Army Cost Culture Initiative May 2013 DASA(CE) Army Cost Culture Brief to the Honorable Dr. Westphal Changing Processes Resource Informed Decisions (CBA) Changing Technology Enterprise Resource Planning (GFEBS, LMP, GCSS-A, IPPS-A) Changing People Training Cost Management Changes the Army Culture Ad-hoc Army today Cost Managed Organization 1 Army Cost Culture Cost Management End-to-End Process Cost Management Changes the Cost Culture People 1. Leadership Commitment 2. Training 3. RM Workforce Technology 4. Data Quality (ERP) 5. Tools & Models Process 6. Cost Planning 7. Cost Analysis (CBA,) 8. Cost Integration to Requirement, Acquisition, & Resource 9. Cost Control (LSS) Cost Management E2E Process its Current Maturity May 2013 People 1. Leadership Commitment 2. Training 3. FM Workforce (AFMO) Army Cost Culture Technology 4. Data Quality (GFEBS) 5. Tools & Models Process 6. Cost Planning 7. Cost Analysis (CBA, AoA) 8. Cost Integration to Requirement, Acquisition, & Resource 9. Cost Control (LSS & AFBRT) Cost Management Professionals Goal: Better Value for Lower Cost • Stewardship of nation’s resources • Cost informed decision making • Continuous improvement • Accountability for costs • Tracking progress as of May 2013 3 Army Resource Informed Decisions (as of 09 May 13) May 2013 Decision Forum Cumulative CBAs Submitted into CBA Workflow Tool 900 715 800 857 Q2 Q3 528 600 453 500 Army Cost Culture 825 640 700 361 400 278 300 160 200 100 775 7 20 33 57 Q2 Q3 Q4 Q1 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY10 FY10 FY10 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 FY13 FY13 FY13 Totals 193 AROC 10 Army Campaign Plan (ACP) 12 Budget Review Program 224 Concept Plan 2 Congress 10 EE PEG 31 FDU 28 II-PEG 41 Insourcing 59 Legislative Proposal 5 MM-PEG 3 OO-PEG 3 Office of the Secretary of Defense (OSD) 4 PBAT 5 Planning Programming Budget C (PPBC) 29 SLI 12 SS PEG 18 TT-PEG 3 UU PEG 13 Unknown 47 Other 752 report total: * Not included are CBAs that have been withdrawn and those that did not include a decision forum 4 GFEBS Technology Enables Cost Management May 2013 DASA(CE) Army Cost Culture Army Cost Management Framework GFEBS will provide Multiple Cost Views for Decision Making at Every Level … provide essential data to transform the Army to a cost culture 5 GFEBS Provides Total Cost Visibility May 2013 DASA(CE) Total Cost Visibility Example: 1- Customers by Contracts 2- Customers by Services 3- Customers by Funding 4- Customers by Cost Centers 5- Contracts by Service 6- Contracts by Funding 7- Contracts by Cost Centers 8- Services by Funding 9- Service by Cost Centers 10 –Funding by Cost Centers 3.Services 2. Contracts 3. Services 4.Funding N * (N-1) / 2 for each FY 4. Funding PE 5.Cost Centers Army Cost Culture 2.Contracts 1. Customers 10 views (table) cost visibility for five dimension Polygon 6 Army Cost Management Training May 2013 DASA(CE) Army Cost Culture Cost Management Education Principles of Cost Analysis and Management Intermediate Cost Analysis and Management PCAM Cost Terms Cost Concepts Fundamentals of Cost Accounting and Cost Management Practical Exercises Cost-Benefit Analysis ICAM Cost Flow Methods Analysis and Reporting Practical Exercises Complex Case Studies Cost-Benefit Analysis • • • • • • • • • • 3 Weeks 3 Weeks GFEBS Online Training GFEBS General • GFEBS Overview • Integrated Process Overview • Navigation and Reports • Business Intelligence Reporting • Fundamentals GFEBS: GFEBS Other Other Training Training • • • • • • • • • Cost Management Equipment and Assets Financials Funds Management Plant Maintenance Project Systems Real Property Reimbursable Spending Chain Cost Management Executive Course Army Cost Management Certificate Course • • • • CMCC Managerial Cost Accounting Operations Management Cost Control and Cost-Benefit Analysis Organizational Development for Cost Managers CMEX • Cost • Leadership-Driven Cost Management • Cost-Benefit Analysis • Value Proposition 4 Weeks TBD Cost Benefit Analysis (CBA) Training 4-Hour CBA Training • What is CBA? • Why do we need CBA? • Who are the key players? • What Army processes call for CBA • What are the processes and methodologies used 4-Day CBA Training • Policies, Regulations, Methodology, and Roles • Workflow Automation Tools • Other Tools • Case Studies and Exercises Other Training • Online • Defense Acquisition University (DAU) • Force Management (FA50) Slide 7 CM Community of Practice May 2013 Cost Warrior