I hope you have enjoyed my series of blogs on the Four Pillars of Affordability. I have tried to impart to you what I have learned during my 30 years in the Defense Industry and the last 25 years as an Affordability Manager and cost estimator. The purpose of the Four Pillars of Affordability is to enable you, and your program, to develop a product for your customer that is considered affordable and ultimately, a value to them. My definition of Affordability is: Affordability is the process that balances performance with price to meet customer needs. A product is affordable if it meets customer needs, is within the customer’s budget and is perceived as the best value among all available alternatives.

Pillar #1, Management Support, requires management to be an advocate of the Affordability Process, to reinforce its tenants, remove obstacles to cost reduction, and reward those who follow its methodology.

Pillar #2, Methodology, requires that a written Affordability Methodology Document be written and published. A written Methodology establishes legitimacy, authority, and sets the requirement for Affordability within an organization. An Affordability Document should define and contain, at a minimum, the following:

  • The Definition of Affordability
  • The Affordability Iterative Process
  • Affordability Roles and Responsibilities
  • Applicability Within an Organization
  • Standardized Affordability Reports and Formats
  • An Example Affordability Plan

The Affordability Process must:

  • Cover Total Life Cycle Cost
  • Be an Iterative Process (Figure 1)
  • Establish Cost Reduction Controls
  • Require Cost Goal Assignment at the Program Level and to the Design IPTs
  • Have a Feedback Loop

Figure 1. Affordability Iterative Process

Standardized reports and formats should be automated, easily understood, reinforce Affordability principles, and portable within the organization.

Pillar #3 is Training. Training supports common understanding and usage and should be focused in two directions. One direction is toward Management and the other toward the Design Integrated Product Teams (IPT). Management should know the what, why, who, when, and where of Affordability. Management’s primary responsibility is to understand Affordability Methodology, to remove obstacles to Affordability implementation, and to reward those who focus on Affordability and cost reduction. In addition to the what, why, who, when and where of Affordability the Design IPTs and other support “ilities” on a program should understand the “how”. Their job is to implement Affordability Methodology and to make sure that cost goals are met while producing value for the customer. PRICE Systems is available to help design, and if necessary, deliver Affordability Training specific to an Organization.

Pillar #4, Tools/Automation, defines the automated tools and suites, such as PRICE TruePlanning, that should be used to perform cost estimation as part of the Affordability Process. It also talks about the Professional Cost Estimators and Affordability Experts that make the functioning of the Affordability Process easier and more effective on a program.

I have enjoyed very much writing these blogs about the Four Pillars of Affordability. I hope I have been successful in imparting my experience and knowledge about Affordability to you. Please let me know if you have any questions or need any guidance or help concerning Affordability and its application within your organization.