stracener_emis 7305/5305_spr08_04.23.08 1 system cost analysis dr. jerrell t. stracener, sae fellow...

Stracener_EMIS 7305/5305_Spr08_04.23.08

System Cost Analysis

Dr. Jerrell T. Stracener, SAE Fellow

Leadership in Engineering

EMIS 7305/5305Systems Reliability, Supportability and Availability Analysis

Systems Engineering ProgramDepartment of Engineering Management, Information and Systems

• Cost Analysis Principles• Life-Cycle Cost (LCC) Analysis• System Considerations• LCC Management

– Design to Cost (DTC)– Cost as an Independent Variable (CAIV)

Agenda

• LCC Organization• Warranties/ Guarantees• Wrap-Up

Cost Analysis Principles

• Cost Analysis Essentials– Precise definition of what is being cost– Documentation of assumptions and

constraints– Model tailored to needs of problem and

consistent with existing level of system definition

– Risk/Uncertainty analysis to identify any conditions which could affect a conclusion

– Key limitations

State Objectives

Define Assumptions

Select Cost Element

Develop CERS

Collect Data

Estimate Element Cost

Perform Sensitivity Analysis

Perform Uncertainty Analysis

Present Results

• Six Desired Characteristics of Cost Models– Consistency: Conforms to current cost

estimating practices. This allows the Proposed System to be compared to an Analogous System.

– Flexibility: Constructed so that it is useful in the early phases and can evolve to accommodate more detailed information as the program continues through its life cycle.

• Six Desired Characteristics of Cost Models– Simplicity: Requires only the minimum data

necessary to estimate the cost. More complex models can be used as more data becomes available.

– Usefulness: Provides useful information to the decision makers in their evaluation of support and design tradeoffs.

– Completeness: Models should include all applicable costs for a system’s life.

• Six Desired Characteristics of Cost Models– Validity: Capable of providing logical,

reproducible results.

• Payback Analysis

Time - Years

Payback Period

Crossover PointModified System

Existing System

Life-Cycle Cost (LCC) Analysis

• Introduction– LCC a well-traveled concept for over 30 years– Numerous papers, policies, and decisions

issued relative to LCC over these years– Despite its longevity, a universal

understanding of LCC has not been established– A common definition of LCC terms, processes

and applications is required– LCC or a derivative will exist as long as

controlling program costs is a critical consideration

• Definitions– Life-Cycle Cost (LCC): Total cost to the

customer of acquisition and ownership of a system over its full life. It includes the cost of development, production, operation and support and disposal.

– Cost Effectiveness (CE): Consideration of mission capability, mission reliability and operational availability along with LCC to evaluate competing design, production or support alternatives

• Life Cycle Costing: An analytical study of a system’s live cycle cost – not an exact science

• Definitions– Design To Cost (DTC): Cost is a design

parameter receiving consideration along with performance, schedule, etc. In program decisions. DTC is a management process to integrate cost into design, production and support decisions.

• Scope of LCC– LCC analysis can be applied on commercial

as well as government programs– Existing programs require LCCA - increasing

frequency is expected– LCC analysis is applicable across all program

phases - development, production and use– LCC analysis is applicable to software as well

as hardware– LCC analysis can be performed in constant,

inflated or discounted dollars

• LCC Limitations– LCC outputs are estimates and are only as

accurate as the inputs– Interval estimates (Cost-Risk Analysis) are

appropriate for LCC predicting or gudgeting purposes

– Accuracy of LCC estimates is difficult to determine

– Limited data exists on new programs particularly with respect to operation and support costs

Life Cycle Phase

LCC Analysis: Phased LCC Funding Trends

FundsCommitted

FundsExpended

Definition RDT&E Production O&S

• Cardinal Principles– Not an exact science - highly estimate– No right or wrong - reasonable or

unreasonable– Most effective as a Trade-Off tool– Should employ cost-risk analysis for LCC

estimation– Requires project team approach - need

specialized expertise from the project disciplines

• Cardinal Principles– Should be an integral part of the design,

production and support processes - DTLCC

• Cost Analysis Estimates– As system definition matures, system-

comparable data replaced by system-specific data

– Systems Engineer should be LCC team leader and coordinate input data from team members:ReliabilityMaintainabilityLogistics

