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©Decision Analysis Services Ltd 2013 ©Decision Analysis Services Ltd 2013
This document is Copyright ©2013 of Decision Analysis Services Ltd. Its contents wholly or in part shall not be communicated or copied by any means whatsoever to any third party, individual or organisation or government without consent of Decision Analysis Services Ltd.
An Introduction to DAS Ltd To enhance the ability of our clients to make considered, affordable strategic decisions
Arthur Griffiths
Tel: +44 7792 911279
Email: [email protected]
www.das-ltd.co.uk
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 1
©Decision Analysis Services Ltd 2013
Agenda
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 2
• Company brief
• Case studies
• Questions and discussion
©Decision Analysis Services Ltd 2013
What we do
If you have a complex decision to make, if no-one else can help in the time available, and now you have found us, maybe DAS Ltd can:
Augment your capability to make that critical decision
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 3
©Decision Analysis Services Ltd 2013
Our approach
• Wholly independent of third parties; our analysis is not influenced by outside interests and puts your needs first
• More than a management consultancy:
– bridging the gap between strategy and implementation; DAS supports decision making by distilling complex issues into clear practical outcome focused implementation options for your consideration
– depth of market knowledge; understanding of stakeholders in our core sectors of Defence, Government and Energy informs our work for you
– seek to deeply understand; time taken to understand the issue and holistic operating context (technical, commercial, operational, human and legal) from your perspective and that of your regulators and clients; internal and external
– don’t generate expensive time hungry paperwork; DAS structure information in the format you wish to communicate your decision to stakeholders
• International in outlook; 45% of our turnover is from overseas assignments
• Listen, seek to understand and then apply systems thinking/engineering to evaluate options
• Accredited by UKAS to ISO 9001:2008
• Confidentiality is key; we operate from a secure, 24-hour guarded and serviced office suite; within the UK national security provisions
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 4
©Decision Analysis Services Ltd 2013
Our people
• Values:
– Not afraid to be a critical friend; challenging in a positive task focused manner
– Value long-term relationships based on the quality of their work
– Leave their ego at the door; they are there to achieve your objectives
– Every individuals safety is more important than £
– Hard working with a “can do” attitude
– Proven ability to work with highly sensitive client information; key to everything they do
• A core team of professionally qualified leads and graduates supported by associates:
– Maintains experienced capability to understand your requirement with the flexibility to cost-effectively deliver assignments with teams and specific expertise
– Professionally qualified leads; many years organisation leadership experience and delivery track record in our market sectors
– All our people are incisive driven individuals
– Associates provide specific subject matter or functional expertise
– All develop themselves and our IPR; each person is equipped with system analysis techniques to identify and examine the root information and context that will underpin your decision
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 5
©Decision Analysis Services Ltd 2013
Defence Government Blue Chip Energy
o BAE Systems o UK MoD o Clarion Events o BP
o QinetiQ o National Audit Office o De La Rue o Marine Current Turbines
o Thales o New Zealand MoD o Vanguard Strategy o EDF Energy
o General Dynamics oDEFRA o Lansdowne Partners o Magnox
o L-3 o NHS o Marie Curie Cancer Care o Shell
o Supacat o Dstl o Leighton Contractors Pty o PETROBAS
o HESCO Bastion o Canadian Parliament o The Carlyle Group o AMEC
o Exponent o AWE o NHS o Technip
o Niteworks o US DoD o Foresight Associates / Coca-Cola o Conoco
Our people have worked alongside
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 6
Last year 92% of the previous years DAS Ltd clients re-engaged us on new projects New clients formed 31% of the total number of clients last year
©Decision Analysis Services Ltd 2013
Agenda
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 7
• Company brief
• Case studies
• Questions and discussion
©Decision Analysis Services Ltd 2013
Case Studies (1)
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 8
• Budget & Cost Modelling for Management
We undertook , as a private venture investment, the construction of strategic cost model built on historical trend data to enable the accurate and predictive forecasting of the likely cost of future military force structures. This model was subsequently deployed by Army to inform the likely cost of their future force structure within the overall UK Forces force structure proposed post-SDSR.
