordability to be addressed and implemented within your organization and on your program. The methodology requires that Affordability and its processes be resident on every single program within your business. By requiring Affordability on every program the methodology insures that addressing cost and cost reduction is part of the way you do business.

The written Affordability Methodology provides legitimacy and the authority of the Affordability Manager and cost estimators to require the implementation of Affordability on all programs. As a cost estimator your ability to use cost estimating tools such as TruePlanning® makes you valuable to every program because estimation of the current and future product is part of the process for meeting the program cost goals.

The definition of standard Affordability terms and processes are found in the written Affordability Methodology. Standardizing Affordability terms and processes insures that all Program Members understand the language and processes connected to Affordability. For example, some standard terms that should be defined and included are:

  • Affordability - Affordability is the process that balances performance with price to meet customer needs.
  • Cost Analysis - 1:  the act of breaking down a cost summary into its constituents and studying and reporting on each factor 2:  the comparison of costs (as of standard with actual or for a given period with another) for the purpose of disclosing and reporting on conditions subject to improvement
  • Integrated Product Team - An Integrated Product Team (IPT) is a multidisciplinary group of people who are collectively responsible for delivering a defined product or process. IPTs are used in complex development programs/projects for review and decision making.
  • Etc. as required.

Specific responsibilities for the Management, the Program Manager and every IPT Team Member is spelled out in the Affordability Methodology Document. For example, the Program Manager is designated as having the ultimate authority and responsibility for the implementation of Affordability on the program. In the responsibility section it also requires Affordability Leads and IPT Members to report on Affordability progress at all Program internal and external reviews, whenever they occur.

Standardized report formats are delineated and should be used throughout the program and business. These reports should include:

1.  A Step-Down Chart that shows the cost goal, progress toward the goal, and cost reduction plans;

The Step-Down Chart has the following details:

  • The Step-Down Chart has the following details:
  • Cost Goal Line in Blue
  • Progress Line and Current Estimate in Black
  • Cost Reduction Plan and Items in Green
  • Cost Reduction Goal highlighted in insert box
  • Current Estimate and date in insert box
  • Pink line indicating today's date

 

2.  Trade Study Report format that shows trade study details and the final trade study decision. A catalog file of these Trade Study Reports should be created to improve results sharing and document actions taken;

The Standardized Trade Study Report contains these important details:

  • A description of the Trade Study
  • Date & Trade Study Number
  • Contact Name, email address, and phone number
  • Performance Parameters and the value of each option
  • Cost Analysis measurements for AUPC, DTUPC, O&S, and Total LCC for each option
  • Risk Analysis for each option
  • A Summary Analysis of each option
  • A Trade Study Recommendation
  • Finally, a Trade Study Disposition and Date

 

3.  Standardized Affordability 4-Corner Chart to be used at all program and management reviews that addresses Affordability Goals, Metrics, Cost Take-Out Initiatives and a Step-Down Chart


 

Lastly, the Affordability Methodology should provide an Affordability Plan Template that can be tailored to each individual program. A tailored Program Affordability Plan will address each programs peculiarities.

A written Affordability Methodology is an important pillar for Affordability to stand on. The Methodology is the heart of the program and sets the requirement for an Affordability Program, establishes its legitimacy and authority, identifies responsibilities, outlines the processes to be followed, standardizes reports, and provides an Affordability Plan Template for the program to follow.

4.  Other charts specific to the program as necessary.

The Affordability process to be followed must be outlined for the program with specific milestones and accomplishments identified in a Program Affordability Plan. The standard GAO 12 step process for estimation should be addressed in the Methodology document and shown where it fits into the Affordability Process. As a cost estimator/manager this is important information for you:

 

In addition, the supporting best practices and other initiatives pertaining to cost estimation and Affordability throughout a program’s life cycle should be addressed and explained. These include:

  • Price to Win (Position to Win)
  • Design to Cost (DTC)
  • Value Engineering (VE)
  • Cost As an Independent Variable (CAIV)
  • Target Cost (TC)

 

Lastly, the Affordability Methodology should provide an Affordability Plan Template that can be tailored to each individual program. A tailored Program Affordability Plan will address each programs peculiarities.

A written Affordability Methodology is an important pillar for Affordability to stand on. The Methodology is the heart of the program and sets the requirement for an Affordability Program, establishes its legitimacy and authority, identifies responsibilities, outlines the processes to be followed, standardizes reports, and provides an Affordability Plan Template for the program to follow.