U.S. Army PEO STRI Cost Management Implementation
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1 U.S. Army PEO STRI Cost Management Implementation Anthony A DeMarco PRICE Systems, LLC 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 1
2 Outline Who - PEO STRI Overview Dr. James T. Blake, SES, Program Executive Officer Why - Improving Software Cost Estimates Mr. James A. Golden, Associate Chief Financial Manager Cost How Cost Management Implementation Details Anthony A DeMarco, President, PRICE Systems 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 2
3 Washington 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 3
4 Approved for public release; distribution is unlimited. Dr. James T. Blake, SES Program Executive Officer for Simulation, Training, and Instrumentation United States Army 24 October 2013
5
6 Vision: To be the Nation s Acquisition and Contracting Center of Excellence for Training, Testing, and Simulation Solutions. Mission: Acquire and Sustain Training, Testing, and Simulation Solutions in Support of the Nation Provide STRI capabilities to support Decisive Action Operations Strategic Goals Ensure capabilities meet the needs of the Integrated Training and T&E Environments Develop a workforce with expert level acquisition, technical, and leadership skills Promote and sustain excellence in the execution of contracting activities Approved for public release; distribution is unlimited. as of OCT
7 Simulation Enhances Live Training Approved for public release; distribution is unlimited. Simulation Is Safe, Saves Time, Money, Fuel and the Environment Safety less training injuries Minor Fuel Needs No Ammo Required Limits Environmental Impact Air Pollution Noise Pollution Terrain Damage Inexpensive to Operate 7
8 Life-Cycle Support Army Training Inventory 335,000 training devices located at over 600 sites worldwide Sustained by 7,000 people Valued at $3.9B Life-Cycle Management Plan is required to support training systems 850 Field OPS Contractor personnel deployed in SWA at over 25 locations. Since March 2003, we have supported over 2,126,000 individual soldier training events in SWA. Joint Forces: Army, Navy, Marine Corps, Air Force and SOCOM. 11+ Coalition Nations including the United Kingdom, Australia, Italy, Norway, Poland, France, Netherlands, Lithuania, Canada, New Zealand and Germany. More than 560,000 Iraq Army and Afghanistan National Army soldiers trained to date. Iraq 0 (As of 31 Aug 13) Afghanistan 759 Kuwait 63 MDEP WCLS is PEO STRI s sustainment budget line for Army accepted TADSS Field OPS operates 24/7 around the world the sun never sets on their support Approved for public release; distribution is unlimited.
9 Approved for public release; distribution is unlimited. Foreign Military Sales - Across the World Open Cases 204 Open Requisitions 1528 FY13 $ Value $ 451M Total Value $2.11B Foreign Military Sales 52 Active Country Programs NZ
10 Approved for public release; distribution is unlimited. Mr. James A. Golden Associate Chief Financial Manager Cost Program Executive Office for Simulation, Training, and Instrumentation 24 October 2013
11 Approved for public release; distribution is unlimited. Problem: Software development cost estimates may be overstated by 30-56%, negatively impacting ability to provide timely and affordable capabilities Goal: Significantly reduce growth factors in software cost estimates: Improve AFFORDABILITY of software-intensive programs. Deliver more CAPABILITY; eliminate arbitrary growth factors. Decrease CYCLE TIME to develop software cost estimates DEFENDABLE and CREDIBLE software cost estimates Develop solution set using Lean Six Sigma (LSS) process by initiating a LSS Black Belt project to improve software cost estimates at PEO STRI 11
12 Approved for public release; distribution is unlimited. In Scope PEO STRI ACAT II and III programs with a software development requirement, including: All appropriations (RDTEA, OPA, OMA) All software development effort (e.g., P3I, PPSS, PDSS) Contractor software data PM software data PEO STRI software data collection process Out of Scope ACAT I and Non-ACAT programs PEO STRI management systems (e.g., CIO-developed, GFEBS) 12
13 Approved for public release; distribution is unlimited. Software Resources Report (SRR): 13 SLOC count based on logical lines of code as defined by the University of Southern California (USC) Code Counting Tool Skill hours (Resource Effort) Provided to the program office by contractors and summarized into consolidated report Code counts will be automated using the USC Code Counting Tool and a PRICE Systems provided Excel spreadsheet Collection of the appropriate amount of data necessary to provide defendable cost estimates based on historical data Identify and validate a collection process / set of procedures which minimizes burden / cost impact to the program and contractors
14 Approved for public release; distribution is unlimited. Quantitative Benefits: 14 Program cost savings of over $90M indicated by pilot Across six years life cycle usually full operational capability +20 Using only a 15% reduction in growth factor actual reduction higher Pilot looked at only eight software-intensive programs Cost savings on program life cycle costs significantly reduced Cost savings can be reinvested in new technology and to reduce funding requests Revenue generation increases as PEO STRI lowers cost to take on more work Effective measurement of the productivity of contractors software development efforts for future pricing/cost estimates.
