Lean Aircraft Initiative
Plenary Workshop
Policy and External Environment
Program Instability
October 16, 1996
Presented by:
Eric S. Rebentisch
MIT
LEAN AIRCRAFT
INITIATIVE
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Outline
Research overview
Progress update
– SPO survey
– Contractor survey
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Recent findings
– Cost of instability
– Influence of technical advance
– Impact of specific practices
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Summary
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LEAN AIRCRAFT
INITIATIVE
Near-term Research Strategy (CY 96)
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Continue analysis of SPO survey data.
– Program/technology characteristics.
– HR issues.
– Management strategies.
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Integrate Contractor survey data into
program instability database and analysis
process.
Validate current findings through
interactions with practitioners.
Continued population of the LEM with
findings.
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LEAN AIRCRAFT
INITIATIVE
145 responses to date:
– Air Force: 118
SPO Survey Update
Army 16%
3% Navy
– Army: 23
– Navy: 4
81% Air Force
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LEAN AIRCRAFT
INITIATIVE
Survey Sample Demographics
Preliminary - For Discussion Only
Size:
ACAT Designation:
– Mean total
program
budget $3.7B
(median
$237M).
14% ACAT IV
ACAT III 35%
– Mean program
length to IOC
7.75 years
(median 6.4
years).
41% ACAT I
ACAT II 10%
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Survey Sample Demographics (cont.)
Preliminary - For Discussion Only
Program Phase:
Sustainment 12%
11% Other
5% Concept Exploration
7% DEM/VAL
Production
29%
36% EMD
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Survey Sample Demographics (cont.)
Preliminary - For Discussion Only
System Types (sectors represented)
Other 13%
14% Electronics
Engines 6%
12% Airframe
Software 16%
14% Missiles/Munitions
25% Avionics
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Contractor Survey
Preliminary - For Discussion Only
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~320 surveys distributed.
76 responses (~%24 response rate)
to date
– 1 Sept. deadline.
– Follow-up underway.
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No analysis performed yet
– First looks by CY97.
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LEAN AIRCRAFT
INITIATIVE
Cost of Instability Update
Preliminary - For Discussion Only
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Cost growth (average annual*):
–
–
–
–
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Budget changes:
Changes in user requirements:
Technical difficulties:
Total:
2.4%
2.7%
2.6%
7.8%
Budget and requirements changes
account for 66% of average annual
program cost growth.
* Mean baseline period 60 months; median 43 months
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Cost
of Instability Update (cont.)
Preliminary - For Discussion Only
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Schedule slip (total program):
–
–
–
–
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Budget changes:
Changes in user requirements:
Technical difficulties:
Total:
9.1%
11.9%
9.4%
34.3%
Budget and requirements changes
account for 61% of total program
schedule slip.
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Cost
of Instability in Perspective
Preliminary - For Discussion Only
Program Cost
(Change from Baseline)
30%
20%
Average cost growth due to
funding and requirements
changes
10%
0
Time (Years)
“Traditional” program baseline
-10%
-20%
}
Estimated range of savings from
the use of lean practices
-30%
Source: 1996 Government PM survey, JSF MADP report.
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LEAN AIRCRAFT
INITIATIVE
The Role of Uncertainty
A fundamental tenet of leanness:
– Reduce uncertainty (uncontrolled
variance) where possible.
Problem:
– Aggressive technological advance
introduces uncertainty into program
planning and programming.
– Excess uncertainty may inhibit
successful overall movement towards
leanness.
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LEAN AIRCRAFT
Types of Cost Growth Associated with
INITIATIVE
System-level Technical Advance
Preliminary - For Discussion Only
12
Annual Program Cost Growth (%)
Technical Problems
10
Budget Instability
8
Requirements Changes
6
4
2
0
-2
Revolutionary
New Concept
Source: 1996 Government PM survey.
New Generation
Architecture
Incremental
Improvement
Little Change
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LEAN AIRCRAFT
INITIATIVE
Subsystem-Level Technical Advance
Preliminary - For Discussion Only
Level of Technical Advance Required in
Critical System Components:
All New
Development
7
6
5
4.43
4.06
4
3
2.75
2
All Non1
Developmental
Source: 1996 Government PM survey.
Lowest
Quartile
Cost
Growth
Median
Quartiles
Cost
Growth
Highest
Quartile
Cost
Growth
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LEAN AIRCRAFT
INITIATIVE
Non-Developmental Content
Preliminary - For Discussion Only
OTS / NDI Value Content (%)
100
80
64.3
60
41.3
40
26.6
20
0
Lowest
Quartile
Cost Growth
Source: 1996 Government PM survey.
