Cost As An Independent Variable Research Articles

Research on Application of CAIV in Armament Demonstration

Abstract Armament demonstration is a forward-looking and basic work, which plays an important role for supporting scientific rule for the demonstrated project. In this paper, the application of CAIV (cost as an independent variable) is studied in armament demonstration and the model for cost and effectiveness are constructed based on CAIV idea. A balanced space of cost and effectiveness could be gotten from the model with trade-off relationship between cost and effectiveness. This conclusion benefits the affordability and sustainability for armament demonstration.

4.6.1 Affordability Considerations: Cost Effective Capability

AbstractThis paper examines how best to determine the contextual and dynamic attributes of an affordable system. The complexity of the problem cannot be overstated. The affordability trade space is composed of a relational set of attributes that are contextually sensitive; once this set is bounded, the need arises for an implicit comparison to other systems, sub‐systems and components. The problem may be embedded in how systems are designed, how they are governed, and how they are evolved. Considerations are provided to help resolve the complexities involved in identifying and evaluating what an affordable system is.Most of the existing literature is focused on cost comparison or performance comparison of systems separately; the literature which addresses a perspective of how cost and capability of systems can be integrated is found under the disciplines of Cost as an Independent Variable (CAIV) and Value Engineering (VE), but appears insufficient in providing an encompassing framework in which to develop a design for affordability trade space. Both of these disciplines may not adequately address the life cycle or temporal dimensions of systems.To address this deficiency, INCOSE and National Defense Industrial Association (NDIA) have worked to define affordability, and identify related concerns, through ongoing working groups since late 2009. Both organizations have developed definitions for use in this context. Even though affordability has been defined by NDIA, INCOSE and Military Operations Research Society (MORS), in discussions at the recent MORS Special Meeting on Affordability Analysis – How do we do it? (Oct.2012), the Development Planning Working Group discovered that affordability analysis was contextually‐sensitive, often leading to misunderstanding and fragmented perspectives. Various industry working groups have recommended developing and formalizing affordability analysis processes, including recognizing the difference between cost and affordability analyses… Key insights include the need to consistently define an affordability context, and establish a framework for the appropriate analytic process. They also have determined that accountability for affordability needs to be assigned across the life cycle.System Engineers must understand that the affordability trade space is fluid, an ever changing set of boundaries that evolve as mission needs evolve, and recognize that any affordable solution is essentially a “snapshot” within that trade space at any point in the life of the system.

Why Affordability Is A Systems Engineering Metric

The Systems Engineering approach to Affordability is equal to CAIV + LCC + TOC + Systems Effectiveness. The purpose of this presentation is to apprise the Systems Engineering community of Affordability as a critical metric in the total organization. Affordability will be defined in terms of the most “bang” for the available bucks from the Government and commercial perspectives. Illustrations of how the design process can affect the affordability and determine the “profit” and maximize sales. The flow of Affordability will define at a top level the definition of Cost As an Independent Variable (CAIV) with program examples and real life scenarios. Affordability is dependent on mission requirements, i.e. quantity, performance, supportability. Life Cycle Cost (LCC) will be defined at a top level and include the elements of LCC with the appropriate process of “How an LCC is developed” along with the customer requirements and models to support. Total Ownership Cost (TOC) is defined and illustrations of various TOC's will be provided at a top level. Systems Effectiveness will be discussed as mission utilities that are inherent in the Systems Engineering processes. Additionally, there is discussion of IPT responsibility, when this process is implemented and other Economic Analysis aspects pertinent to the Affordability Program.

Enabling CAIV through Design, Modularity, and Program Management

AbstractMany naval ship acquisition programs have not been able to effectively implement cost as an independent variable (CAIV). With a CAIV approach, operational requirements provided by the customer are given in terms of threshold and objective values. The range between these two values provides the program manager with trade‐space to match the available funds with the capabilities that can be bought for that amount—the total program cost remains a constant. In practice though, much of the final cost of an acquisition program is fixed early in the design process through basic design decisions on architecture and the allocation of operational requirements and derived requirements to systems. Unfortunately, while much of the cost is determined early in the design process, estimating that cost to any degree of certainty is nearly impossible. As the costs of the program are better understood, the remaining design flexibility to adjust to increasing costs may not be sufficient to enable the program manager time to take corrective action when the cost estimates indicate a possible problem. This paper describes the techniques, including the use of modularity, cost contingencies, and set‐based design, to provide the program manager with sufficient flexibility to implement CAIV. The views expressed in this paper are those of the author and are not necessarily official policy of the US Navy or any other organization. The intent of this paper is to foster dialogue to gain a better understanding of how to develop an acquisition strategy and systems engineering strategy to enable CAIV.

