1. Data for Costing & Cost Uncertainty
Mort Anvari
Director, Acquisition Costing
(SAFM-CEA)
June 18, 2008
Cost Management Panel
PRICE Customer Symposium

2. Key Points Need Data for Costing:
We have Several Data Quality Issues and Potential for Type I (α) and II (β) Errors in our Cost Estimating.
Opportunity for Cost Analysis Enterprise Resource Planning (CA-ERP) and Data for Costing Architecture.
Need for Range Cost Estimating and Cost Confidence Analysis
My Points are
1. We should not forget the leadership and effort by DCARC and CAIG to bring the attention of acquisition communality to cost data and enforcing the Data Collection requirement by all means. As the result we have accumulated several reach data bases. Mr. Bagby will cover some of theses successes within the Army.
2. For many reasons we have difficulties using the collected data for costing future technologies and systems.
3. Information Technology has provided the opportunity to integrate the DoD enterprise data for costing databases.
4. The Cost Analysis faces higher expectation and faster turn around.
Need Data for Costing:
Future Technologies; Processes; Performances; Products; Services; Personnel; and Schedule.

3. Army Cost Data Sources + DCARC CSDR Repository
Automated Cost Databases (ACDB)
Cost Analysis Requirements Description (CARD)
Capability Knowledge Base (CKB)
Operation and Support Management Information Systems (OSMIS)
Contractor Logistic Support (CLS) Data
Joint Integrated Analysis Tool (JIAT)
Software Data Collection Initiatives
Army Cost Positions (ACP) Database ACE-IT Sessions,
Periodical SAR, DAES, WSR, APB, P-Form, Contracts Summaries +

4. Data for Cost Estimating
Information
Knowledge
Cost Models
Historical Data:
Cost and (Physical, Technical, Performance, Capability, Schedule).
Subject System Data:
Physical, Technical, Performance, Capability, Schedule.
Performance
Cost
Schedule
Data conversion to Information mixed with previously acquired knowledge are the base for our cost model.
In past cost analysts assumed fixed performance (requirement) and schedule and modeled for cost.
Now we are expected to do early costing with capability and KPP and allow for performance and schedule fluctuation.
From Parametric costing perspective we need all kinds of data for tagging to the cost data.
Data is Cost Analyst is the raw martial. Without it we can not produce.
Estimates are only as good as the data that they are based on.

5. Data Issues Allocation Issue: Mapping to Standard Reports
Current Data Reporting and Usage Issues (CSDR CCDR, SRDR, and CPR).
Family or System of Systems (Commonality Issue)
LSI, JV, Prime, Sub (Contracting Issue)
CPIF, FFP,. . Reporting Requirements (Contract Type Issue)
Manufacturing, Services, SW, and ERP (Activity Type Issue)
Mod, ECP, and Incremental Contracts (Completeness Issue)
Competition and Business Base Issues (Quantity issue)
Physical, Technical, TRL, Performance (Technology Issue)
KPP and Capability Data Issue
CSDR plan provide foundation for collecting CCDR, SRDR and CPR
There exist many reason that you might not get complete cost or the cost are misallocated. I personally no longer do not believe on Labor Material, Direct- Indirect, Recurring and Non-Recurring breakout and allocation scheme.
System of Systems Commonality, Contracting Structure and Types will impact data allocation and quality.
Stand alone system cost might be OK, but when you put it next to an inconsistence data then you have data integrity issue.
GFEBS the most important Army ERP system with over $ 1.0 B, does not need to and will not report cost and effort because the contract is FFP and it is not required.
Again we need more than cost data to perform parametric costing.
Allocation Issue: Mapping to Standard Reports
Labor – Material
Direct – Indirect
Recurring – Non-Recurring

6. Data Quality Challenges
Lack of data.
Physical, technical, performance, capability.
S/W ERP FFP Contract.
ACAT II and below programs.
Policies and procedures.
DoDI dated May 2003.
Requires SRDR (w/o Cost) but not CCDR for some programs.
Vague in some areas; CSDR “not required for procurement of commercial systems, or for non-commercial systems bought under competitively awarded, firm fixed-price contracts, as long as competitive conditions continue to exist”.
Army regulations do not require additional cost reporting.
Data collection process.
Existing data is not readily available to the Cost Analysts; sometimes they are not even aware that data exists. (Data in Jail)
Contractors required to map CSDR reports IAW DoD MIL-HDBK-881.
Lack of data, Policies, and Collection process have made it quite challenging to have Data Reliability assurance.
We should not also ignore the tremendous amount of not so well define data available to a practicing cost analysts that to others are Data in Jail

7. Data Collection Process
Data Quality?
Labor vs. Material
Direct vs. Indirect
Rec. vs. Non Rec.
Unique vs. Common
Contractor allocation
Contracting
Contractor Data / Reports:
Contractor1
Contractor Accounting Systems: G2
Contractor 2 R3 R8
R12
Contractor Allocation
R18 R5 R7 S4
R11 R1
R16 S2
R14 R2
Contractor3 S5 S9 S1 S6
R10 R4 G1 S7
R17
R13
S10
R15 G3 R9 S8 S3 R6
CSDR
Process vs. Quality.
Looking at our data collection, normalization, and allocation process from distance would easily convince you that is impossible for different programs with different contractors stay consistence in their data reporting.
Process affects data quality.
Increases probability for data errors.
Results in mapping / allocation inconsistencies.

