Developing Far-Term Portfolio Cost Estimates for a System of Systems
Traditional cost estimation relies upon data such as requirements, schedules, and relevant historical data provided by a program office to develop an estimate. Significant problems arise for programs with far-term (>10 years) start dates because this data may be unavailable and program offices may not exist. Historically, many commercial and government agencies would either ignore these future costs or develop a simple Rough Order of Magnitude (ROM) estimates. Additional complexities arise when these far-term programs interact with existing near- and mid- term programs. In these complex “system of systems” analyses, decision makers require greater accuracy than is traditionally provided by ROM estimates to enable more detailed trade-off analyses between programs within these systems.
This paper will present a method to provide decision makers the required level of cost and schedule information based upon a detailed understanding of the programmatic evolution from the current “As Is” state to the future “To Be” state. The method was developed in support of the Joint Planning and Development Office (JPDO) in support of the Next Generation Air Transportation System (NextGen).
As part of this effort, the JPDO developed an internal JPDO NextGen Portfolio Analysis Package that details the interagency programs which define the NextGen system. This analysis required detailed understanding of the costs, benefits, and risks that will impact the “system of systems” that define NextGen. With many cost estimates, detailed requirements are often available to base the analysis upon. Even programs in their early phases have some clear definition of the operating environment of the project in question. Unfortunately, when programs aren’t slated to begin for over 10 years, and initial research and development activities are only beginning, it is difficult to develop meaningful cost estimates. This presentation will document how the Interagency Portfolio and Simulation Analysis (IPSA) group within the JPDO took broad requirements statements and developed “Target Programs” that enabled cost estimates to be developed.
Booz Allen Hamilton
Mr. Foley is an Associate with Booz Allen Hamilton’s Economics and Business Analysis group. Mr. Foley has managed projects for both public and private organizations, as well as for international corporations. He has 14 years of professional experience in various aspects of consulting and economic analysis, including financial statement analysis and strategic decision making. Mr. Foley works with Booz Allen’s Economic and Business Analysis (EBA) team supporting both Commercial and Government Agencies with subject matter expertise in business case analysis, financial analysis, and econometrics. He has an undergraduate degree in aerospace engineering, an MBA, and a Masters in Applied Economics. He is a SCEA Certified Cost Estimator/Analyst and holds a Certificate in Forecasting Practice from the International Institute of Forecasters.
Booz Allen Hamilton
Mr. Cappitelli is an Associate on the Economic and Business Analysis Team. He is a subject matter expert in the areas of Cost Estimating, Cost Analysis, IT Capital Planning and Business Case Evaluation. During an extended leave of absence from the firm, he served as a Peace Corps Volunteer in the Kyrgyz Republic where he worked as an advisor to local non-government organizations in matters of organizational strategy and sustainability. His functional areas of expertise include data gathering and analysis, requirements analysis, cost modeling, cost analysis, quantification of benefits, assessment and development of performance measures, quantification of risk, sensitivity analysis, and decision analysis. Mr. Cappitelli has an undergraduate degree in civil engineering, an MBA, and is a Certified Cost Estimator/Analyst.