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Cost Benefit Optimisation to Achieve Affordable Force Structures

Models Track

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This paper will describe the application of parametric cost models to the problem of selecting the optimum Force Structure when limited defence budgets impose considerable restrictions on the shape and magnitude of the armed forces.

The use of Cost Benefit analysis by means of a Combine Operational Effectiveness and Investment Appraisal (COEIA) has been a methodology used to select alternative Force Structures in many procurement agencies. It is now possible to optimise this process through the linkage of parametric models and optimisation tools such as Phoenix Integration’s Model Center.

The objective of this study is to develop the optimum Force Structure, within a specified budget, which provides the most benefit in terms of the measure of effectiveness.

This paper will describe the methods and processes used to establish the measure of effectiveness and cost estimate for each of the systems under consideration. It will demonstrate practical usage of the parametric models and linkage to optimisation tools such as Model Center including techniques resulting from this study so far and planned future research.

The technique is transferable and equally applicable to other situations where multiple trade-off of cost and benefit exist.


Dale Shermon
Principle Consultant, HVR Practice, QinetiQ
Dale Shermon is a Principle Consultant responsible for the Cost Management Through Life section in HVR Practice within QinetiQ. Dale has presented courses in fundamentals of cost estimating, hardware estimating, software estimating, life cycle cost, Cost Estimating Relationships, Information Technology, risk analysis and supplier assessment in the UK, Italy, USA, Sweden, Australia, Singapore, Taiwan and Germany. He has conducted consulting assignments in UK, Italy, France, Australia and the Netherlands. He was responsible for the development of the “PRICE HL Questionnaire” within the PRICE Estimating Suite and the TruePlanning for Concepts methodology.
Dale was the editor and major contributor of the Gower publication “Systems Cost Engineering” (ISBN: 978-0-566-08861-2) which was published in July 2009.
Dale was the first European to become an International Society of Parametric Analysts (ISPA) Certified Parametric Practitioner in 2003. He has been the tutor for the “Cost Estimating Relationships” session of the ISPA Professional Development Training at the 2004, 2005, 2006 and 2008 conferences and in 2009 was the tutor for “International use of Parametrics” session.
He was the first European to be awarded the ISPA Frank Freiman award in 2009 for lifetime contributions to parametric estimating.
Dale was previously working as a Senior Executive Consultant within PRICE Systems Ltd providing training, consulting and support in Northern Europe. Prior to this Dale was a Cost Forecaster within Pricing and Forecasting Group (PFG) a support group of the Defence Procurement Agency (DPA) part of the UK Ministry of Defence (MOD). He headed a cell studying submarine platform Whole Life Cycle (WLC) Costs that supported DPA project approvals. He has been parametric cost estimating since 1987.
Dale has held estimating positions in various defence and aerospace companies including. Matra Marconi Space, British Aerospace (Space Systems) Ltd, British Aerospace (Dynamics) Ltd. and Rolls-Royce Ltd. Military Engine Group. During this career he has participated in numerous proposals and studies in engineering fields as varied as satellites, missiles and aero-engines. During his period in the MOD he performed High Level Studies covering all of the armed services.
Dale has presented papers to the European meeting of Space System Cost Analysis Group (SSCAG) in Toulouse, France; the PRICE Symposium in Nice, France, Cambridge and London UK also at the International Society for Parametric Analysts (ISPA) Conferences in San Diego, California; Frascati, Italy; Denver, Colorado; Seattle, Washington, St Louis, Missouri, New Orleans, Louisiana and Orlando, Florida. This final paper “If a little bit of Knowledge is dangerous… what is a lot of Knowledge?” presented with the UK MOD was awarded Best Applications Track Paper for the conference. At ISPA, Seattle the paper entitled “Creating True Concepts, a methodology, not a model” was awarded Best Hardware Track Paper 2006.
He has had articles published in the “Project” magazine of the Association for Project Management, “The Cost Engineer” the journal of the Association of Cost Engineers and the “Defence Management Journal” (DMJ) the management journal for the United Kingdom (UK) Ministry of Defence (MOD).
Dale has a Bachelor of Arts Degree from the Open University and is a Fellow of The Association of Cost Engineers (ACostE) and member of The Association of Project Management (APM). Dale has a Certified Diploma in Accounting and Finance from the Association of Chartered Certified Accountants (ACCA).

Zachary Jasnoff
PRICE Systems
Zachary Jasnoff is a Solutions Architect Director for PRICE Systems, LLC. Headquartered in Mt. Laurel, New Jersey, PRICE Systems provides advanced modeling software and expert professional services to government agencies and corporations throughout the United States and around the globe.
Mr. Jasnoff has over 25 years experience in Life Cycle Cost estimating on a wide range of defense programs and is an acknowledged expert in Affordability Management. Mr. Jasnoff began his career at the United States Government Accountability Office (GAO) where he was responsible for independent audits and investigations of defense acquisition programs.
Mr. Jasnoff then broadened his career in parametric lifecycle estimating while serving in various positions at Boeing, PRICE Systems (mid-1990’s) and Lockheed-Martin. At Lockheed-Martin he was responsible for managing the Affordability Analysis group, and was the “Cost as an Independent Variable” (CAIV) author for the Littoral Combat Ship Proposal. He has won several awards from the International Society of Parametric Analysts (ISPA) for various presentations on CAIV and advanced estimating methodologies.
Prior to joining PRICE Systems, Mr. Jasnoff served as Vice President/Director of Business Resiliency at JPMorganChase. In this position, Mr. Jasnoff managed a staff responsible for developing new models for measuring resiliency, value-at-risk and Total Cost of Ownership.
Mr. Jasnoff is also a firm believer in lifelong learning and, in August 2006, received his M.S.E in Technology Management from Penn Engineering and The Wharton School at the University of Pennsylvania. While at Wharton, Mr. Jasnoff was part of a team that developed intellectual property for the financial sector in Business Resiliency and Risk Management. He also holds an M.B.A from American University and B.A. from Villanova University.