2012-MMT213

Just-In-Time Cost Analysis

Methods and Models II Track

MMT213_Presentation_JustinTimeCostAnalysis_Ko

Abstract:

Booz Allen developed and maintains a robust Life Cycle Cost Estimate (LCCE) for the acquisition of the Urgent Universal Need Joint Mine Resistant Ambush Protected (MRAP) vehicle program, the Defense Secretary’s top acquisition priority. Building and maintaining the LCCE was challenging because the MRAP Program is unique from other urgent needs Acquisition Category I-D programs in two ways. First, to accommodate the aggressive and accelerated schedule, the MRAP Program conducted an open competition, which required a review of several designs from various contractors in a short period. These reviews allowed the program to determine the final design of the vehicles, which are grouped into four vehicle categories (CAT I, II, III, M-ATV) each represented by several variants. Secondly, after fielding the vehicles, the MRAP Program Office continued to redesign the vehicles through a series of Engineering Change Proposals (ECPs) deviating from the normal acquisition process. The major changes incorporated have resulted in a near redesign of the vehicle within a year of production. These ECPs established for the MRAP vehicles caused the program to undergo a second series of development efforts.

Planning the transition to peacetime while still acquiring new vehicles and implementing ECPs created a new set of challenges. In FY11, the Office of the Secretary of Defense drafted a memorandum stating that the Overseas Contingency Operations funds, which previously funded the Joint MRAP Vehicle program entirely, would no longer fund Continental United States activities in FY13. In the austere budget environment, the services must begin planning to sustain a multi-billion dollar program. Although LCCEs are traditionally based on peacetime requirements, the MRAP Vehicles were acquired in wartime and have never experienced peacetime requirements. The LCCE was not designed to support the decision analysis senior leadership required; it needed its own ECP.

Booz Allen Hamilton modified the LCCE tool to provide just-in-time (JIT) analysis for end of war planning and integration of the new acquisition program into the baseline budget for multiple services. This paper will demonstrate how it modified the Microsoft Excel model structure to incorporate a flexible structure to not only calculate costs by service, and vehicle category, but also four fielding capabilities: Active in Theater, Home Station Training, Hot Storage – available worldwide in 30 days, and Cold Storage – available worldwide in 90 days. This paper will also demonstrate how it overhauled methodologies and tied them to the fielding schedule which created a dynamic cost estimate based on various courses of action for each service. The results allowed each service to decide the portfolio of vehicles it can support given budget restraints.

This paper outlines the development of the MRAP Logistics Requirements Funding Summary (LRFS) utilizing the revolutionary USMC Cost Estimating Tool. The purpose of LRFS was to document required integrated product support activities and costs associated with those activities, a requirement for the Joint MRAP Vehicle program to become an official Program of Record during peacetime.

Author:

John Ko
Booz Allen Hamilton
Mr. John Ko attended the Graduate School of Industrial Administration (now known as the Tepper School of Business) at Carnegie Mellon University to earn his MBA in Operations Research, Finance and Information Systems.
Mr. Ko has over nine years of experience in supporting the US Army and the United States Marine Corps as a Cost Estimator. Mr. Ko joined the Ground Vehicle Team of the Weapons Systems Division of ODASA-CE as an Operations Research Analyst where he developed Life Cycle Cost Estimates (LCCEs) for the Stryker Program and Future Combat Systems and represented ODASA-CE in reconciling the LCCEs developed. Mr. Ko joined SAIC where he continued to support ODASA-CE by developing and updating LCCEs and Cost Analysis Requirements Documents (CARD) for U.S. Army and joint ground vehicle programs. At Booz Allen Hamilton, Mr. Ko supported USMC program offices such as PM AAVS, the JLTV Program Office, GCSS-MC, and AC LCL. At Booz Allen, Mr. Ko applied his cost estimating experience to the logistic requirements of a program by developing the cost model library for the LRFS Cost Estimating Tool (LRFS CET) to support AC LCL programs.

Mr. Ko is currently a SCEA Certified Cost Estimator/Analyst (CCE/A) and has obtained the DAU Business Cost Estimating and Financial Management (BCEFM) Contractor-Equivalent of Level III Certification.