© Copyright QinetiQ Limited Delivering Cost Data to the MoD to Support Business Cases Paul Duvall Deputy Team Manager HVR Practice – Through Life Cost Modelling Association of Cost Engineers 3 Nov 09

© Copyright QinetiQ Limited Contents slide 1 Process and Requirements 2 Modelling Examples

© Copyright QinetiQ Limited Process and Requirements

© Copyright QinetiQ Limited Generic Process? Whole Life Cost Model (Deterministic) £ MDAL (Master Document Assumptions List) SME Cost Assessments Supplier Cost Data Equipment Reliability Data DLOD Base Assumption Risk Register SME Risk Assessments Probabilistic Risk Model Whole Life Cost Model (Probabilistic) £ £ £ £ Captures Uncertainty Captures Risk Provides 10, 50, 90% Confidence Figures

© Copyright QinetiQ Limited Risk Modelling Terminology Uncertainty Current Potential Variation in project cost or duration which will not be “firm” until contract sign-up = 3pt Range Risk Event which may or may not happen which would add to assumed project cost or duration = Probability * Impact Opportunity Event which would reduce the assumed project cost or duration = Probability * Impact

© Copyright QinetiQ Limited Measuring Confidence/Optimism Bias

© Copyright QinetiQ Limited CMTL Allocation of Cost Input −Defence Lines of Development −TEPIDOIL (I) −Training, Equipment, Personnel, Infrastructure, (Concepts &) Doctrine, Organisation, Information, Logistics………………… (Interoperability). −Cost Resource Breakdown Structure (CRBS) −PBS/WBS/BOM etc Output −Budget Holder −EPP/ESP −RDEL/CDEL −TLF −Procurement, Upkeep, Update, Upgrade, Capital Spares, Fuels, Other Costs

© Copyright QinetiQ Limited Current Issues Allocation of Uncertainty Use of Global Uncertainty Factors −Impact: −uncertainty applied across ALL elements of model −Does not reflect increasing uncertainty as estimate extends into the future Identification of Uncertainty −Annualised or Totals? Allocation of Risk −Foreign Exchange Risk −Correlation?

© Copyright QinetiQ Limited Global Uncertainty

© Copyright QinetiQ Limited Modelling Examples

© Copyright QinetiQ Limited Through Life Costing Capability (Case Study) Concept Assessment IG MG Demonstration ManufactureIn-ServiceDisposal Costing Requirements BOI Studies Cost of Ownership Trade Studies Options Analysis Affordability Analysis Risk Assessment Costing Requirements BOI Studies Cost of Ownership Trade Studies Options Analysis Affordability Analysis Risk Assessment Costing Requirements BOI Studies Cost of Ownership Trade Studies Options Analysis Strategies Risk Assessment Costing Requirements BOI Studies Cost of Ownership Trade Studies Options Analysis Strategies Risk Assessment Cost Requirement Earned value Measurement Whole Life Costs Cost of Ownership Trade Studies Support Strategies Cost Requirement Earned value Measurement Whole Life Costs Cost of Ownership Trade Studies Support Strategies Costing Requirement Earned Value Measurement Cost of Ownership Upkeep Strategies Costing Requirement Earned Value Measurement Cost of Ownership Upkeep Strategies Cost Forecasting Tools OSCAM Portfolio Cost Forecasting Tools FACET OSCAM Portfolio Bespoke WLF models CRBS, DLODS Cost Forecasting Tools FACET OSCAM EVM tools Portfolio Bespoke WLF models CRBS, DLODS FACET

© Copyright QinetiQ Limited Concept Phase - Exemplar Exemplar: Assessment of Options for Auxiliary Warship Family of Advanced Cost Estimating Tool (FACET) used to generate the acquisition cost for the development and manufacture of 6 ships. Using the established performance criteria key Design inputs were identified and agreed. Excursions: −reduced displacement −smaller helicopter or fewer larger helicopters −fewer (vertical) replenishment points

© Copyright QinetiQ Limited Through Life Costing Capability (Concept) Programme cost (2009 prices) £0M£500M£700M £800M £900M £1000M £1100M Iteration 1 Iteration 2 Iteration 3 Iteration £1200M £1300M £1400M Budget FACET provides the capability of generating iterations against variations in performance and design rapidly Budget Line clearly indicates the difficulty of procuring 6 Auxiliary warships to meet the original KURs Budget £1100 m

© Copyright QinetiQ Limited Historic Trend Analysis - FACET

© Copyright QinetiQ Limited In-Service Phase Exemplar OSCAM - Operational Support Cost Analysis Model Can provide detailed analysis of support costs Can provide rapid cost assessment Can show effect of running options and allows comparison

© Copyright QinetiQ Limited In-Service Cost Option Analysis Running Options (Exemplar) Baseline: aircraft maintenance based on three lines of maintenance Excursion: actions previously handled by the intermediate level are split between Govt (Organic) and Contractor Depots

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