Enhancing weapon system initial cost estimate credibility with advanced tools

Abstract

Weapon system development programs continue to have cost growth and schedule delays leading to higher development risk. Government Accountability Office's (GAOs) latest review of selected weapons systems found that twelve of the 43 programs in the report had cost growth from 4% to 45% as well as schedule increases. Lack of technical maturity in components, subsystems or interfaces within a system-of systems prior to development start (Milestone B) contributed to the unexpected cost and schedule growth. GAO indicated that one reason may be that most of these programs are not yet following the recommended knowledge-based “best practices” approach to technical maturity published in earlier GAO reports. Similarly, acquisition guidance in Department of Defense (DoD) Instruction 5000.02 mandates a plan for should cost goals at the “Milestone A” review (which denotes the start of technology maturation and risk reduction) to support affordability and cost control. The GAO “knowledge point” system assesses weapon system technology maturity at key acquisition lifecycle phases (Milestone pre-A, A, B, etc.) to help reduce program acquisition risk. This approach reveals high level insight into program risks, however objective qualification and quantification of cost growth and schedule impacts is lacking. An objective quantification is necessary to evaluate system maturity for weapon systems to obtain more realism in initial cost and schedule estimates that will withstand time. System Readiness Levels (SRLs), an emerging method supports that quantification of systems and their technology readiness. The method integrates the Office of the Secretary of Defense (OSD) better buying power (BBP) initiatives (1.0, 2.0 & 3.0) providing confidence in meeting development cost and reduction in total ownership cost objectives. Obtaining accurate Government development (initial) cost estimates during program formulation and technology maturity (Pre-Milestone B) has always been required. They now have become paramount in the success (or failure) of programs to meet affordability goals. During program formulation there is much uncertainty; program management structures are unknown, cost drivers are not clear and program risks may not be well understood. SRLs can capture this uncertainty and provide an objective metric that integrates technology and integration readiness levels (TRL, IRL). The result supports more accurate forecasts of mission capability cost, schedule and drivers. Using information from the annual GAO “Assessments of Selected Weapon System Programs” knowledge gaps are identified with the knowledge point framework identified in the report. Bridging the knowledge point framework with SRL techniques, cost estimators and analysts can enhance their initial forecasts to meet affordability goals and should cost goals. We describe how using these methods can identify potential cost drivers and highlight risk areas during program formulation. An example is provided to illustrate the method. Last, future research is discussed.