DesignProductionCost

• Cost Analysis Estimates– Estimated data is followed by test and

evaluation data which is in turn followed by field data

• Basic LCC ModelsLCC = CA + CS

CA: Acquisition CostCS: Sustaining Cost

CA = CD + CICD: Development CostCI: Investing Cost

CS = COS + CRCOS: Operating and Support CostCR: Retirement Cost

• LCC Objectives– Estimate Costs– Compare Costs– Balance Cost

Acquisition Cost Sustaining Cost

Typical LCC Model StructureLife

CycleCost

Acquisition Cost

SustainingCost

Operating & Support Cost

RetirementCost

1st DestinationTransportation

Installation& System

integration

Support Equipment & Initial Spares

Modification

Packaging & Transportation

Scheduled Maintenance

UnscheduledMaintenance

New/ModifiedFacilities

InitialTechnical

Prime Equip.And Initial

Spares

SupplyIntroduction

InitialTraining

Investment Cost

Development Cost

Software

Prime Equipment

SupportEquipment

SupplyManagement

Energy Consumption

ReplenishmentSpares

Operating

Support Equip.Maintenance

Technical DataManagement

FacilityUsage

RecurringTraining

Software Maintenance

Life-Cycle Cost (LCC) Analysis: Flow

Doctrines•Procurement•Operational•Maint./Support

SystemCharacteristics

StandardFactors

InputData

EstimatesCost

Estimateof

BestEstimateof LCC

Sensitivity Analysis

• LCC Estimating Techniques– Analogy/Scaling– Parametrics-LCC as a function of weight for

example– Engineering (Bottom-Up) Analysis– Vendor Data– Field Data

• LCC Input Data– System Characteristics

Quantity of item under study in larger system

Item unit costItem MTBF/MTBMItem Weight

• LCC Input Data– System Characteristics

Item VolumeItem MTTRQuantity of stock number introduced and

managed support equipment (if applicable) unit cost

• LCC Input Data– Standard Factors

Maintenance labor rates at each maintenance level

Shipping ratesCost per stock number for introductionCost per stock number for managementCost per page for technical data

creation/management

• LCC Input Data– Standard Factors

Attrition rates for recurring trainingFacility space cost factorsSupport equipment maintenance cost

factor

LCC Analysis: Data Paradox

SmallValue

LargeValue

SmallAmount

LargeAmount

Cost DecisionValue

DataAvailabilityV

Availa

• Types of LCC Analysis– Baseline: Evaluates LCC for particular system

configuration for given operational and maintenance policies

– Sensitivity: Evaluates the impact on LCC of changes to the input data to identify cost drivers requiring special attention during the program

– Tradeoff: Evaluates alternative approaches to aid in the selection of the preferred option based on LCC, mission capability, availability and mission reliability

• Types of LCC Analysis– Tracking: Monitors LCC of System over time

to identify variances from baseline and aid in definition of trade-offs to control total program cost

• LCC Sensitivity Analysis– Types of LCC Drivers:

Hardware - LRU/WRA, SRU/SRA, etc.Cost Element - Initial spares, maintenance,

etc.Design Parameter - MTBF, UPC, weight,

LOC, etc.

• LCC Sensitivity Analysis– Common LCC Drivers:

System Usage - Hours, miles, cycles, etc.Unit Production Cost (UPC)Mean Time Between Failures (MTBF)Mean Time to Repair (MTTR)System QuantityExpected Service Life of System

• LCC Applications– Customer

Affordability studies - CAIVSource SelectionDesign Trade Studies - Establishing reliability

and maintainability goals / requirementsRepair Level AnalysisWarranty should cost and cost effectiveness

• LCC Applications– Supplier

Identification of cost drivers for emphasis during program - sensitivity analysis

Comparison of competing design, production and support alternatives - trade-off ranking

LCC Tracking during program - problem isolation

Marketing tool - new and modification programs

Warranty Pricing

• Cost Analysis Considerations– Time Value of Money

Constant Dollars: States all costs in terms of constant purchasing power measured at a given time - also known as real dollars

Inflated Dollars: Cost stated in terms of estimated expenditures at the time the money is spent - also known as then-year future or actual dollars

• Cost Analysis Considerations– Time Value of Money

Discounted Dollars: All costs are referenced to a common point in time based upon the anticipated earning power of money - costs can be in constant or inflated dollars.

Monte Carlo Process

• Random• MTBF

• Labor Cost/Repair

• Unit Cost

• Constant• Number of Systems

• Service Life Period

• Operating Hours

Inputs

Possible Distributions

Uniform

Triangular

Normal

Maintenance Cost Elements

Material

Shipping

Administration

Outputs

• Maintenance Cost Sample

• Histogram

• Statistical Parameters

• Cumulative Distribution

0.2x$P

System Considerations

• Driving System Concepts– Procurement Data

Number of Systems procuredProduction ScheduleInstallation ScheduleDesign to unit production cost (DTUPC)

requirementsFirst destination transportation

requirements

• Driving System Concepts– Operational Data

Number of operational sitesQuantity of systems per siteMission schedule - number of missions per

periodMission Profile - mission length, mission

typeGround operation requirementsMission readiness and reliability

requirements

• Driving System Concepts– Maintenance/Support Data

Number of levels of maintenanceQuantity of maintenance sites per levelLocation of maintenance sitesNumber of systems supported per siteDescription of maintenance at each levelScheduled/preventive maintenance

requirements

• Driving System Concepts– Maintenance/Support Data

Required MTTR at each maintenance levelRequired spares assurance factors and

TATSSupport equipment requirments

Product

•Spares•Technical Publications•Training•Support Equipment

•Availability•Sortie Generation Rates•Basing

•Reliability•Maintainability•Supportability•Testability

Operational

Concept

MaintenanceConcept

SupportConcept

•Organization•Requirements•Schedule Maintenance•Unscheduled Maintenance

RMS as Key System Elements

• Cost-Effectiveness Analysis Outcomes

Effectiveness

•A is preferable IF E is worth more than C

•A is more effective•B cost less

Cost-Effectiveness Factor Interactions

S AnalysisM AnalysisR Analysis

LCC Analysis

A Analysis

CEAnalysis

Mission R

Design to Cost (DTC)