15 Approved for public release; distribution is unlimited. Qualitative Benefits: Compliance valid and reasonable software cost estimate IAW policy Quality standardized methodology across domains Efficiency faster cycle time to gather data and estimate costs Credibility defendable estimates based on historical data Accuracy improved accuracy of cost estimates and funding requests Improve contractor software data collection process 15
16 Cost Management Implementation Details Anthony A DeMarco PRICE Systems, LLC Anthony.DeMarco@pricesystems.com 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence
17 Data Driven Estimation Data-driven estimation IS Not a new idea just a new focus on what s behind an estimate More credible and lends a a sense of defendability to any estimate 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 17
18 Data Driven Estimation A data-driven estimate MAY BE Based on data extrapolation from analogous systems Based on a model using analogous systems to determine model inputs Based on a model calibrated to historical data 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 18
19 Data Driven Estimation A data-driven estimate MUST BE Transparent as to what data was used Obtained from a credible, identifiable source Clear about how that data was used 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 19
20 How do you achieve Data-driven Cost Management? 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 20
21 Steps 1 & 7 Software Data Collection & Integration Software data collection and analysis to support more defendable estimate Army Program Executive Office for Simulation, Training, and Instrumentation (PEO STRI) No data collection processes in place Pilot involves one large, complex program two contractors one does primarily development, one primarily integration 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 21
22 PEO STRI Data Collection 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 22
23 Software Pilot Software Resource Report 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 23
24 Collection Tool Unified Code Count (UCC) Free code counting tool developed by University of Southern California Center for Software Excellence (USC-CSE) Implements popular code counting standards Supports over 21 software languages and performs source differencing Key to identify new, deleted and unchanged code base Approved for public release, distribution is unlimited
25 Data Collection Process What, when and how to collect Build reporting frequency Typically every weeks Three lane data collection Capability Development Integration and Test Release Allows for segregation of effort in a way that would help determine productivity levels Approved for public release, distribution is unlimited
26 Step 2 Data Mining & Analysis Task minimized because we designed the form and the process together! Project Attributes measured to match TruePlanning software model cost drivers Effort collected by activities and capabilities to align to desired outcomes Normalization guidelines developed Documentation of these understandings and guidelines in a clear, concise, understandable and repeatable fashion. Automation to ease the collection process, ensures consistency in the process and facilitates the process of normalization 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 26
27 Data Collection Keys to Success Lots of collaboration between PEO STRI personnel, contractors and the PRICE team resulting in.. Use of an Integrated Product Team (IPT) Data Item Dictionary created to define. What data to collect A clear understanding of the data and potential uses How often to collect it How to align project specific data to more general categories (across multiple contractors) PRICE Contractors PEO STRI 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 27
28 Data Collection Keys to Success Lots of collaboration between PEO STRI personnel, contractors and the PRICE team resulting in.. Requirement added to Contract Deliverable Requirements List (CDRL) making data collection a contractor requirement Creation of automated code counting tools by wrapping USC s Code Counting tool with Excel to help ensure consistency of data Software Resource Report (SRR) developed to align with output of code counting tool, automate mapping processes and align with potential uses 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 28
29 Step 3 Turn data into information for estimating Calibrate the inputs of interest in TruePlanning using data from TrueFindings Organizational Productivity Functional Complexity by capability by language Import the calibrated inputs into TrueFindings file Drive inputs values using the findings from TrueFindings inside TruePlanning to create defendable estimates PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 29
30 Introducing TrueFindings find ing /ˈfīndiNG/ Noun A conclusion reached as a result of an inquiry, investigation, or trial PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 30
31 Step 4 Produce Estimates with Calibrated Data 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 31
32 Step 4 Contour Projects to FY Funding 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 32
33 Step 5 Map to Army Cost Budget Structure 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 33
34 PEO STRI is doing Data-driven Cost Management! 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 34
35 Approved for public release; distribution is unlimited. Quantitative Benefits: 35 Program cost savings of over $90M indicated by pilot Across six years life cycle usually full operational capability +20 Using only a 15% reduction in growth factor actual reduction higher Pilot looked at only eight software-intensive programs Cost savings on program life cycle costs significantly reduced Cost savings can be reinvested in new technology and to reduce funding requests Revenue generation increases as PEO STRI lowers cost to take on more work Effective measurement of the productivity of contractors software development efforts for future pricing/cost estimates.
36 Approved for public release; distribution is unlimited. Qualitative Benefits: Compliance valid and reasonable software cost estimate IAW policy Quality standardized methodology across domains Efficiency faster cycle time to gather data and estimate costs Credibility defendable estimates based on historical data Accuracy improved accuracy of cost estimates and funding requests Improve contractor software data collection process 36
37 Data Collection - Lessons Learned Entire team needs to understand motivation for data collection Alleviate contractor concern about being measured or misuse of data Facilitate determination of data collection targets Need buy in from the data collectors 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 37
38 Data Collection - Lessons Learned Automation is key to success Creates consistency Creates efficiency Reduces impact on contractors Promotes harmony Only means to handle such large code counts / bases Facilitates normalization and enforces normalization guidelines 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 38
39 Data Collection - Lessons Learned Communication, teamwork and building trust are paramount Data needs to be inspected for quality and ported into an environment for easy analysis PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 39
40 Conclusions The need for data driven estimation is driving many organizations in Aerospace and Defense and industry in general to look for new ways to collect and use data Data driven estimation is really nothing new we have been using data (real or experiential) to justify our estimates forever. The new requirement is transparency and openness about the data and how it is being used. To support this effort organizations may need to establish formal processes for collecting their project data. CDRL, Data Collection Form with Definitions SRR Standard Code Counting Tool USC Code Counter Standard Estimating Tool PRICE TruePlanning Software Model When doing this it is important to understand the importance of Communication Automation Flexibility Buy in across all the stakeholders 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 40
41 Vision: To be the Nation s Acquisition and Contracting Center of Excellence for Training, Testing, and Simulation Solutions. Mission: Acquire and Sustain Training, Testing, and Simulation Solutions in Support of the Nation Provide STRI capabilities to support Decisive Action Operations Strategic Goals Ensure capabilities meet the needs of the Integrated Training and T&E Environments Develop a workforce with expert level acquisition, technical, and leadership skills Promote and sustain excellence in the execution of contracting activities as of OCT PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 41 Approved for public release; distribution is unlimited. 41
42 Questions 2013 PRICE Systems, LLC All Rights Reserved Decades of Cost Management Excellence 42
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