Capabilities-Based Cost Analysis: Adapting to a New Paradigm
The advent of transformational operational concepts emphasizing joint
capabilities imposes significant change upon the defense acquisition establishment.
The new operational concepts place a premium on integration among discrete
systems, and emphasize “jointness” as an organizing principle, with interoperability
as a key performance parameter. The traditional acquisition paradigm, which focuses
on the “program” or “system” as the unit of interest, is being replaced by
“capabilities” and “portfolios” as the objects of management attention. In this new
“capabilities-based” construct, the scope and scale of the defense acquisition process
expands dramatically, and drives changes in governance which are now only dimly
perceived. Still, the nature of public investment, with its checks and balances, will
require sound cost, schedule and performance objectives be established and met.
Along with all other functional disciplines within the DoD, the cost analysis
community will be significantly affected by this paradigm shift. Recent history
demonstrates that increasing levels of aggregation and complexity tend to confound
traditional costing methodologies developed for, and adapted to the “system-centric”
view. This phenomenon, coupled with intense scrutiny with respect to cost, schedule
and performance outcomes, demands that the DoD cost community develop new
methodologies tailored to the capabilities-based paradigm.
This presentation describes the principles, objectives, and status of an ongoing
study, led by the Office of the Secretary of Defense Cost Analysis Improvement Group,
which attempts to identify the key drivers of cost, schedule and performance
outcomes in the capabilities-based context. The study pursues both empirical and
theoretical approaches to the issue, with the objective to develop empirical cost
estimating methodologies rooted in an evolvable theoretical framework. In
particular, in addition to technical characteristics such as number of interfaces of the
systems comprising the capability area, the impact of governance structures and
stakeholder characteristics are being explored and evaluated.
Research Sponsor
Robert M. Flowe
Operations Research Analyst
Office of the Secretary of Defense,
Program Analysis and Evaluation
Deputy for Resource Analysis
Weapon Systems Cost Analysis Division
Presenters:
William B. Anderson
Software Engineering Institute
Mary Maureen Brown, Ph.D.
Associate Professor
School of Government
University of North Carolina at Chapel Hill
CB#3330 Knapp-Sanders Building
Chapel Hill North Carolina 27599-3330
Robert R. Jones
Senior Cost Analyst
Technomics, Inc.
201 12th Street Suite 612
Arlington VA 22202
(703) 412-6097 Office
(703) 798-1507 Cell
(703) 412-0600 Fax
rjones@technomics.net
Biographies:
Rob Flowe is an Operations Research Analyst in the Office of the Secretary of Defense, Program
Analysis, and Evaluation (PA&E). In this capacity, he serves as Cost Analysis Improvement
Group analyst for a variety of major defense acquisition programs, with particular interests in
emerging system acquisition concepts, such as Evolutionary Acquisition, Spiral Development,
Capabilities-Based acquisition, and software-intensive systems. Rob retired from the USAF in
2003, having gained experience in the acquisition of space, C4I, and software-intensive systems.
Rob achieved his Level 3 certification in Program Management from the Defense Systems
Management College in 1998, has a BS in Aerospace Engineering from Virginia Tech, and a MS
in Software Systems Management from the Air Force Institute of Technology.
Mary Maureen Brown (Ph.D. University of Georgia) is an Associate Professor at the School of
Government at the University of North Carolina Chapel Hill. Brown's applied and scholarly
activities focus on the use of information based technologies for re-engineering operations to
improve service delivery throughout all levels of government. She has more than 15 years
experience in the design, development, and implementation of advanced information technology
in government organizations. In addition to her role at the School of Government, she also
serves as a Visiting Scientist at the Software Engineering Institute at Carnegie Mellon University
where her work focuses on forecasting the costs and risks of systems integration. She also serves
as a Senior Fellow with the Center for Excellence in Municipal Management at George
Washington University where she provides instruction and consultation to senior federal and
state officials on the adoption and implementation of advanced technologies.
Bill Anderson (Software Engineering Institute, Integration of Software Intensive Systems)has a
career long focus on process improvement and technology management. A former Vice
President for a Fortune 500 company, Bill is broadly experienced with factory floor and
business; processes, support systems, automation, and management. He is a large system project
manager that has successfully led operational, financial, product line, and new product launch
groups. As a senior member of the SEI technical staff, Bill’s research interests include
integration and interoperability of complex software systems, COTS and reuse management, and
business case justification of complex systems.
Robert Jones: Bio to be supplied.