DPA. Whole Life Costing Overview. Mike Storey Cost Forecasting Land. Pricing & Forecasting Group, DPA. Space Projects.

Transcription

1 Space Projects Whole Life Costing Overview Mike Storey Cost Forecasting Land Software Pricing & Forecasting Group, DPA

2 Agenda Who are we WLC Overview Build up of costs Ilities Risk Uncertainty Tendering Process Approval Submission Through Life Management Plans Challenges

3 Who are we The Pricing and Forecasting Group(PFG) is a support group situated within the DPA but with responsibilities pan-mod Although funded throuh the DPA we are required to recover some of our costs direct from projects and at the moment we charge DPA teams for some services Although

4 Our services Pricing Cost Forecasting Asset Accounting PPP/PFI EVM

5 The Demand Barrel PFG/DQAG Resource Level Small Beer?

6 Why do we have Subject Matter Teams? These provide a clear understanding of the relevant technology In-depth expertise Fully understand the issues and know what the Scrutineers are looking for Hence can make a significant contribution to smoothing the IPT s submissions to the IAB

7 Our capability To enable key decision-makers to choose which procurement option is likely to be the most cost-effective To assist IPTs to pass through the approval process at first pass

8 Whole Life Cost Overview The Procurement Cycle Concept Assessment Demonstration Manufacture In Service Disposal

9 Whole Life Cost Policy WHOLE LIFE COSTING The WLC Policy rests with the Defence Logistic Organisation(DLO) WLC IBT who have provided the next slide

10 Compiling an in-service COO template STP data Def Agencies PTC STC DLO IPT DP A Cash Flow - - Op ing Cost Statement - - Balance Sheet - - apportionments Year 1 Year 2 Year 3 Year 4 Cash Flow - - Op ing Cost Statement - - Balance Sheet - - Year 1 Year 2 Year 3 Assumptions Year 4 Forecast to out of service date Summary COO Template Consolidated for Harrier GR7/T10 Models TLMP for Harrier GR7/T10

11 Cost Build Up Rule of thumb Comparative Parametric Synthetic

12 RULE OF THUMB (LINEAR) DPA 6 metres 1M 10 metres 3M? 8 metres 2M 23 May 2000 E File Reference SPS CF PPT TEMPLATE 32 UNCLASSIFIED

13 COMPARATIVE DPA 0.7M %Size + 0.2M Turret= 1.04M 23 May 2000 E File Reference SPS CF PPT TEMPLATE 33 UNCLASSIFIED

14 PARAMETRIC DPA 10 tonnes 0.6M 40 tonnes 2.6M 20 tonnes 1M 23 May 2000 E File Reference SPS CF PPT TEMPLATE 34 UNCLASSIFIED 60 tonnes??

15 Parametric Relationship Intercept Weight

16 SYNTHETIC DPA BODY & POWER UNIT 0.4M TURRET CANNON TOTAL 0.1M 0.15M 0.65M 23 May 2000 E File Reference SPS CF PPT TEMPLATE 35 UNCLASSIFIED

17 Ilities! Reliability Availability Maintainability Durability Survivability Supportability

18 Model Capability DPA Need to have flexibility to allow what if predictions based on :- Price / Quantity Economic Conditions Collaboration / Cost Share Risk & uncertainty Timescales 23 May 2000 E File Reference SPS CF PPT TEMPLATE 39 UNCLASSIFIED

19 RISK Risk is an event which may happen that will have an impact on Cost,Time or Performance or any combination of these

20 Johari s Window What I know about me and what you know about me What you may know about me that I do not about me What I know about me that you do not know about me What there is to be know about me that neither of us know

21 Mike s Risk Window Risk that have been identified and are therefore known Risks other people know about Risks that I from experience may be able to identify Uncertainty

22 Mike s Risk Window Risk that have been identified Risks other people know about and are therefore known Risks that I from experience may be able to identify Uncertainty

23 Uncertainty Uncertainty to a cost forecaster is the expression of our lack of confidence in the data used. Expressed as three point estimates

24 Tendering Process Input into the Invitation to Tender Questionnaires Empty model Industry Days Assessment of returns

25 Submissions to the IAB Production of the IA for the Business case submission Assistance with Cost Of Ownership statement Prior agreement by DG(S&A) Scrutineers Prior agreement by Director of Economic Advice that IA properly conducted

26 Through Life Management Plan A-Credit Responsibility Matrix Cost Plan Resource Accounting

27 Data lack of it Data Quality of it Data Challenges Boundaries it encompasses These challenges apply especially to the in-service phase

28 Basis for in-service costings The usual forecasts of Whole Life Costs are based on declared peacetime operating patterns, which are normally focused on training to achieve fully competent operators of the equipment These peacetime operating patterns are often assumed not to change materially over time Major shifts in operating pattern will generate a revised in-service cost forecast The Through Life Management Plan facilitates such revisions

29 Challenges Contractor Logistic Support What does it cover? What are the affects on the MoD logistics pipeline structure? What risks remain with the MoD? How is attrition handled in the contract? How will the CLS be affected when engaged in operations?

30 PFI/PPP Many additional issues to conventional acquisition: hat are the boundaries of the contracted service provision Additional insurance required if in a zone of conflict? Interface between Service personnel and contractor s Sponsored Reservists How is attrition/damage handled in the contract? Third-party revenue Project funding What risks remain with MoD? Financial viability of the Special Purpose Vehicle company

31 Thinking outside the box DPA PFG/CF are used to thinking outside the box An example is low intensity conflicts for which we need to consider in much greater detail: effects of attrition the effects of high tempo usage changed logistics pipelines outloading of equipment and personnel possible backloading of items beyond local repair loss of Spares/tools in the heat of conflict extra fuel usage (but local fuel maybe cheaper) whole fleet management issues

32 Low intensity conflicts Some Whole fleet management issues: impact on scheduled maintenance possible major servicing programme required at the end of the conflict possible subsequent rotation of equipment to even out usage

33 Normal peacetime provisions may not apply Hello is that the AA?

34 Effects of Gulf War on Costs MoD Budget Billions Series3 Series2 Series1 5 0 MOD Budget Budget + Gulf War Budget + Gulf War - Contributions Costs

35 PFG Cost Forecasting