3.2.2 Cost As An Independent Variable Balancing Performance with Affordability

Abstract

AbstractThe US Department Of Defense (DoD) Cost as An Independent Variable (CAIV) initiative replaced their Design To Cost (DTC) requirements. These changes were caused by the continuing reduction in the DoD budgets and the requirement to maintain the country's war fighting capabilities as the best in the world. In this peacetime environment, cost is the overarching constraint, not performance. As system providers, we are required to identify the customer's cost driving requirements. The customer/user can then makes the program decision to reduce system performance to maintain program costs.CAIV is the trade‐off of total ownership cost (TOC), also known as life cycle cost (LCC), performance, schedule and risk for a product that is developed, produced, and supported within the customer's expectations.In order to easily evaluate a program's performance in the area of CAIV, a small series of metrics can be established. Since CAIV seeks to find the optimum balance between Cost, Performance, Schedule and Risk, any set of CAIV Metrics should encompass these areas. These metrics would allow both senior management and the program manager a clearer picture of a program's status and progress, and, when applicable, be able to identify areas in which a program needs assistance or a concentration of forces.This paper presents the CAIV process, program responsibilities, and a recommendation for a series of CAIV Metrics.