SCAF Conference 2011 Cost, Value and Affordability. Optimism or objectivity?

Transcription

1 SCAF Conference 2011 Cost, Value and Affordability. Optimism or objectivity? Bob Barton MD Niteworks Crown Copyright 2011 UNCLASSIFIED 1

2 What happens when you just don't know... Crown Copyright 2011 UNCLASSIFIED 2

3 Historical view MOD is a complex organisation It is large, multi-headed, dispersed It does very difficult things It has to cope with massive interventions (eg political) It is publicly accountable Cost overruns and poor estimating are widely reported But what are the root causes? What drives the bad programmes? Is optimism rife? It s clear that there are systemic problems with cost control The pursuit of certainty is overplayed The desire for control Crown Copyright 2011 UNCLASSIFIED 3

4 Specification and the "Conspiracy of Optimism" *...the so-called conspiracy of optimism, through which the risks and costs in new projects are under-estimated, only to find mushrooming costs later, needs to end... Secretary of State for Defence 22 Feb 2011 Hypothesis The dynamics of the Defence marketplace are different Classic competition is great in purchasing MOD specifications aim for certainty There are no certainties but collaboration, done early, dramatically reduces optimism * In reality: institutionalised dishonesty 4

5 Control or constrain? e.g. specifications The power is in the question not the answer Characteristics of MOD specifications: Produced as replacement a kit or solution focus Done by desk officers often unskilled in requirements management, not current front line generally the answer - with little degrees of freedom Desire to over-specify and this lets industry off the hook!!! Need to understand art of possible, cost range, options 5

6 ..If you want the truth don t expect it to come from a bid Getting the requirement right Not exhaustive, but test the art of possible Being prepared for change Stuff happens the more you experiment the lower the risk Managing Integration begins on day one It s not something you do at the end Knowing where your degrees of freedom are And be realistic about using them Collaboration up front pays dividends It explores the unthinkable, the un-thought-about Prepares the supply base Exposes the performance knees which drive cost 6

7 What goes wrong with MOD model? Ten root causes of problems 1. Strategy written by desk officers not leaders 2. Requirements, specifications, requirements what about outcomes? 3. Too many decision boards, too few decisions, too much scrutiny 4. Strategic mis-match between budget and aspiration 5. Stove piped budgets with no trades across DLODS 6. Inability to make evidenced trades at all levels, poor information 7. Accountability and responsibility not aligned 8. Failure to consider the integration & sustainment early 9. Lack of operating model 10.No common currency or language across the silos Crown Copyright and pride in complexity... UNCLASSIFIED 7

8 Some exemplar drivers of bad practice and cost Requirements vs Acceptance Making it tick box reduces the industrial onus and quality Makes nugatory work for both parties Fails to recognise inherent restrictions, innovation, degrees of freedom Fitness for purpose gets subjugated Project teams/shadowing Poor use of effort make industry do the work, reduce MOD Affordability vs Value for Money Former must surely be the driver Latter is too subjective, fails to force the right thinking Lack of transparency fuels the Conspiracy of Optimism Complex environments cannot be controlled Reduce the complexity or give up the control. Crown Copyright 2011 UNCLASSIFIED 8

9 Breaking the perceptions...we must rebalance our relationship with industry so that we achieve maximum value for money... Competition vs collaboration? Balance, means getting the best of both Secretary of State for Defence 22 Feb 2011 Commercial pressures Acquisition practice Operational needs Commercial pressures Operational needs industry operations Acquisition practice...but how? 9

10 MOD Sponsor The Request model Partners The Question Sector Director Execution Lead PROJECT Core Team Resource Control Team Members Start-up PMs Assurance Technical (Architect, Systems, Modeller) Request Associates

11 What Niteworks delivers reducing the uncertainty, challenging the assumptions, creating value by shaping sounder, effective competition practice How? Rebalancing specification vs need Refining the risk/solution options Assessing the best fit cost options Modelling and architecting Providing intuitive visualisations Supporting a rational, evidenced and less subjective decision process Informs and underpins a faster, more objective approvals and acquisition process QuickLooks Projects Campaigns 11

12 Ten ways to bake-in cost and problems! Can 1. Over specification 2. Short termism 3. Poor Data 4. Lack of Enterprise Approach 5. Failure to address integration early 6. Poor use of trades 7. Not engaging industry in problem 8. Poorly constructed bids 9. Isolated departments/operating centres 10.Lack of configuration control help? 12

13 Some project examples 1. Fires 2. Carrier Strike 3. Facilities 4. Army Equipment Plan 13

14 Future Maritime Fires Key Features A project for IGMR Project team in DE&S Weapons OC on future guns for T26 and other vessels 8 month project, core team of 5 Joint working with customer, Dstl and industry CONEMP, draft reqts, capability and cost model Focussed on gun and wide range of gun and fitting options modelled - approach endorsed by Scrutiny 5 key questions Why do we need a gun? Why do we need to make a decision now? What is most effective option set? What trade-offs are possible? What influences cost? 14

