2013-R205

Joint Cost Schedule Risk and Uncertainty Handbook

Risk II Track

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Abstract:

The Naval Center for Cost Analysis (NCCA) has created a Cost Schedule Risk and Uncertainty Handbook (CSRUH) that clearly presents simple, well-defined cost risk and uncertainty analysis processes that are repeatable, defendable and easily understood. The CSRUH is based upon the Air Force Cost Analysis Agency (AFCAA) Cost Risk Uncertainty Handbook published in 2007. It updates key processes to address cost risk and uncertainty methods with an emphasis on providing guidance to capture the impact of schedule uncertainty and the risk register while avoiding “double counting”.

The CSRUH acknowledges the existence of two types of models that capture the impacts of duration uncertainty. To aid in the discussion, we propose two terms to help clarify what type of model is under development:
• Cost Informed by Schedule Method (CISM): CISM is a typical, spreadsheet based, cost model that in addition to standard cost risk uncertainty methodologies, has some level of duration uncertainty built into it such that duration uncertainty influences the cost simulation results. Building a CISM model is one of the principal focuses of the handbook. An example model is built in @Risk, Crystal Ball and ACEIT to demonstrate that the CSRUH guidance is tool independent.
• Fully Integrated Cost Schedule Method (FICSM): FICSM typically begins with a cost loaded schedule model with cost schedule risks and uncertainty addressed for most, if not all cost and schedule elements. The elements of a FICSM model are introduced at the end of the handbook. A number of government agencies are experimenting with many different FICSM capable tools. Several are described and one is used to demonstrate how the example CISM model may appear in the FICSM context. The rich reporting capability of the FICSM model is contrasted with the CISM model approach.

The presentation will describe how the current state-of-the-art cost risk uncertainty processes have been incorporated in the handbook, including an example demonstration of the differences between a standard cost risk uncertainty analysis, the same analysis informed by the CISM approach, and again with the FICSM approach.

Author(s):

Duncan Thomas
NCCA
Mr. Duncan Thomas currently serves as the Technical Director for the Naval Center for Cost Analysis, Office of the Deputy Assistant Secretary of the Navy (Cost and Economics), Washington, D.C. He is responsible for the quality of all cost and economic analyses reviewed by Headquarters Staff to support major Department of the Navy resource allocation decisions, and assisting with Naval cost estimating policy development. He was appointed to his position as member of the scientific and technical cadre of senior executives in November 2009. From October 2008 to November 2009, he served as the Naval Center for Cost Analysis (NCCA) Director of Cost Estimating Division, where he was responsible for overseeing the development of Service Cost Positions for all Navy ACAT IC and IAC / IAM programs. Mr. Thomas began his Government service with the Air Force Cost Analysis Agency (AFCAA) in November 2002. While at AFCAA, he held a variety of positions including Division Chief and Technical Advisor of the Space Programs Division. Prior to Government service, Mr. Thomas was a senior analyst at Tecolote Research, Inc. responsible for providing analysis to support major Army, Air Force, Navy, Marine Corps, and Federal Aviation Administration (FAA), and National Aeronautics and Space Administration (NASA) acquisition decisions. He is also the author of several cost research papers including “Methods for Estimating Radar Transmit/Receive Modules” and “Cost Estimating Relationships for Tooling for Composite Parts”.
Mr. Thomas is a veteran of the United States Army and holds a Bachelor of Science degree in Applied Mathematics from UCLA and a Senior Managers in Government Certificate from Harvard Kennedy School.

John Fitch
NCCA
As the Cost Research and Tools Division Director at the Naval Center Cost Analysis since May 2011, Mr. Fitch is responsible for managing, planning, and executing the NCCA cost research and tool development program. Mr. Fitch has over 17 years of experience developing independent cost estimates, sufficiency reviews, and program assessments for the Department of Defense and NASA aviation, space instrument, C4ISR, satellite communication equipment, and weapon programs.
Mr. Fitch began his career working as a junior cost analyst for Sparta, Inc. and SAIC in support of the MDA. In 1998, Mr. Fitch joined the Naval Center for Cost Analysis and supported the Aircraft and C4ISR divisions, participating in independent cost estimates for the F/A-18 E/F Super Hornet, V-22 Osprey, and various Navy software and electronics systems.
In 2002, Mr. Fitch transferred to the Air Force Cost Analysis Agency and went on to become Weapons Branch head within the Aircraft division. Mr. Fitch led independent cost estimates on Joint Air-to-Surface Standoff Missile, Small Diameter Bomb, CV-22, B-2 Radar Modernization, and Global Hawk.
Mr. Fitch joined NASA PA&E in 2008 and was responsible for performing independent assessments of NASA’s planetary and heliophysics science portfolio. Mr. Fitch also supported the acquisition and budgeting processes by coordinating decision documentation, developing or reviewing issue papers, and budget justification documentation.
Mr. Fitch has taught courses on learning curves to the Washington, DC-area chapter of SCEA and other organizations. In 2004, Mr. Fitch was named the Air Force Acquisition Cost Analyst of the Year.
Mr. Fitch holds a Bachelor of Arts degree in Economics and Politics (Double Major) from Wake Forest University and a Master of Arts degree in Economics from the University of Kentucky.

Alfred Smith
Tecolote Research, Inc.
Alfred earned a Bachelor Mechanical Engineering degree from the Canadian Royal Military College and a Master of Science with Distinction in naval architecture from the University College, London, England. He spent 21 years in the Canadian Navy driving submarines (Navigator, Operations Officer) and ten years as a naval architect. He has over 20 years’ experience leading, executing or contributing to life cycle cost model development and cost uncertainty analysis for a wide variety of military, Coast Guard, NASA and foreign projects. He has been with Tecolote since 1995 and since 2000 has been the General Manager for Tecolote’s Software Products/Services Group, responsible for the development, distribution and support of a variety of web and desktop tools including ACEIT. Alfred has delivered numerous papers on cost risk analysis topics and principle support for AFCAA Cost Risk and Uncertainty Handbook (2007) and the Joint Cost Schedule Risk and Uncertainty Handbook (2013).

Jeff McDowell
Tecolote Research, Inc.
Jeff is employed by Tecolote Research, Inc. as the Chief Scientist for the Huntsville Group, where he performs cost research and cost estimating for numerous customers. He has thirty-one years of experience in cost estimating, cost analysis and cost modeling. Mr. McDowell received a Bachelor of Industrial Engineering degree from Auburn University in 1979. Jeff was principle support to AFCAA Cost Risk and Uncertainty Handbook (2007) and the Joint Cost Schedule Risk and Uncertainty Handbook (2013).