1. Cost Culture
Update
2009 PDI – Army 27 May 2008
Stephen Bagby

2. Army Cost Culture Update
Increased Leadership Commitment
Establish Cost Management Process & Provide Guidance
Costing In GFEBS
Training & Career Development
Designed Enterprise Cost Management Framework
Cost Culture in Theater of Operations X

3. Senior Leader Commitment
“Redouble efforts of good stewardship of resources”
“inculcate cost culture”
“shrink and share;”
GEN George W. Casey, Jr.,
HON Pete Geren, SA
ALL ARMY
GEN David Petraeus
CENTCOM COMMANDERS
GEN Raymond Odierno
COMMANDERS, MNF-I

4. Incorporating ‘Cost’ Into DOTMLPF Strategic Initiatives
Doctrine
Organization
Training
Materiel
Leadership
Personnel
Facilities
Business Case Analysis
Forum/ Decision Point
Independent Chair
Thinking Domains
Decision
Forums
Generate Capability
Gaps / Requirements
QDR/TAA
CSA
Force Design Update FD
PEGS
POM
/ BES
Basis of Issue Plan
ORDAB
Manning
AOA Studies
SAG/Other
All
Equipping
JCIDS/AROC
AROC
Training
Acquisition Process
Milestone Reviews
Sustaining
ONS/JUONS
AR2B
Organizing
Strategic Initiatives
AEB
Installation
Installation/MILCON
MILCON IPT
Leadership
Ad Hoc D O T M L P F

5. Congressional / OSD Commitment
Acquisition Reform Act
New OSD Director of Cost Assessment & Program Evaluation
Director of Program Analysis & Evaluation (PA&E)
Director of Cost Assessment & Program Evaluation
Cost Assessment
Program Evaluation
Trade-Offs Among Cost, Schedule, & Performance Objectives
Authority to Challenge Acquisition / PPBES / Requirements
Reports to Congress 10 Days After Budget

6. Army Cost Culture Update
Increased Leadership Commitment
Establish Cost Management Process & Provide Guidance
Costing In GFEBS
Training & Career Development
Designed Enterprise Cost Management Framework
Cost Culture in Theater of Operations X

7. Cost Management Process
Cost Management - Managing Business Operations Effectively & Efficiently Through the Accurate Measurement & Thorough Understanding of the “Full Cost" of an Organization's Business Processes, Products & Services in Order to Provide the Best Value to Customers.
Cost
Measurement
Cost
Management
Process
Cost
Planning
Cost
Analysis
Cost
Controlling

8. Cost Management Handbook
Standard Rates
Full Cost
Depreciation
Overhead / Allocation
Master Data For Cost Model
Labor Tracking
Contract Cost Tracking
The Office of the Deputy Assistant Secretary of the Army (Cost & Economics) [DASA-CE] is the Army’s proponent for cost policy.
Please refer to the Cost Management Community of Practice for the current version of the Army Cost Management Handbook:

9. Definition of Cost Management Success
ARMY COST MANAGEMENT
Integration with Quality/Productivity
MATURITY MODEL
Improvement
Version 10: 4 June 2008
5.0
Knowledge Sharing
/ Best Practices
Enterprise
Perspective
4.0
3.0
2.0
Data
Quality
Leadership
Commitment
1.0
0.0
Workforce
Competencies
Process Integration
Accountability
/ Performance Mgmt
Acceptance & Attitude
Actual
Target
The Office of the Deputy Assistant Secretary of the Army (Cost & Economics) [DASA-CE] Developed the Army Cost Management Maturity Model Jun 2008 to Assess Level of Cost Management Activity across Army Organizations .