3.2.2 Cost As An Independent Variable Balancing Performance with Affordability

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.

System of systems force structure optimisation

AbstractA system of systems study plan was developed and a prototype was executed to optimise a recommended military force structure. This methodology defined the optimal force structure, using constrained optimisation to reflect budget limitations and desired mission performance. The force structure included surface and air assets, a command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) architecture, and a recommended logistics infrastructure. A second aspect of the study plan defined the total acquisition strategy, which accounted for: retiring legacy assets, extending the service life of existing assets until new replacements became available, and acquiring new assets for deployment, within the budget allocation. This methodology combined various modeling and simulation techniques to meet three study objectives. First, a nonlinear mixed integer programming model maximised performance, subject to cost constraints, cost as an independent variable (CAIV). Second, a dynamic programming model scheduled the transition from the legacy force structure to the future force, defined by the previous modeling technique. Third, a process simulation model simulated performance, over a one-year time period, for 25 areas of responsibility and five missions. This model verified performance estimates generated by the previous models.

9.1.2 A Basic Primer in Life Cycle Cost Analysis

AbstractLife cycle cost (LCC) has become increasingly important as systems are designed with longer useful technological lives. In addition, deferred modernization due to limited budgets is causing many aging weapon systems to be extended, thus incurring greater support costs. This paper will present an overview of the process of life cycle cost analysis (LCCA). It will address the basic concepts and applications, along with a review of methodologies and some aspects of engineering economics.LCC is defined as the sum total of the direct, indirect, recurring, non‐recurring, and other related costs estimated to be incurred in the design, research and development (R&D), investment, operation, maintenance, and support of a system over its life cycle, i.e. its anticipated useful life span. It is normally organized into four phases: research, development, test, and evaluation (RDT&E); procurement (or acquisition), operations and support, and disposal.Economic Decisions are often made solely on initial investment or RDT&E and procurement cost. But this is only the proverbial tip of the iceberg – a portion of the total cost of ownership. More and more customers (especially government) are emphasizing and requiring an LCC perspective. To make intelligent acquisition decisions to meet a specific need, it is necessary to look beyond acquisition. In defense systems O&S costs can encompass up to 80% of the total LCC.LCC allows the evaluation of competing system proposals on the basis of total ownership cost and allows more effective budgeting of future funds such as O&S costs and disposal costs. A LCC perspective maximizes the benefit of applying strategies such as Cost as an Independent Variable (CAIV) and Design to Cost (DTC)Most LCCAs require a mix of estimating methodologies. The methods may be applied individually or in combination. Analogy and parametric tend to be most useful in the early stages of product development. As program and system design stabilizes parametric estimating becomes more useful. A detailed design facilitates engineering estimate and projection of actuals.In summary, this paper gives an overview of LCC as well as addressing many of the complexities of LCC analysis. More and more customers (especially government) are emphasizing and requiring an LCC perspective making LCC an increasingly important engineering design parameter. Total cost impact, not just initial near‐term cost, must be considered.

3.6.4 Discrete System Optimization Using Cost as an Independent Variable (CAIV) Techniques With Distributed Analysis Models

AbstractA design environment has been constructed to assist designers and analysts in performing concept studies and optimization based on distributed analysis to support cost as an independent variable (CAIV) studies. This environment uses application server‐based techniques to host distributed simulations and analysis tools. These components are then linked through a common client interface to build an integrated model. A set of unique design exploration tools provides the analyst with a decision support environment for performance, cost, and operational assessments. A design example based on this architecture is shown. This example illustrates discrete configuration selection of platform and sensor types based on a non‐gradient based optimization algorithm to defeat various threats given system cost constraints.