Derive rates of equipment capability
acquisition projects
Calculate acquisition costs
Calculate spares, support and fuel costs
Calculate Other support and personnel support
Planned change in force
structures
Required force elements
Calculate frontline and
support personnel
• Use a standard acquisition cycle
• Based on service life
• Use parametrics based on UPC and inventory
• Develop other direct costs associated with force element
• Front line personnel based on force element
• Support personnel uses overhead ratio of frontline personnel cost
• Personnel cost escalation applied
• Define force elements at start and end period
• Costs are reported by capital, personnel and other running costs
• Also broken down by industrial sector
• Define a change in the force structure
©Decision Analysis Services Ltd 2013
We can develop force structure-based futures, develop a cost and compare to the macro-economic budget envelopes
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 9
UK Force Structure
Top down budget envelopes from macroeconomic
models
Force structure options
• Force structures described through elements (high value assets, regiments etc)
• Costs based on manning, operating, “tooth to tail” overhead and cost of acquisition to maintain capability
• Scenarios can be rapidly developed, for example
Cost of running and support
Cost of maintaining capability - acquisition
UK defence budget
SDSR/Carter 2020
Repeat Carter exercise 2020
Eliminate Deterrent 2020
Eliminate Carrier Strike 2020
• Fully implement SDSR and Carter
• Armoured infantry • Armoured Units • Light Role Infantry • Rocket Artillery • Engineer Units • Logistics Units • Attack Helicopters
• SSBN – withdraw fleet (4 boats)
• SSN – withdraw 2 boats
• MCMV – reduce by 1 ship
• ASW vessels – reduce by 2 ships
• Survey Vessel – reduce by 1 ship
• EA tactical aircraft - reduce by 1 squadron – not removed, taken out as part of SDSR
• CVF platforms – withdrawn
• JSF buy reduced – 4 squadrons withdrawn
• Destroyers 4. • Logistics support 6. • SSN escort 2 • Merlin/MASC 1 sqn
ASW & 1 sqn Ca • Strategic
AAR/transporter 1 sqn
• Trainer aircraft reduced according to existing ratios
©Decision Analysis Services Ltd 2013
Latest MoD reporting suggests that total defence spend by 2020 planned to be around £42bn cash
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 10
• Report stated EP will be 45% of total defence budget by 2021 (para.4)
• This would equate to Defence Spend of around £31-34bn (FY11 constant) (@2%pa inflator, DEL or Defence Spend basis in MoD report)
• We can see that this is considerably more than our forecast
– Political will to maintain the %GDP for defence
– Optimistic GDP forecasts post CSR
UK defence EP post Round 12 (Feb 2013) (£M cash)
©Decision Analysis Services Ltd 2013
Case Studies (2)
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 11
• Programme Enterprise Modelling We utilised business modelling techniques in order to be able to synthesise large volumes of data down to a manageable level for a programme of national strategic importance. The output provided key decision makers, for the first time, to be able to respond, at the speed of a strategic discussion, to specific questions or alternative strategies proposed by government
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Derived solution 4 year delay to ISD 3 boats Retain PWR2
Total costs 2009-2014
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Current System Running Costs Future System Running Costs Other Sustainment SWS/Warhead Sustainment Future System Acquisition
©Decision Analysis Services Ltd 2013
Key components of the model
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 12
Individual activity attributes
Programme dates, dependencies
3 - point estimates (cost and timescale)
CERs – impact of timescale on cost
Driver analysis used to inform model inputs
Cum prob S - curves (cost/time)
Budget vs cost profile
Other metric trajectories
• Assess budget vs spend deltas
• Examples may include cost breakdowns by project/ DLoD , budget holder etc
• Project progress used to calculate other metrics
• May include capability measures
• Risk analysis used to give confidence on key milestone dates
• Confidence intervals on total budget needed within various
breakdowns e.g.
