1. Engineering Management Systems Engineering Management MSE607B Chapter 6 Part II of II System Engineering Program Planning

2. 2 Learning Objectives Introduce system engineering program planning First step in system management Material presented in this module leads into the discussion of: The organization for system engineering in module 7 System engineering program evaluation in module 8

3. 3 Preparation of Cost Projections Important to all organizations, regardless of size Particularly in limited resources and high competition Starts with initial development of cost estimates Continues with the functions of cost monitoring and the collection of data, analysis, and corrective action Cost control implies good overall cost management Includes : Cost estimating Cost accounting Cost monitoring Cost analysis Reporting necessary control functions

4. 4 Preparation of Cost Projections (cont.) Activities applicable to cost projections: Define Elements of Work Integrate Tasks into the WBS Develop Cost Estimates for each Task Develop a Cost Data Collection and Reporting Capability Develop a Procedure for Evaluation and Corrective Action

5. Cost Account Code Breakdown Structure

6. Project Cost Projection 3000 2500 2000 1500 1000 500 0 123456789101112 Direct Labor Material Overhead Total Cost General and Administrative

7. 7 Technical Reviews and Audits An integral part of the system engineering process Can vary from very formal design reviews to informal reviews All such reviews share common objectives: Determining the technical adequacy of the existing system design configuration and Whether or not design meets its initially specified requirements As design and development effort evolves, the reviews become more detailed and definitive

8. Program Cost and Schedule Reporting Establishment of both technical and management requirements at program inception is inherent within the planning process Need to review progress against program requirements on a periodic basis as system design and development evolves A Management Information system (MIS) should be developed to provide ongoing visibility and the reporting of progress against Designated cost Schedule Performance measures

9. Program Cost and Schedule Reporting (cont.)

10. 10 Determination of “Outsourcing” Requirements “Outsourcing” Identification, selection and contracting with one or more outside suppliers Procurement and acquisition of materials and services for a given system “Supplier” A broad class of external organization that provide products, components, materials, and/or services to a producer May range from a delivery of a major sub-system or configuration item down to a small component part

11. 11 Suppliers may provide services, including: Design, development, and manufacturing of a major element Production and distribution of items already designed Distribution of commercial and standard component parts Process implementation in response to functional requirements Determination of “Outsourcing” Requirements (cont.)

12. 12 Typical Structure - Layering of Suppliers

13. 13 Supplier Identification and Procurement Process

14. 14 Identification of Potential Suppliers The next step after system definition is to identify the possible sources of supply How should design and/or manufacture of an item be accomplished? In-house by the producer or An external source of supply be selected

15. 15 “Make-or-Buy” committee with representation from: Program management, engineering, logistics, manufacturing, purchasing, quality assurance, and other supporting organizational activities as required. From a system engineering prospective, Items that are relatively complex and critical to the overall system should be handled internally if possible Identification of Potential Suppliers (cont.)

16. 16 Development of a “Request for Proposal (RFP)” Important step in the development of major technical projects Rarely receives the professional attention it deserves Used by government agencies and by private corporations to solicit proposals from contractors and vendors

17. 17 Properly developed and written, RFPs are powerful tools for: Selecting the most appropriate solution Developing straightforward relationships with suppliers Departments must work together and with the chosen supplier Must take into consideration technical, implementation, project management requirements, budget, and contract provisions Development of a “Request for Proposal (RFP)” (cont.)

18. 18 Goals of Request for Proposal (RFP) (Cont.) Requirements Develop and implement a plan for understanding the problem Identify appropriate potential suppliers and solutions Gain visibility for acceptance of identified need and potential solutions Establish the project budget Develop a project schedule Organize project personnel

19. 19 Requirements Evolve real requirements that are clearly stated and measurable Develop rigorous evaluation criteria to ensure objective evaluation Elicit high-quality responses from potential contractors Promote effective communication between the client and the supplier Goals of Request for Proposal (RFP) (Cont.)

20. 20 Review and Evaluation of Supplier Proposals After the RFP package has been developed and distributed to interested and qualified suppliers, each recipient must make a “bid/no bid” decision Suppliers deciding to respond will establish a proposal team and will proceed with the preparation of proposal Results must be responsive to the instructions included in the RFP

21. 21 Customers seek the bid that offers best value: Meeting the requirement The most appropriate option Achievability Affordability A sound commercial arrangement Review and Evaluation of Supplier Proposals (cont.)

22. 22 Sample Checklist of Evaluation Criteria for Supplier Proposals

23. 23 Selection of Suppliers and Contract Negotiation Develop a formal contractual arrangement with the supplier Focus on finding the best mix of products and services Balancing costs, timeliness, quality, technical suitability, legal requirements and other business considerations Honor all applicable laws, rules and regulations in procuring products and services

24. 24 Implemented in agreement with recognized standards of business conduct Procurement works with other departments to coordinate the purchasing of products and services Offer appropriate consideration of qualified, certified Minority, Woman, and Disabled Veteran-owned Business Enterprises May have significant impact on supplier performance Selection of Suppliers and Contract Negotiation (cont.)