8. Current Information Access Flow.
Cost Data Flow
Contractor Cost Accounting Systems
Contractor Sys1
Contractor Sys2
Contractor Sys3
Contractor Sys4
Government Informational
Systems / Databases
ACDB
OSMIS
CLS
Cost Analysts
Current Information Access Flow.
Need for Data Warehousing.
Repository of electronically stored data.
Several databases typically supply data to the warehouse.
Improved ease of data retrieval and data quality.

9. Proposed Information Access Flow.
Data Warehousing
External Data
Contractor Cost Accounting Systems
Data Warehouse
Information
Delivery System
Government Informational
Systems / Databases
Data Marts
External
Users
Proposed Information Access Flow.
Raw Data loaded directly from contractor accounting system into data warehouse.
Metadata: ‘Data about Data’.
Data visualization / data warehousing / intelligent data mining.
Global definitions that can be referenced by many different databases.

10. Cost Analysts need to be more involved in the process.
Cost Analysis ERP
Potential for Enterprise Resource Planning (ERP) of Cost Analysis Data and Models across the DoD.
Enable data and information sharing.
Allow automation and integration of business processes.
Data for Costing – Vision:
Collect raw data with more flexibility and focus on metadata development – XML.
Data warehousing of raw and current data.
Acquiring data mining and search tools to assist data analysis.
Cost Analysts need to be more involved in the process.
Data ERP for Costing? Check out

11. Cost Risk Analysis
Risk analysis reduces the uncertainty between requirements and funding

12. Causes of Cost Variations
Technical & Schedule Risk (Included)
Cost Estimating Methodology Uncertainty
(to-be Included)
Engineering
Analogy
Parametric
Physical Parameters
Technical Parameters
Performance Parameters
Capability Parameters
Expert Opinion
Programmatic Changes (Mod) (Excluded)
Restructuring
Reprogramming
Rescheduling
Resourcing
Confidence
100%
75%
50% 0%
25%
Cost $
Cost Confidence Curve or “S” Curve

13. Current & Proposed Estimating Methods
Point Estimate Costing and Reporting, with Additional Cost Range Modeling Option at Technical & Schedule Risk Items.
Narrow Band Confidence.
Utilities are Risk Management and Execution.
Proposed:
Range Estimate Costing and Reporting, with Point Estimate Reporting Option at Different Confidence Level.
Wide Band Confidence.
Utilities are Planning and Programming.

14. Cumulative Distribution Functions
Confidence Level
100%
75%
50% 0%
25%
Cost $
Technical Risk
All Risks and Uncertainties
Increasing cost confidence from 50% to 75%
Path Forward: Increase cost estimating confidence and implement rigorous risk analysis

15. Backups
Backups

16. Current Cost Data Collection Efforts
Automated Cost Databases (ACDB)
Primary source of data is CSDRs, CPRs, etc.
Includes programmatic and technical information.
Cost Analysis Requirements Description (CARD)
Redesigned to reduce variation (IAW Lean Six Sigma process).
On-line living document.
Standardized format for documents.
Controlled author access to CARD sections.
Milestone feeder documents (draft) provided early.
New process allows variation to be controlled (man-hour avoidance).
Capability Knowledge Base (CKB)
Performance/capability-based relationships.
Uses capabilities and costs of current systems to provide rough order of magnitude estimates for capability-filling solutions.
Cost support for earlier acquisition decisions.
Aircraft
Com / Electronics
Missiles / Munitions
Surface Vehicles

17. Current Cost Data Collection Efforts
Operating and Support Management Information System (OSMIS)
Used by over 1,400 DoD employees (government and contract).
Over 25,000 queries generated annually.
Data used to generate OPTEMPO Weapon System Factors; direct link to PPBE process.
Historical archive of O&S data for period covering 1993 to 2007.
Prior year data is available by 1 April of the following year; Monthly activity reports by serial number level are available by 25th of the following month.
Contractor Logistic Support (CLS) Data
CLS accounting for more of the total OPTEMPO requirement.
Established a standardized process for CLS data collection.
Requirement place on contract in conjunction with CSDR requirements.
Cost data will enable the Army to forecast more reliable cost estimates for supply support.

18. Current Cost Data Collection Efforts
Joint Integrated Analysis Tool (JIAT)
Cost estimating, engineering design, requirements, capability and performance analysis linked.
Ready access to cost and technical data in each commodity area: Missiles, Aircraft, Vehicles and Communications and Electronics Systems.
Supports cost as an independent variable (CAIV) analysis, capabilities costing and trade-off analysis.
Near real-time cost estimating capability to the acquisition and requirements communities.
Software (SW) Data Collection Initiatives
Collecting SW development actuals on past programs.
Emphasis on improving SW maintenance estimates Working with Army SW Engineering Centers collecting SW maintenance actuals.
Partnering with Air Force & Navy Collect & share data on Enterprise Resource Planning (ERP) Projects and SW intensive programs.