Roundtable Cost Warrior Newsletter Cost Warrior milSuite web site CBA Field Trainers AKO Cost Management Community Army Cost Culture Cost Warrior Listserv 1 8 Senior Leadership Commitment May 2013 DASA(CE) Army Cost Culture SECDEF Leon Panetta, 5 Jan 12: New DoD Strategic Guidance—Impact of fiscal constraints We are shaping a Joint Force for the future that will be smaller and leaner, but will be agile, flexible, ready, and technologically advanced. SECDEF Robert Gates 24 May 11: …not repeat the mistakes of the past …salami-slicing” approach results in a hollowing-out of the force USD (AT&L) Dr. Ashton Carter, June 28, 2010: Better Buying Power: Mandate … …we can't support our troops with the capability they need unless we achieve greater efficiency (doing “more without more”) DEPSEC William Lynn, 11 May 11: America’s cut forces after every war: WW II, Korea, Vietnam, Iraq …the Army had to reverse course, rebuild …we’re 0-for-4 in managing drawdowns Army • USA/VCSA memo (30 Dec 2009) Directed CBA's are to be prepared (For APGM and TGM, Force Design Updates, Concept Plans, Part of VCSA portfolio analyses, ACP, BRP, AR2B, etc..) • SECARMY McHugh at AUSA, 10 October 2011 • USA Efficiency Memo, 2 September 2010 • ASA-FM&C Cost Management Memo, 7 January 2011 • Army Campaign Plan Object 9.4 and 9.8 OSD • SECDEF Memo, 16 August 2010 • SECDEF Robert Gates 24 May 11 • SECDEF Leon Panetta, 5 Jan 12 • USD (AT&L) Dr. Ashton Carter, June 28, 2010 Better Buying Power • DEPSEC William Lynn, 11 May 11 SECARMY McHugh at AUSA Oct. 10, 2011: Army Bracing for More Budget Cuts No matter what happens, we are not going to have a hollow force We have been analyzing the best ways to meet these challenges, …and do it in a way that truly makes sense. 9 Army Campaign Plan Objective 9 Army Cost Culture May 2013 DASA(CE) OBJECTIVE: Increase the number of Generating Force (Infrastructure) organizations executing quarterly cost management reviews, increase the use of cost benefit analysis and improve the Cost Management Maturity Model index score. Slide 10 10 Army Campaign Plan Objective 9 May 2013 Army Cost Culture Measure 1 Baseline & Target Output: The number of - Organizations will be defined by Fund Centers generating force within a Command (ACOM, DRU, and select organizations (operating on ASCC). GFEBS) that are executing - The baseline for number of organizations quarterly Cost Management executing quarterly reviews will be assessed process reviews. by Command at the beginning of year (assume start point is zero) - Target Set to Achieve 90% of Army Organizations executing Quarterly Reviews by 2013. Initiatives Frequency - Cost Management Training (Cost Management Certification Course, Cost Mgmt 101, GFEBS Modeling and Deployment) - Issue Survey by Command to Establish Baseline. - Develop requirement linked to GFEBS deployment for conducting Quarterly Cost Management Reviews - Define CP-11 Manpower Requirements to Adapt Workforce for more Analytical Skills Measured Quarterly: Output: The number of organizations utilizing Cost Benefit Analysis (CBAs) in making resource-Informed decisions - Organizations will be defined by Fund Centers - USA/VCSA memo (30 Dec 2009) Directed CBA's (for those on GFEBS) or Allotment Serial are to be prepared (For APGM and TGM, Force Number (for those on Legacy Financial Design Updates, Concept Plans, Part of VCSA Systems) within a Command (ACOM, DRU, portfolio analyses, ACP, BRP, AR2B, etc..) and select ASCC). - Prepare additional ASA(FM&C) guidance - The baseline for number of organizations requiring use of CBA practices to support utilizing CBAs will be assessed by Command at Resource-Informed Decision-Making throughout the beginning of year (assume start point is Army zero) - Continue CBA Training, CMCC and Cost - Target Set to Achieve 90% of Army Management Training Across Army Organizations making resource-informed decisions using CBAs by 2012 Measured Quarterly: Output: The percent improvement in Cost Management Maturity Model (CM3) score index. - Establish Baseline Index Score by organization - Initial Target Set as % Increase from Baseline by Command (Measure Twice per Yr) than % Increase from Previous Period Calculated as “ Number of organizations executing quarterly CM reviews / Total number of organizations within command" Calculated as "Number of organizations utilizing CBA's / Total number of organizations within command" - Direct Initial Army-wide Assessment using Cost Measured