2012-MGM12

Capabilities Based Portfolio Analysis (CBPA)

Management Track

MGM12_Presentation_CapabilitiesBasedPortfolioAnalysis_Gvoth

MGM12_Paper_CapabilitiesBasedPortfolioAssessment_Gvoth

Abstract:

Total cost is no longer the singular driver of defense acquisition program economic decision making. Defense programs and projects must be evaluated according to their contributions to overall monetary and non-monetary Return on Investment (ROI) relative to the capabilities of a Family of Systems (FoS), System of Systems (SoS) or as a part of a portfolio of products that together meet documented operational requirements. This is needed because future defense strategies, including Smart Defence are being driven by budget cuts. With less money available, decision makers will have to make difficult funding choices for existing programs as well as for future investments and divestments within acquisition portfolios. A clear-cut, objective process for analyzing acquisition program portfolios can assist acquisition managers in making the tough choices in the face of impending funding cuts. Analysis from a portfolio perspective will account for the capabilities required to meet warfighter needs while minimizing redundancies, which will reduce costs and increase ROI.

We propose a Capabilities Based Portfolio Assessment (CBPA) methodology to evaluate the relative contributions of a given program with respect to defined requirements and strategic goals. This approach combines the analytic disciplines of cost, benefit, risk, requirements and decision analysis that accomplish the following: better informs decision making and optimizes resources; ensures that investments are managed collectively as capabilities; aligns investments with strategy; and helps determine the best mix of investments based on cost and effectiveness.

CBPA provides decision quality information needed to determine which programs, projects or portfolios need further investment or divestment without sacrificing required capabilities. The CBPA will expose overlaps and redundant investments based on a thorough requirements analysis that is mapped to capabilities provided by programs within portfolios. Using risk-adjusted monetary ROI and other metrics, programs can be evaluated separately or as part of an overall portfolio.

Stakeholders need an effective methodology to identify, quantify and assess the economic and programmatic implications of investment and divestment decisions without diminishing tomorrow’s readiness. Our CBPA methodology applies the appropriate decision support skills to frame portfolio decisions and draws upon processes, analytics and tools needed to: prioritize investments; prioritize divestments; allocate resources; reduce decision-making uncertainty; and illuminate underlying decision rationale. CBPA is a methodology that decision and policy makers can use to reduce spending and gain efficiencies while balancing capability across their portfolios.

Author(s):

Paul Gvoth
Cask, LLC
Mr. Gvoth specializes in Economic and Business Case Analysis for the acquisition of Marine Corps Major Automated Information Systems (MAIS), and other weapons systems ranging from vehicles to radars. Paul started his work in defense contracting after a 24 year career with the Government Accountability Office (GAO) where he served as an Operations Research Analyst, Defense Policy Analyst, and Government Program Evaluator reporting to the U.S. Congress on wide-ranging topics within the Defense and Civil domains. He has a BA in Psychology and an MA in Economics from the University of Denver. He is also a graduate of the Joint and Combined Warfighting School – Senior Seminar – Joint Forces Staff College, Norfolk, VA. Paul currently works as an Associate with Cask, LLC in Stafford, Virginia.

Brad Ellis
Cask, LLC
After a successful tour as an enlisted Marine, Mr. Ellis attended the University of Tennessee where he earned his 1998 BS in Biochemistry and Molecular Biology. Upon graduation Mr. Ellis entered Officer Candidates School and served four years in the aviation command and control field. Mr. Ellis received his MBA from the Naval Postgraduate School, Monterey CA in 2004 and served as an Operations Research Analyst and Cost Analyst for the Marine Corps Combat Development Command (MCCDC). Mr. Ellis left active duty in 2006 and began his career in industry as part of Booz Allen Hamiltons Economic Business Analysis team where he supported the Marine Corps CIO in areas including policy development, performance measurement, capital planning and investment control, and portfolio management. Mr. Ellis is currently a Practice Area lead for Cask, LLC specializing in cost estimating and analysis, business case analyses and economic analyses. He currently supports the Marine Corps Enterprise IT (MCEITS) program office providing acquisition engineering support including requirements management, life cycle cost estimating, manpower analysis, and preparation for Milestone reviews. Mr. Ellis is presently working toward completing a Masters in Cost Estimating and Analysis (MCEA) and expects to graduate in 2013.