10. Army Cost Culture Update
Increased Leadership Commitment
Establish Cost Management Process & Provide Guidance
Costing In GFEBS
Training & Career Development
Designed Enterprise Cost Management Framework
Cost Culture in Theater of Operations X

11. GFEBS Cost Structure Supports Supports Operational Decision Making & Analysis
Full Cost
Organizations
Product/Services
Customers
IMCOM:
Director of Logistics
TRADOC:
Ranger School
FORSCOM:
1st Brigade Combat Team
SSPs:
Provide clothing,
Issue OCIE, etc
Courses:
Mission technique
classes, combative
training
- Ready Unit
- Capability
Mission
Commander
- Division / BCT
- MOS
- FMS
Tenants:
School
Brigade

12. Capture Cost by Organization
IMCOM Installations
TRADOC Schools
FORSCOM Brigades

13. Capture Cost by Product/Service and Customer
Cost of Installation Services Provided to Tenants
BCT Cost by Resources Consumed

14. Integrates Cost Measurement and Analytics
Cost Reporting by Multiple
Views (Cost Objects)
Graphic
Display
Exportable to Excel
for Analysis

15. Provides Multiple Analytical Cost Views
- Variance Analysis
Controlling
- Cost Planning
- Cost Comparison
Benchmarking
- Forecasting
- Trend Analysis
Cash Flow
Operational
Cost Mgmt

16. Army Cost Culture Update
Increased Leadership Commitment
Establish Cost Management Process & Provide Guidance
Costing In GFEBS
Training & Career Development
Designed Enterprise Cost Management Framework
Cost Culture in Theater of Operations X

17. Training Opportunities
Cost Management 101
4 half days of instructor-led training in advance of GFEBS deployment
GFEBS – Cost Management Training
These courses are either computer-based or instructor-led training classes to learn how to operate within the GFEBS cost module.
Cost Management Process Overview
Cost Master Data Maintenance
Cost Planning
Cost Collection and Allocation
Labor and Payroll Process
Controlling Close and Cost Reporting and Analysis
Cost Management Certificate Course
The program of instruction (POI) is designed to teach the fundamentals of cost management with a view to developing a cadre of Army personnel who are professionally knowledgeable, analytically competent, and personally motivated to serve as proactive change agents within their respective Enterprise line and staff organizations.
Naval Postgraduate School - 4 Weeks
Earns 12 credits toward masters degree.
Requires command nomination and completion of prerequisites.
Week 1 – Managerial Costing
Week 2 – Operations Management
Week 3 – Cost Control
Week 4 – Organization Development
Self Study-Cost Management Community of Practice
This site contain the Army Cost Management Handbook and the Cost Management 101 training slides.
Cost Management Courses in all Professional Development Programs
DASA-CE is working with Army Civilian University and TRADOC to include cost competency skills for all military and civilian personnel. The program is being developed based on a matrix of stackable credentials that build competency over time.

18. Cost Management 101 Day 1: Cost Management Overview
Understanding of why managing costs are important, Army’s overall objectives, the process of Cost Management, how it differs from Budget, and key cost terms
Day 2: Cost Object Definition
Understanding of an ERP, how to build a Cost Model, and the various cost objects within a Cost Model (e.g. organization, products, job orders, etc.)
Day 3: Assignment of Costs
Understanding of cost allocations/assignments, how to chose which to utilize when, how to valuate the results of the assignments (Std. vs Actual), and rate creation
Day 4: Analysis and Reporting
Understanding of the results of the Cost Model and how various types of analysis and decisions are supported
Training Designed for Pre-GFEBS Deployment for Resource and Operational Managers. Provides Common Understanding of Definitions, Concepts, Methodologies and Principles.

19. Cost Competency Matrix

20. Cost Competency Matrix

21. Cost Competency Matrix

22. Cost Competency Matrix

23. Cost Competency Matrix

24. Army Cost Culture Update
Increased Leadership Commitment
Establish Cost Management Process & Provide Guidance
Costing In GFEBS
Training & Career Development
Designed Enterprise Cost Management Framework
Cost Culture in Theater of Operations X