8.4.3 Systems Engineering MegaPractices – Identification, Assessment and Redundancy By Object Analysis and Modeling

AbstractWhat happens when practices and disciplines overlap? – Wasted efforts, turf battles, redefinition of lifecycle models based on different management, engineering, manufacturing, finance, maintenance and support viewpoints. In short, a proliferation of the ‘way we do things around here’.Systems engineering has become a set of complex processes that are difficult to implement and improve. Too often, either sub processes are developed for lower tier Integrated Product Team performance or for large enterprise level practices which are promoted as ‘Best Practices’ (Heibler 1998). Most often, the linkage at different levels of abstraction is very difficult to see, much less apply. These are difficult to implement for management of larger and smaller projects. Also many projects in an enterprise are at different stages of development, which makes process improvement across the organization difficult to assess and implement.Lifecycle ‘Practices’ and ‘Standards’ are generated as panaceas for good systems engineering and are evidenced as: Systems integration, Systems design, Systems validation, Software engineering, Design to Cost (DTC), Design for Manufacture and Assembly (DFMA), Cost as an independent variable (CAIV), Affordability, Quality Function Deployment (QFD), Supply Chain Management, Robust Design, Risk management, Requirements management, Time‐to‐market, and Just‐in‐Time ManufacturingThe purpose of this paper is to show how a set of capability improvement models (SW‐CMM 1995, SECM‐EIA731 1998, CMMI 2000, ISO 9001 1994, ISO 15504 1998) and process definition standards (IEEE1220 1998, EIA‐632 1998, ISO 15288 2000, and ISO12207 1995) can be used to test these megapractices for commonality and redundancy. Object oriented (OO) techniques are be used to: 1) identify the validity of megaprocesses, 2) determine which processes belong to megapractices and are common throughout the chosen set, and 3) assist assessors and process improvement practitioners in selection and optimization of best set of practices for the top level enterprise down to team level performance. Conclusions from this analysis are: Systems Integration includes Design Reviews, Integrated Schedules, and Integrated Planning CAIV includes Trade Studies, Requirements, Risk, Cost, Performance (TPMs), and Decision Making Software Development is a large subset of Systems Integration in software‐intensive systems

Are there too many MBAs in aerospace?

As many have intuitively sensed, if not outright admitted to themselves, American corporate society has turned their focus to the bottom line. Do you use Cost-As-an-Independent-Variable (CAIV) to meet the bottom line today so you can live to fight another day? Do you stand on your principles so that, when tomorrow comes, you will be prepared? Can you do both? What happens when you guess wrong? This paper explores the question of management for the bottom line versus management for technical excellence.

Processes for Reducing total Ownership Cost: CAIV and Target Costing

Abstract This paper will present Cost as an Independent Variable (CAIV) and its analogous commercial practice, Target Costing, as the processes for reducing Total Ownership Cost (TOC) in the acquisition of Department of Defense (DoD) weapons systems, with an emphasis on Department of the Navy (DoN). It will feature an in-depth statistical analysis of the recently completed Target Cost Best Practices survey, conducted by the Consortium for Advanced Manufacturing—International (CAM-I) and co-sponsored by the American Institute of Certified Professional Accountants (AICPA) and the University of Akron. Understanding of Target Costing is essential for practitioners of CAIV, since it is a mature (20+-year-old) practice in Japan and has taken root in Germany and the United States, offering both precedence and guidance in how to deploy a system such as that necessitated by CAIV