• Establishes LCC as a design parameter - not a consequence of design

• Requires establishment of cost goals, monitoring of these goals and tread-off actions to keep the LCC within these goals (budgets)

• Activity focuses on identifying system cost drivers, potential risk areas relative to the drivers and on-going cost/ scheduled/ performance tradeoffs

• Should be early and continuos

Design to Cost (DTC): Terms

• Design to unit production cost (DTUPC): Concerned with managing UPC goals- includes recurring and non-recurring production cost

• Design to LCC (DTLCC): Concerned with managing the total LCC of a system, including development, investment, operation and support and retirement- focuses on drivers since out-year costs are difficult to manage

Design to Cost (DTC): Terms

• Design to Cost Effectiveness (DTCE): Concerned with managing not only LCC but also other system parameters such as mission reliability, readiness and mission capability

• DTLCC Implementation– Keys to Success

Useable LCC modelReasonable input dataExtensive trade-off analyses- LCC not ony

criterionRelating of results to hardware/software

designImplementation of trade-off decisions into

the hardware/software design

• DTLCC Implementation– Keys to Success

Challenging the performance requirementsAdhering to hierarchy - equipment, cost

category and design driver

• DTLCC– Program trade-off issues

UPC vs. MTBFRedundancy vs. no redundancyBuilt-InTest (BIT) vs. no BITTwo vs. Three-Level maintenanceRepair vs. discardLCC vs. system performanceDifferent sparing assurancesDifferent levels of environmental stress

screening (ESS)

• Trade-Off Process

EstablishBasis ofComparison

IdentifyCandidates

Define Purpose

Select/Develop Model

Secure Input Data

PerformBaselineAnalysis

RankCandidates

PerformSensitivityAnalysis

Select Best Candidate

LCC Vs. MTBF

Cost($)

MTBF (Hours)

Total Life Cycle Cost

Operating and Support Cost

Development and Acquisition Cost

Scheduled Maintenance Trade Study

100 120 1408060

Unsched

Sched 1000

Sched 800

Percent of Predicted Baseline - MTBF

Scheduled Vs. Unscheduled Maintenance

Repair Versus Discard Trade Study

Unit Production Cost (UPC)

Discard

Repair

Staff-hrs per repair

Repair

Discard

12 Staff-hrs

Cost as an Independent Variable

• What is CAIV?– An acquisition strategy/methodology to

acquire and manage affordable systems– Early, continual and consistent focus on

balancing requirements to the program budget

– Establishment and management of cost targets consistent with the program budget

– Diligent use of trade-off analysis between requirements and cost to maintain performance and cost within targets

• What is CAIV?– An extension of DTLCC where cost and

requirements are independent variables not just requirements

CAIV Vision Team Effort

Acquirer Industry

•Define Operational Requirement•Control $•Make Trade Decisions

•Define Capabilities•Make Trade Inputs•Build System

•Mange Contract•Identify Trades

Wrap-Up

• LCC can be controlled on commercial and government programs through the diligent application of CAIV

• CAIV is a management tool to establish affordability and integrate LCC into the design process

• Tradeoffs are the cornerstone of CAIV• CAIV should be applied as early in the

program design process as possible

Wrap-Up

• Team concept is vehicle for a successful CAIV program

• Cost must be a design parameter not a consequence of design

stracener_emis 7305/5305_spr08_04.23.08 1 system cost analysis dr. jerrell t. stracener, sae fellow...

Documents

stracener_emis 7305/5305_spr08_02.14.08 1 systems...

dr. jerrell t. stracener, sae fellow

devilbiss suction unit instruction guide 7305 series ·...

ra 7305 (magna carta for health workers).pdf

7305-03_funciones instrumentadas de seguridad de deltav i

issn 1560-7305 2 (35) 20142/2013 1 issn 1560-7305...

republic act 7305

systems prognostic health management emis 7305 march 28,...

cn sx ruou bia va nc giai khat 1 7305

tonya elizabeth stracener kane, lilith, jesiuts, pope...

+ prevention plan: hepatitis a vaccination jenni stracener...

stracener_emis 7305/5305_spr08_03.19.08 systems...

scarab attack - 7305

stracener_emis 7305/5305_spr08_02.28.08 1 reliability data...

issn 1365-7305 aquaculture economics & management … ·...

1 statistical analysis - graphical techniques dr. jerrell t....

stracener_emis 7305/5305_spr08_03.25.08 system...

7305-09_control de versión

anexĂ - european parliament201… · 7305 11 00 -- sudate...

spectrophotometers models 7300 & 7305 - jenway3).pdf ·...