Bi-Annually: Management Maturity Model Survey to Establish Baseline Calculated as “Percent - Reassess at Mid-Year and Year-End (Annually) change In index score from previous period by organization" Slide 11 11 Cost Management Policy and Guidance Army Cost Culture May 2013 1 12 Cost Culture Activities Mapped to Process, Technology, and People May 2013 Process 1 2 5 6 8 Army Cost Culture 9 11 12 14 15 16 17 19 20 24 25 30 31 35 36 39 42 43 44 46 49 51 53 55 57 58 62 64 66 72 73 75 78 81 AAR ABC ACP ACP-O9 AFBRT AFMO AoA AR2B AROC ARRG ASARC BCA CARB CBA CBA-RB CBA-WM CKB CM CP-TDA CRB CW-NL EA EA-M EC EVM G-CC & CE G-CMM GFEBS IATC ICE IGCE JCIDS LCCE MDUR PEG PPBES RA SBC TCVF 6 7 8 9 1 Cost Planning Cost Anal1sis Cost Integration Cost Control Leadership Commitment 1 2 1 9 1 1 1 1 1 1 12 Technology 1 1 1 1 1 1 1 1 1 1 4 1 1 1 1 1 1 1 1 1 1 27 37 1 47 1 1 1 1 1 1 1 1 1 49 50 52 53 1 1 1 54 60 1 63 1 1 1 1 1 1 1 10 30 1 1 7 25 1 1 1 1 3 1 70 74 78 81 ACDB ACEIT ACT AMCOS CBA-WM CCDR CKB CSDR FORCES G-CC G-CE G-CO GFEBS G-WBS ISR JIAT OSMIS R2C2 SBC TCVF 14 4 5 Data QualitY Tools & Models 1 1 1 1 1 1 1 1 1 1 1 1 1 1 15 16 18 19 1 1 1 1 21 22 23 24 26 29 32 1 33 34 36 1 38 40 43 45 48 55 56 59 1 1 1 1 62 65 66 69 71 72 1 76 1 79 ABC AFMO AR2B AROC ARRG ASARC CAM CARB CBA 4D CBA 4H CBA-G CBA-RB CC CE-CMC CMC CMCC CMEX CRB CW CW-RT EA-M EE FP IATC ICAM II JCIDS LSS MDUR OSD-CMI PCAM PEG RM-J SS People 2 Training 3 WF Development 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 13 Cost Management Acronyms May 2013 1 2 3 4 5 6 7 Army Cost Culture 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 AAR ABC ACDB ACEIT ACP ACP-O9 ACT AFBRT AFMO AMCOS AoA AR2B ARFORGEN AROC ARRG ASARC BCA CAM CARB CBA CBA 4D CBA 4H CBA-G CBA-RB CBA-WM CC CCDR CE CE-CMC CKB CM CMC CMCC CMEX CP-TDA CRB CSDR CW CW-NL After Action Report Army Business Council Automated Cost Database Automated Cost Estimating Integrated Tools Army Cost Position Army Campaign Plan Objective 9.4 and 9.8 ARFORGEN Costing Tool Army Financial Benefits Reporting and Tracking Army Financial Management Optimization Army Military-Civilian Cost System Analysis of Alternative Army Requirements and Resourcing Board Army Force Generation Army Requirements Oversight Council Army Working Capital Fund) Requirements Review Group Army Systems Acquisition Review Council Business Case Analysis Army Cost Analysis Manual Coalition Acquisition Review Board Cost Benefit Analysis CBA training 4 Days CBA training 4 Hours CBA Guide Cost Benefit Analysis Review Board CBA Workflow Management Cost Culture Contractor Cost Data Reporting Cost and Economics DASA-CE Cost Management Certification Capability Knowledge Base Cost Management Financial Management Certification Army Cost Management Certificate Course Cost Management Executive Course Concept Plan (TDA Updates) Cost Review Board Cost and Software Data Reporting Cost Warier Cost Warier Newsletter 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 78 79 81 82 CW-RT DASA-CE EA EA-M EC EE EVM FORCES FP G-CC G-CE G-CMM G-CO GFEBS G-WBS IATC ICAM ICE IGCE II ISR ITA JCIDS JIAT LCCE LSS MDUR MM OO OSD-CMI OSMIS PCAM PEG PPBES R2C2 RA RM-J SBC SS TCVF USASOC Cost Warier Roundtable Deputy Assistant Secretary of the Army for Cost and Economics Economic Analysis EA Manual Early Costing Pre-Milestone-A Equipping PEG Earned Value Management Force and Organizational Cost Estimating System Fellowship Program GFEBS Cost Center GFEBS Cost Element GFEBS Cost Management Module GFEBS Cost Objects General Fund Enterprise Business System GFEBS Work Breakdown Structure Institutional Army Transformation Commission Intermediate Cost Analysis and Management Independent Cost Estimate Independent Government Cost Estimate Installation PEG Installation Status Report Army Information Technology Agency Joint Capabilities Integration and Development System Joint Integrated Analysis Tools Life Cycle Cost Estimates Lean Six Sigma More Disciplined Use of Resources - campaign Manning PEG Organizing PEG OSD Cost Management Initiative Operating and Support Management Information System Principles of Cost Analysis and Management Program Evaluation Groups Planning, Programming, and Budgeting, and Execution System Requirement Readiness Capacity Cost Analysis Redundancy Analysis Resource Management Journal Service Based Costing Sustaining PEG Total Cost Visibility Framework, GFEBS CM design (ITA, USASOC, .. ) United States Army Special Operations Command 14