25. 25 Contract Negotiations – Categories of Contracts Firm Fixed Price (FFP) Fixed Price with Escalation Fixed Price Incentive Cost Plus Fixed Fee (CPFF) Cost Plus Incentive Fee (CPIF) Cost Share Time and Material Letter Agreement

26. 26 Supplier Monitoring and Control Monitor suppliers’ continued quality, delivery, technical, financial and commercial performance To ensure all standards are met in accordance with contract Using past performance as a control factor can allow to predict degree of customers’ satisfaction in the future

27. 27 Extent of performance monitoring is determined by: The level of risk involved in the purchase The nature of the goods or services provided Results of this process should provide suppliers with a strong incentive to maintain or build up high levels of performance Define measures with key suppliers and trace their implementation Suppliers must be willing to participate in this process actively Supplier Monitoring and Control (cont.)

28. 28 A Sample of Supplier Project Activities Conceptual Design Preliminary System Design Detail System Design and Development Production and/or Construction Design and Development (Research, Design, test and Evaluation) Production (Manufacturing and Test of Prime Components) Production (Manufacturing and Test of Support Elements - Spare/Repair Parts) BA Supplier A A B C A Supplier B Supplier C C C B BA A B Supplier D Supplier E B B Supplier F BA C Supplier G A

29. 29 Integration of Design Specialty Plans The integration and coordination of the program efforts for engineering specialty areas To achieve a best mix of the technical/performance values incorporated in the contract Shall be described with the detailed specialty program (project) plans being summarized and/or referenced, as appropriate The specialty efforts and parameters will be integrated into the system engineering process at each iteration The process will be described and considerations taken defined

30. 30 Integration of Individual Design Discipline Plans

31. 31 Interfaces with Other Program Activities

32. 32 Interfaces with Related Program Activities Individual design plans Configuration management plan Data management plan

33. 33 Test and Evaluation Master Plan (TEMP) Marketing plan Supplier management plan Production/manufacturing plan Interfaces with Related Program Activities (cont.)

34. 34 Integrated Logistic Support Plan (ILSP) Total quality management plan (TQMP) System retirement and material recycling plan Risk management plan Interfaces with Related Program Activities (cont.)

35. 35 Management Methods/Tools The goal is to: Gain early visibility Reduce the time it takes for system acquisition Be able to make good design and management decisions as system development evolves To minimize risks associated with decision-making process The system engineer should have the knowledge of the latest technology Apply to facilitate the process of applying the techniques and tools available The challenge is to: Quickly assess what is required, when, and to what extent

36. 36 Available Management Methods/Tools Techniques and tools: Electronic commerce (EC), information technology (IT) and electronic data interchange (EDI) and the Internet in system development and the system engineering process Application of CAD, CAM, and CAS methods in design Utilization of simulation methods in design Rapid prototyping methods in software design and development Scaled models and mock-ups in design evaluation Application of statistical and operations research methods in system analysis The challenge Quickly assess what is required, when, and to what extent

37. 37 Risk Management Plan Risk The potential that something will go wrong as a result of one or a series of events Risk management An organized method for identifying and measuring risk, and for selecting and developing options for handling risk Should be an inherent part of any sound management activity Includes the following basic activities: Risk assessment, Risk analysis, Risk abatement

38. 38 Global Applications/Relationships Ensure proper compatibility and integration of the various activities as suppliers are selected and partnerships are established Need to ensure: Good communications throughout the project That technologies and technology applications used are compatible across the board That the business processes are compatible That the various logistics and maintenance support infrastructures are compatible That the political structures for each participating organization are compatible Success by covering issues important in a global environment

39. 39 Summary Topics System engineering program requirements System engineering management plan (SEMP) Determination of “outsourcing” requirements Integration of design specialty plans Interfaces with other program activities Management methods/tools Risk management plan Global applications/relationships

40. 40 Interactive Workshop The Objectives of System Engineering management are to: a)Ensures that requirements are properly balanced and integrated b)Influence the design in the early phases of acquisition, effectively and efficiently c)Influence the manufacturing in the latter phases of production, effectively and efficiently d)Both (a) and (b) are correct

41. 41 Early system planning is essential to ensure: a)Identification of activities that must be accomplished to fulfill the requirements specified b)Identification and measurement of risk for selecting and developing options c)Identification of activities that must provide system support equipment and resources d)None of the above Interactive Workshop

42. 42 Properly developed and written, RFPs are powerful tools for: a)Developing straightforward relationships with suppliers b)Controlling functional and physical design characteristics c)Selecting the most appropriate solution d)Both (a) and (b) are correct e)Both (a) and (c) are correct Interactive Workshop

43. 43 The goal of system engineering management is to: a)Gain early visibility to problems b)Reduce the time it takes for system acquisition c)Minimize risks associated with the decision-making process d)All of the above Interactive Workshop

44. 44 The type of contractual agreement negotiated can have a significant impact on: a)Supplier performance b)Cost of system development c)Supplier selection d)Functional baseline of the system Interactive Workshop

45. 45 Homework Assignment Chapter 6 Part II – Textbook page 335 Answer questions 12, 14, 16, 18, and 24. Read Chapter 7 – Organization For System Engineering Pages 337-377

46. 46 Questions? Comments?