25. Enterprise Governance
4/19/2017 7:10 AM
Enterprise Governance
Secretary of the Army
Chief of Staff of the Army
CE – Core Enterprise
Army Enterprise Board
– Process Teams
HQDA
(Secretariat + ARSTAF)
Human Capital
Materiel
Services
&
Infrastructure
Combatant Commanders
Trained and Ready
Forces for the
ARFORGEN
Readiness
Objective: Efficient Delivery of Outputs
Improve ARFORGEN: Effective and Efficient delivery of Trained and Ready Forces

26. Enterprise Resource ManagementX
Light
Stryker
Heavy
Managing Funds to Ensure Strategic Objectives are Effectively Resourced
Managing Resources to Effectively and Efficiently Produce Outputs to Achieve Strategic Objectives
ARFORGEN
Cost Management Construct
Human
Capital
Readiness
Materiel
Services &
Infrastructure
Program / Budget Construct
This slide illustrates the capability to allocate various costs to a brigade and --
Present a more realistic summary of total cost to add or sustain a brigade.
Provides opportunity to better recognize the various cost drivers.
The cost data headings relate to various organizations as follows:
Training, Individual: essentially TRADOC
Training, Unit: essentially FORSCOM, USAREUR, EUSA, USARNG and USAR
Base Support: essentially IMCOM
Equipment: essentially AMC
Personnel:
Military- essentially centrally controlled but GFEBS enables aligning to force
Civilian- funds dispersed among a number of appropriations, but GFEBS enables aligning to manpower costs to force
NOTE: May insert slide(s) with comparisons, e.g., (illustrative only)
1st Heavy Bde at Ft Hood costs $1.35 bil/year and is C-1
Avg Heavy Bde in III Corps cost costs $1.5 bil/yr and is C-1
What is 1st Bde doing to achieve readiness at lesser cost?
Core Enterprises
OA / MDEP
Products/Services
Organizations (Cost Centers)
Resources (Labor, Equipment, Assets)

27. Army Cost Management Framework
ARFORGEN
Available / Deploy
HBCT
SBCT
IBCT
Train / Ready
Reset
Command & Intelligence
Operating Forces
Train Units
Operations & Activities
Readiness
Depot Maint / Repair of Mil Eqt
Ordnance
S&T and R&D
Systems Acquisition, T&E,
Engineering, and Contracting
Research
Procure
Sustain
Distribute
Dispose
Materiel
Cost Framework
Program Framework
Civ Education / Training
Civ Personnel Svcs
Mil Education / Training
Mil Personnel Svcs
Prof. Development Educ.
Acquire & Train
Manage (Pay) & Distribute
Develop & Educate
Force Development
Human
Capital
Community & Family Svcs
Environmental Security &
National Resource Svcs
Health Svcs
Installation / Facility Mgt
Facility
Installation
Command Programs
Centrally Managed Programs
Services &
Infrastructure

28. Readiness Core Enterprise
ARFORGEN
Requirements / Risks
RIGHT FORCE . . .
RIGHT READINESS . . .
RIGHT COST . . .
RIGHT TIME . . .
. . . TODAY, AND IN THE FUTURE
OUTPUT =
READINESS
COST
Process Owner
Cost Benefit Analysis
Provides Products / Services
Sample Types of Analysis Include:
Organizational Performance
Analysis of Alternatives
Variance Analysis
Business Case Analysis
Cost / Risk Assessments

29. Readiness Core Enterprise Cascading Through Processes
ARFORGEN
Requirements / Risks
OUTPUT =
READINESS
COST
Organization Level 1
Process Owner
Cost Benefit Analysis
Organization Level 2
OUTPUT =
READINESS
COST
IBCTs Ready
Process Owner
Cost Benefit Analysis
Organization Level 1
OUTPUT =
READINESS
COST
IBCT Ready
Process Owner
Cost Benefit Analysis

30. Army Cost Culture Update
Increased Leadership Commitment
Establish Cost Management Process & Provide Guidance
Costing In GFEBS
Training & Career Development
Designed Enterprise Cost Management Framework
Cost Culture in Theater of Operations X