2 System Design to Affordability in a Collaborative Systems Engineering Environment

AbstractThe Cost as an Independent Variable (CAIV) concept requires establishing aggressive but realistic total system ownership cost objectives and goals very early during system development. A balanced set of goals are identified through cost, schedule, and performance tradeoffs and the management of associated risk. Subsequently, these ownership cost objectives guide the strategic system architecture, design and technology decisions.The relationships and dependencies between different design views, schedules, and correlating infrastructure need to be rationalized in estimating the system cost of ownership. Furthermore, this has to be done within an environment of continuous flux. This becomes even more of a challenge in a Commercial‐Off‐The‐Shelf (COTS)‐intensive open system environment, with development, production, and system supportability being executed concurrently. The team can exploit a number of synergies that result from such a scenario. However, a prerequisite is the ability and infrastructure for timely and reliable information exchange between the disciplines contributing to design decisions. Effective execution of the CAIV methodology is dependent upon strong integration of multi‐disciplinary processes, methods, information and domain specific toolsets.This paper describes an initiative to integrate a CAIV methodology for COTS‐intensive combat systems engineering into a collaborative systems engineering environment. A pilot effort to implement a common information model within a COTS Product Data Management (PDM) system, CAIV processes, and engineering tools supporting the execution of COTS‐based combat systems design is described. Future extensions to the information model, the systems engineering processes, and the collaborative engineering environment supporting combat systems design, development, and life cycle engineering activities are presented.

Integrated Desktop Analysis and Planning System (IDAPS) for Cost as an Independent Variable (CAIV)

Abstract FTI's I-CAIV process and automated tool has been successfully used in a number of DoD studies to perform a structured comparative evaluation a wide range of architectures, systems, and technologies. The process embodies sound engineering principles to establish a framework that provides senior decision-makers with sufficient data to make informed decisions regarding the acquisition of systems, development of technology investment strategies, and the assessment of alternative architectures / systems / technologies with both military utility and cost as principal measures in a “Cost as an Independent Variable (CAIV)” perspective. The I-CAIV framework also supports establishing a permanent, readily accessible corporate knowledge base that preserves intellectual capital through disciplined, structured and automated synthesis of information.

2 Risk‐based Decision Support

ABSTRACTRisk Management is often accomplished in a segmented and incomplete process. The engineering design team will worry technical risks, the mission planning team will worry mission success, and the program management team will worry about cost and schedule risks. None of these issues are independent. Schedule reductions or cost reductions will cause technical risks which may compromise mission success. Likewise a solution to a mission risk will create technical risks which directly impacts cost and schedule performance.Risk‐based decision support is a process of examining the entire risk environment of a decision issue and presenting not just a point value to a decision maker, but the risk impacts, uncertainty, and the risk drivers for the solution options.Current hot topics such as DoD's CAIV (Cost as an independent variable) and NASA's “Faster, Better Cheaper” (FBC) approach to projects and programs are concepts that beg for an integrated approach to risk management. The previous culture was to approach risk as “reduce all risk at any cost”. The current environment demands that risk be a traded resource along with cost, schedule and mission performance. Decisions must be made such that an acceptable mix is achieved.Our approach is designed to integrate these risks into a common framework. It is designed to be a part of the program manager's decision‐making process. All decisions are made within a context of understanding the total integrated risk to the project.

Implementation of an Initial Cost as an Independent Variable (CAIV) and Total Ownership Cost (TOC) Process in the Navy's Acquisition Center of Excellence (ACE)

Abstract The briefing will present an overview of the beginning processes and toolset for the implementation of CAIV by the Navy ACE, and describe the problems overcome and yet to be overcome in this endeavor. It will describe the place that the processes and toolset take in the larger contexts of Acquisition Reform, and of the Total Ownership Cost initiatives.

2.4.2 Cost As an Independent Variable (CAIV) on the Joint Helmet Mounted Cueing System (JHMCS) Program

ABSTRACTThe Cost As an Independent Variable (CAIV) process is the next evolutionary step in the Department of Defense's ongoing effort to continue to modernize, operate and support its forces within a shrinking Defense budget. The Joint Helmet Mounted Cueing System (JHMCS) program was one of the first development programs to implement the CAIV process. The objective undertaken by the JHMCS program was to establish in the integrated product teams the process to control the design factors affecting the production and life cycle costs. This was accomplished through the detailed breakdown of the costs, the open communication between Boeing and the U.S. Government and the active participation of the U.S. Government in reducing all cost areas. The incentive for Boeing to have a successful CAIV process on the JHMCS program was through its profit determination (award fee), but the criticality for the U.S. Government came through its program's budget projections. Program affordability goals must be realized in order to ensure the program's future. This paper presents some of the lessons from the JHMCS program. More importantly, it describes the significance and affordability related results of key actions and decisions made during the formulation and execution of the JHMCS program.