Median
Quartiles
Cost Growth
Highest
Quartile
Cost Growth
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LEAN AIRCRAFT
INITIATIVE
Military-Unique Characteristics
Preliminary - For Discussion Only
Response to the statement: “The technologies used in this program have
more demanding requirements than commercial technologies and therefore
this system should take longer to develop and field.”
Strongly
Agree
7
6
5
4.08
4.21
Median
Quartiles
Cost Growth
Highest
Quartile
Cost Growth
4
3
2.5
2
Strongly
Disagree
1
Lowest
Quartile
Cost Growth
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Summary
Unplanned cost growth from aggressive
technological advance suggests:
– uncertainty associated with very advanced
products presents significant challenges to the
current planning/budgeting process.
– use of “buffers” to compensate for uncertainty
(which is inconsistent with lean paradigm).
– overall levels of uncertainty in the system may
have to be traded against goals for attaining
leanness.
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LEAN AIRCRAFT
INITIATIVE
The Role of Responsiveness
Another tenet of leanness:
– Increase responsiveness
(adaptability) where possible.
• Compensate for uncertainty.
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LEAN AIRCRAFT
INITIATIVE
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Management Practices to
Overcome Instability
Data collected:
– Use of various practices to avoid the
onset and mitigate the negative impact
of program instability.
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Uncertainty reducing
Responsiveness enhancing
– Program plan sensitivity to unplanned
budget changes.
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LEAN AIRCRAFT
INITIATIVE
Tolerance to Budget Variability
Preliminary - For Discussion Only
Use the following practices?
No
Yes
Contractor involved in
requirements generation
High-risk developments off critical
path
Schedule interdependent activities
in same budget year
Designs validated using
prototypes
Use staff from other offices
Design based on incremental
technology steps
Short cycle time
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5
10
15
Tolerable Variance in Budget (%)
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE Cost Impacts of Requirements Changes
Preliminary - For Discussion Only
No
Use the following practices?
Yes
Use CAM
Use TEMs Personnel as Needed
Use Flexible Assembly
Major Subsystems Managed in Different SPOs
Multi-year Procurement
0
1
2
3
4
5
Annual Cost Growth Due to
Requirements Changes (%)
Source: 1996 Government PM survey.
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LEAN AIRCRAFT
INITIATIVE
Influence of OTS / NDI Content
Preliminary - For Discussion Only
No
Use the following practices?
Yes
Aggressively Advocate Support for your Program
Designs Validated Using Prototypes
Design Validated Using Simulation and Modeling
Design Based on Incremental Technology Steps
High-risk Developments Scheduled off Critical Path
Use CAM
Use Flexible Assembly
Use 3-D Modeling
0
Source: 1996 Government PM survey.
20
40
60
OTS / NDI Content Value (%)
80
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LEAN AIRCRAFT
INITIATIVE
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Summary
Increasing responsiveness to change:
– Tolerance to budget variance improved by
reducing dependence on critical technologies or
resources (risk management) and increasing
responsiveness.
– Practices that increase program responsiveness
decrease the premium paid for changing
requirements.
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A Tradeoff:
– Use of risk management, responsiveness
practices an apparent substitute for using more
OTS / NDI technologies.
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LEAN AIRCRAFT
INITIATIVE
Observations
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Program instability factors account for the
major part of both program cost growth
and schedule slip.
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Magnitude of the cost of program
instability may equal or exceed that of
expected cost savings from “lean”.
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LEAN AIRCRAFT
INITIATIVE
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Observations (cont.)
Increased uncertainty associated with high
levels of technical advance a potential
barrier to realizing the full benefits of
leanness:
– Tradeoff between accepting cost of uncertainty or
developing increased responsiveness to
unplanned changes.
– Support PD/SR investigation of benefits of
modular/platform-based product development
concepts.
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LEAN AIRCRAFT
INITIATIVE
Next Steps
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Validate findings through discussions
with practitioners.
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Integrate contractor data into on-going
analysis of SPO data.
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Continued population of the LEM with
findings.
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LEAN AIRCRAFT
INITIATIVE
Other Policy Focus Team Activities
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Economic incentives:
– Two case studies well underway.
– Two more case study sites under negotiation.
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Use of commercial practices:
– Research begun to catalogue “lessons learned” from
commercial practice pathfinder and pilot programs.
– Focus team defining additional research topic.
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Modeling the acquisition process:
– Model development progressing.
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Role of “Lean User” in requirements
generation:
– White paper written.
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