31. USARCENT G8 Theater FM Strategy
MISSION: USARCENT G8 Proactively Shapes Financial Environment While Simultaneously Providing Uninterrupted Support to the USCENTCOM AOR
TASK Lines of Effort Objectives Ends
OPERATIONAL OBJECTIVES
THEATER STRATEGIC OBJECTIVES
Shape, Build, and Promote Desired FM Effects
Trained & Ready FM Community to Conduct Full Spectrum Operations
US Title 10 Support to CJOA, AFORs & Joint Enabled Logistics
Deploy 20 FM automated systems in use in CONUS & e-Commerce
Integrate cost management, analysis, & planning into decision making process
Measure & articulate full cost of ARCENT’s business processes
Determine relationship among readiness, capacity, cost & requirements
Implement new FM doctrine throughout Theater
(1)
Single RM entry into CENTCOM AOR
(2)
Leverage Theater-wide FSO capabilities
(3)
Unburden JTF Staffs
(4)
Achieve FM unity of effort
Deploy / Maintain FM Battle CMD Sys
Establish a Cost Culture in CENTCOM AOR
Determine Cost of Readiness & Effects
Develop & Revise FM Doctrine

32. Costers: Who We Are
Costers are chartered by the Deputy Assistant Secretary of the Army for Cost and Economics (DASA-CE) and ARCENT – C8 to provide cost analysis support and promote Cost Culture
Projects since October 2008
Science Project - Modeling Requirements, Readiness, Capacity and Cost (R2C2)
Cost of ARCENT and Cost of War
Re-Balancing an Army at War
Afghanistan Buildup
FY Budget Submission
Contractors in Theater
Afghanistan TPE and Forward Repair Activity
ARCENT Retrograde of OIF Drawdown
CARB Cost Validation
Deployed OIF & OEF Direct Staff Support
4/19/2017 7:10 AM

33. Relating Requirements, Readiness, Capacity & Cost
Start Point - Current
Step Adjust Capacity
Step 2 - Decrease Requirement
Description
Initial conditions in theater had readiness at 100% and excess capacity
Description
The industrial capacity is reduced with little to no effect on readiness. This achieves balanced capacity with a cost avoidance.
Description
Decreased requirement and a shift of readiness from 100% to 90% provides additional capacity that can be reduced for a cost avoidance.
Fixed - Operational Readiness
Fixed - Operational Requirement
Fixed - Industrial Capacity including excess
Fixed - Operational Readiness
Fixed - Operational Requirement
Adjust - Industrial Capacity to be optimized
Fixed - Operational Readiness
Adjust - Operational Requirement
Fixed - Industrial Capacity optimized

34. Cost Analysis Resources
GFEBS General Fund Enterprise Business System
Automated Cost Estimating Integrated Tools (ACEIT)
Operating & Support Management Information System (OSMIS)
FORCES (CONOPS) Cost Models
Army Military-Civilian Cost System (AMCOS)
Automated Cost Data Base (ACDB)
Joint Integrated Analysis Tool (JIAT)
Capabilities Knowledge Base (CKB)
FM&C Website
AKO Cost Management COP
We have many tools to help with cost analysis
Examples of some of these tools are:
ACEIT: provides a family of applications that help us analyze, develop, report and share cost estimates; ACEIT also provides a framework to automate key analysis tasks and simplify/standardize the estimating process
OSMIS: provides Operation and Support cost data such as system parts cost per mile or parts cost per flying hour, POL, and OPTEMPO information
FORCES: provides current and supportable force cost estimates of Active and Reserve Component Table of Organization and Equipment (TOE) units and produces cost estimates for planning a Contingency Force or Training Operations
AMCOS: provides military and civilian pay grade costs
ACDB: provides development and procurement cost and technical data for various types of systems such as vehicles, aircraft, missiles and C4ISR systems
JIAT: provides an architecture that allows models in the functional areas of cost estimating, engineering design, requirements, capability, and performance analysis to be linked together
CKB: provides development, procurement, and operations and support cost and capability data for various systems that will help analysts produce early or capability-based cost estimates