1. HVR Ref: ISMOR21 Portfolio Presentation Slide 1 HVR Consulting Services Ltd Using portfolio analysis to provide shared BoI decision-making between supplier and customer David Exelby dave.exelby@hvr-csl.co.uk HVR Consulting Services

2. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 2 Introduction Management of complex defence systems requires trade offs throughout the project lifecycle CADMID Trade-offs throughout the acquisition cycle Technology platform System options Sub-system options Updates/Modifications Smart Acquisition acknowledges the need for Shared understanding between all stakeholders Development of through life management plans Focus for study

3. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 3 Developing through life management plans What are the project outputs? When are they needed? What are the decisions (plus their criteria) and activities needed to deliver the outputs? When are these decisions and activities needed and what do we need to do to get there? Where does the responsibility lie? What resources and processes do we need to put in place? What do we need from other people? Business and ‘political’ Environment Time/Cost/ Performance Trade-offs Whole life Whole system Stakeholders (who are they, what are their needs, what is their influence?) Project parameters and targets Monitoring, review Risk, Safety, ILS, legislation, etc... Resources Military context Source: http://www.ams.mod.uk/ams/content/docs/tlmp/tlmdocs/writetlm.doc

4. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 4 Case study Case study centres on the need to develop a long term strategy for prioritisation of work programmes and effective resource expenditure to support a major defence asset sub-system through-life. Key objectives for MoD customer and supplier Develop a long term work plan out 3-5 years Ensure effective dialogue between MoD and its industrial partner Prioritise a wide range of potential work packages Developed a programme of work – HVR working with MoD and industrial partner: Identifying risks associated with the asset Assess impact Explore mitigation options Prioritise a work plan

5. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 5 The risk based balance of investment (RBBOI) process Knowledge capture RBBOI Prioritisation Business Cases Spares or Maintenance R&D Programme Operational Changes New Design Work Physical Testing Knowledge capture driven from identification of key risks

6. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 6 Interacting with the decision maker The customer and supplier needed a shared data repository and analysis framework to develop their long term strategy jointly MoDSupplier Data and analytics Data collected on individual safety and availability issues and associated mitigations – open book and fixed Global data for what ifs e.g. resource productivity and cost

7. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 7 Top level user requirements Visualise sets of complex data in an intuitive way Provide an aid to communication between supplier and MoD Provide a methodology to support balance of investment decision making. Mitigation options will be limited by available funding and the study team needs to be able to identify which options can provide maximum benefit Ensure that a full audit trail is provided from data collection through to decision making Ensure that supplier and MoD are easily able to update the data on an ongoing basis

8. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 8 Visualisation - portfolio analysis and the Boston Matrix Relative market share Market growth rate HighLow High Low Cash cow –today’s breadwinner Dog –also ran Question mark –tomorrow’s star? Star –tomorrow’s cash cow A technique for charting or categorising the different businesses in a firm’s portfolio and determining implications for resource allocation. Including GE Matrix, these approaches have become universal in business

9. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 9 The HVR generic framework for portfolio analysis Identify factors to score Decompose sub factors and metrics Score options against metrics Determine sub factor weightings Analysis of portfolio and recommend- ations Objectives To identify dimensions on which to map options Activities Interviews with senior managers To provide a scoring schema for detailed assessment Interviews Desk based research Review workshops Initial scoring of options Interviews For large portfolios e.g. defence ministries, proformas can be issued To determine the relative importance of each sub factor Workshop Structured weighting exercise applying well tested approaches e.g. Saaty, Swing weight To explore the portfolio space and identify opportunities and prioritise Data input to portfolio models Develop portfolio maps Review workshop Ongoing appraisal Consulting supportHVR’s Rapid Options Analysis tools HVR role This is tailored to each individual study e.g. HVR involvement in current study centres more on approach and tool development rather than data collection

10. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 10 Developing a factor tree A framework of factors and sub-factors was developed Overall Mitigation Option Score £ FailuresUncertainty Reduction £ Mitigation £ Material and Manpower £ Other£ Failure# Failures Asset Years Remaining # ComponentsFailure Rate Reduction in Uncertainty Probability of Mitigation Success £ Material and Manpower £ Other Simplified

11. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 11 Visualising the factors The factor framework coupled with the visualisation allows portfolio mapping of options

12. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 12 Data collection Supplier undertook extensive interviews using SMEs Identifying risk scenarios Assessing risk impacts Drawing up mitigation options Assessing required mitigation resources Generated a large volume of numerical and textual data Collated in database application Approximately 1500 records in initial scan Identify factors to score Decompose sub factors and metrics Score options against metrics Determine sub factor weightings Analysis of portfolio and recommend- ations

13. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 13 Development of software support tool – RBBOI Options Analysis Tool HVR developed a bespoke software support tool for all stakeholders Database functionality Easy updates of raw data Analytics Rapid visualisation of factor scores Prioritisation algorithms Ability to save and exchange scenarios Ability to filter option universe Identify factors to score Decompose sub factors and metrics Score options against metrics Determine sub factor weightings Analysis of portfolio and recommend- ations

14. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 14 Data is easily reviewed within the application Source: RBBOI Options Analysis Tool

15. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 15 Using the factor scores Disguised data

16. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 16 Interpreting the portfolio Secondary criteria based on Failure cost Uncertainty reduction Limited benefits? Priority actions? Problem children? MA cost Overall MA benefit

17. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 17 Analysis process Several stages Plan the analysis in terms of initial factors to plot, prioritisation mechanism, global data Initial exploration of the data Prioritisation Re-explore the emerging insights to challenge/explain prioritisation, sensitivity on global data (charge rates, etc) Select key criteria Visualise data Outlier analysis Prioritise majority data Reality checks ExplorePrioritiseExplorePlan Identify factors to score Decompose sub factors and metrics Score options against metrics Determine sub factor weightings Analysis of portfolio and recommend- ations

18. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 18 Developing prioritisation approaches Recommended prioritisation factors Overall mitigation option score Mitigation cost Failure Cost Uncertainty Reduction Prioritisation can be made on any of the factors. Options can be selected through filtering and sorted Prioritisation for the selected options can be performed for: Best Estimate Best Case Worst Case “Value for money” Mitigation Benefit Score Cost of all aspects of mitigation (materials, manpower, environmental and availability) Cost of all aspects of failure (material, manpower, environmental and availability) Likely impact on knowledge gaps (probability of success and impact if successful)

19. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 19 Overall MA scores Tool allows ranking across factors – user can define multiple ranking schemes

20. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 20 Reality check – sensitivity to uncertainty Worst caseMost likelyBest case CR4-1-12-1 CR10-1-3-1 CR10-1-1-2 CR4-1-7-1 CR10-1-1-2 CTS10-1-1-1CR10-1-2-2CTS10-1-1-1 CR10-1-2-2CTS10-1-1-1CR10-1-2-2 PP1-1-2-1 CTS5-1-1-1 CTS5-1-3-2 CTS10-1-4-3CTS5-1-3-1 CTS10-1-4-3P8-1-1-1 PP1-1-1-2P8-1-1-1CTS10-1-4-3 CTS10-1-4-1 PP1-1-1-1PP1-1-1-2 PP1-1-1-1P8-1-1-1PP1-1-1-1 P8-1-1-2PP5-1-4-2CTS10-1-1-2 PP5-1-4-2PP5-1-3-2PP5-1-4-2 PP5-1-7-2PP5-2-2-2PP5-1-7-2 PP5-2-2-2PP5-1-7-2PP5-2-2-2 PP5-1-3-2PP5-1-2-2PP5-1-3-2 PP5-1-2-2P8-1-1-2PP5-1-2-2 P8-1-1-3CTS10-1-1-2CTS10-1-5-1 CTS10-1-1-2P8-1-1-3 CTS10-1-5-1 P8-1-1-2 PP4-1-2-2 PP7-1-1-1 In this case appears robust to estimates Top 6 remain across all scenarios

21. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 21 Conclusions MoD has developed a comprehensive work plan for next year Fully auditable back to source data Rapid negotiation of packages between supplier and MoD (both technical and commercial much shortened) Communication through the RBBOI tools sets The RBBOI database and options analysis tool is being updated on a regular basis Additional mitigation options arise Track work package progress Anticipated that approach will be used elsewhere within MoD and industrial partner. Collective view is that the approach has strengthened interaction between decision maker and supplier

22. HVR Ref: ISMOR21 Portfolio Presentation HVR Consulting Services Ltd Slide 22 Contact details HVR Consulting Services Ltd Selborne House Mill Lane Alton Hampshire GU34 2QJ UK Tel: +44 1420 87977 Fax: +44 1420 89819 Email: dave.exelby@hvr-csl.co.uk Web: www.HVRGroup.com