15 Modelling supports both capability definition and decision support Capability definition Decision-support Architecture models Definition Assessment Performance models CONEMP Concept Validation Operational performance through time Throughtime Solutions KSRs URD Target set CRD 5 MCGs Solution options 20 Munitions 3 Platforms Capability Requirements (Effects) User Requirements System Requirements Validation Validation Validation (beyond Niteworks Execution Phase) Option definition Solutions Capability performance Solution performance against user requirement Solution performance against SRD Cost Model Cost model URD score Engagement s Solution differentiators Soft factors Key Requiremen t modelling Option definition Operational analysis Capability modelling Cost modelling 15

16 FMF example decision support visualization 16

17 Benefits and follow-on from FMF analysis All stakeholders actively involved before key decisions Solid basis of evidence, robust analysis A tested and refined model which permits trades between: System of systems and concept of operations Cost and performance OA, Capability and user needs Model handed over MoD staff perform subsequent trades Engaged with Weapons OC Future Business Integration team and Naval Design Partnering team (NDP) Aim to exploit FMF methodology for wider Maritime weapons and support T26 capability decision points 17

18 Carrier Strike Key Features A major project for Jt Cap and Cap DTA to examine CONEMP options for Queen Elizabeth Class Focussed on routine (non-warfighting) ops with a range of employment options Full pan-dlod analysis including costings, with industry and Dstl involvement Flexible model delivered Very well received by Carrier Strike 2* Programme Board Currently discussing with sponsors to refresh in light of SDSR decisions 18

19 MDAL agreed with stakeholders SME judgement of strategic effects in 2 future worlds QEC1 QEC2 JCA QEC Deployment Postures CONEMP Options Master Data & Assumptions List (MDAL) Activity Matrices Non- Warfighting Effectiveness Warfighting Effectiveness Future Combat Air Capability analysis CONEMP Cost- Effectiveness Assessment Force Readiness CSTG elements Cost Analysis Analytical Approach Activity matrix metrics Pan-DLoD assessment of systems by state (location and activity) 19 19

20 Partnering to bring joint MOD-Industry perspective to provision of facilities and support A short study for Director Financial Management Business Strategy & Governance Team Aim to bring an industrial perspective to Improved tradeable requirements Options to improve VfM Models to enable objective objective decisions Industry involvement from outside partnership Discussions ongoing regarding further modelling and option analysis support using breadth of Partnership 20

21 Army Equipment Development Plan (AEDP) Equipment Strategy (Army) Equipment Capability Challenges Defence, Land The SDSR and NSS The Army (Land) Strategy The Requirement The Outputs The Concept In this project Niteworks supported ES(A) by developing: A methodology which would enable the Land environment to mature a vision of issues and risks which would be common across the multiple stakeholders; An information environment which enabled structured interrogation of the information and supported decision making; A way of visualising and navigating the results. Understanding the mechanisms behind cross capability trading Supporting solid enterprise-driven solutions Combining analytical rigour with pragmatic solutions 21

22 AEDP The Requirement Risks Engagement (Top Down) Ownership Visualised Coherence Evidence Decisions Priorities Short and Long Term (0-10yrs) Judgement and Analysis Influence 22

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24 Summary assessment Land equipment capability Assumptions 1. Key assumptions which drive the results Land outputs Deductions/Recommendations 1. The key so what s which form the basis of decisions taken to rectify the key issues identified Organisation Profile: Key Equipment Profile Predicted Defence Cost Profile 24

25 AEDP Summary Solution developed and built using Salamander s MooD (2008), based on a MODAF architecture Output is web published onto DII(S) with a linked information source on Sharepoint so accessible to anyone over DII Managed and maintained by ES(A) staff directly to enable evolution as supporting information matures and changes The solution has successfully linked together evidence, judgement and analysis in order to generate coherent risks, needs and priorities 25

26 Programmes vs Projects a different game intellectual V Vee model Complicated projects Intricacy Waterfall model physical Straightforward projects repetitive Uncertainty Volatile projects nonrepetitive Option model Source: Crown Copyright PA Consulting 2011 UNCLASSIFIED 26 26

27 Programmes vs Projects a different game intellectual V Vee model Complicated projects Emergence model Intricacy Waterfall model physical Straightforward projects repetitive Uncertainty Volatile projects nonrepetitive Option model Source: Crown Copyright PA Consulting 2011 UNCLASSIFIED 27 27

28 ...and finally...value for money and Affordability VfM is an abstract concept, it is wholly subjective Design to cost should be the driver Focus on Affordability and art of possible Trades are needed these need to be informed Not from the abstract but from experience Models can help greatly but are they trusted? Ignorance is not a substitute for objectivity Detail is not an indicator of accuracy Inputs (specifications) do not represent outcomes! 28

29 SCAF Conference 2011 Cost, Value and Affordability. Questions? Optimism or objectivity? Bob Barton MD Niteworks 29