may include budget holder/ DLoD
Output types Required inputs
©Decision Analysis Services Ltd 2013
We can develop and visualise the programme on a single sheet
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 13
2009 2014 2019 2024 2029 2034 2039 2044 2049 2054
Vanguard - In ServiceVanguard - Life Extension
Vanguard - DisposalVanguard - Decommissioning
New SSBN - Pre MGNew SSBN - Development
New SSBN - ProductionNew SSBN - First of Class Production
New SSBN - Rest of Class IntroductionNew SSBN - In Service
Dounreay - Capital InvestmentDounreay - Operating
Core Factory - Capital InvestmentCore Factory - Operating
Devonport - OperatingDevonport - Operating
Faslane - OperatingFaslane - Capital Investment
Faslane - Operating
Barrow - SustainmentRolls Royce - Sustainment
D5 - In ServiceD5 - Life Extension
New Missile - Concept StudiesNew Missile - Development
New Missile - ProductionNew Missile - First of Class Production
New Missile - In service
Coulport - OperatingCoulport - Capital Investment
Coulport - OperatingKings Bay - Operating
Warhead Capability - ServiceCurrent UK Warhead - In Service
Current UK Warhead - DisposalCurrent UK Warhead - Decommissioning
New Warhead - Pre MGNew Warhead - Development
New Warhead - ProductionNew Warhead - First of Class Production
New Warhead - In ServiceNew Warhead - Integration
AWE - OperatingAWE - Capital Investment
AWE - Operating
Firing Chain - OperatingFiring Chain - Development
Firing Chain - Production
Transportation - OperatingRanges - Operating
Central Staffs - Operating
USA New Missile - DevelopmentUSA New Missile - Production
USA New Missile - In ServiceUSA New SSBN - Production
USA New SSBN - In Service
Astute - Production
Deterrent Schedule - BaselineStudy Scenario:
©Decision Analysis Services Ltd 2013
We can rapidly visualise resulting costs profiles - a possible deterrent plan baseline
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 14
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0 AWE Infrastructure C&C Capital C&C Operating Infrastructure Op Missile Operating
Warhead Capital Warhead Operating Infrastructure Capital Missile Capital SSBN Capital SSBN Operating
Total annual Successor cost (£m at constant 2008 e.c.) broken down by key cost elements
• Only a limited number of programme elements can be realistically adjusted to meet affordability and/or schedule targets
• These include:
• SSBN acquisition
• SSBN operating
• SWS acquisition
• Infrastructure capital investment (AWE has been assumed to be ring fenced)
ISD New SSBN
IG New SSBN
ISD New warhead
SSBN prod
Warhead prod
ISD New missile
Missile prod
SSBN operating
SSBN capital
Missile capital
Infrastructure capital
Adjustable programme elements
Illustrative
©Decision Analysis Services Ltd 2013
Case Studies (3)
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 15
• Equipment Cost Forecasting and Analysis
We are able to provide independent estimates of the WLC’s for a wide range of defence equipment from the earliest stage of the life cycle. Using our in-house developed cost models we can also undertake an assurance functions on estimates provided by industry and other sources. Our models are built on an extensive data base of project outturn costs collected from open literature sources have been used for both government and industry.
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1000
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UPC $M 2009
Typical UPC 10% confidence 25% confidence 75% confidence
90% confidence Level 0 Estimate SAR Estimate
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139
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 50 100 150 200 250
Cumulative Probability 25% percentile 50% percentile 75% percentile Mean
©Decision Analysis Services Ltd 2013
Cost Forecasting Results
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 16
• This results screen contains a review of the system, cost estimate and statistics
Save button allows user inputs to be saved
Navigation buttons to return to main menu, change model, return to last input form or display more results
Notes button to record details about current dataset
Print button to print user inputs
©Decision Analysis Services Ltd 2013
Cost Forecasting Context Results
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 17
• The second results screen shows the estimate in the context of outcomes and trends of past projects of a similar kind for weight, cost and time
Results - Fighter Strike Aircraft (new engine) : JSF new engine
Economic conditions: 2012 £M
Unit Costs (£M) : 125.09
Current project in context of Fighter Strike Aircraft (new engine) past projects
Additional Context Plot Data :
Context Plot Settings : Title ISD BME, kg
Production Cost
(£Abs) Project
Technology
Year (MG)
Development
Time, yrs
Development
Time SE, yrs
Set Period - Start L0 2018 20240 229,000,000 USER DATA 2000 11.70 Adjusted user input time for new design from new
- End L2 2018 20240 379,380,000 Specific Equipment 2000 11.62 2.31
Units Budget 2018 20240 Analysis of 11 Fighter Strike Aircraft (new engine) projects enables refinement of this context
Note: Minimum 5 years displayed from start year (Any blank value in row excludes data from plot)
Context Data:
Project ISD
Production
Cost/BME, kg BME, kg
USER DATA 2008 7,476.70 11,899.69
A4B Skyhawk 1956 1,068.30 4,899.00
F-104A-D Starfighter 1958 1,183.05 6,397.00
F-4A/B Phantom II 1961 1,451.98 12,700.00
F-111A Aardvark 1968 2,142.71 20,943.00
Harrier GR1 1968 2,164.43 5,491.00
F-14A Tomcat 1972 2,566.63 17,650.00
AV-8A Harrier 1968 2,073.02 5,656.00
F-15A Eagle 1974 2,925.02 12,973.00
Tornado F2 1983 3,076.43 14,500.00
F-16A-D Falcon 1979 3,705.13 8,573.00
F-15E Eagle 1988 3,576.28 14,515.00
F/A-18A-C Hornet 1980 4,397.73 10,810.00
T-45A/B Goshawk 1992 7,096.49 4,461.00
Gripen 1995 5,788.43 6,620.00
Rafale M 2001 5,694.47 9,670.00
Eurofighter 2003 6,463.13 9,999.00
F-22 Raptor 2005 11,049.83 19,700.00
Rafale F 2004 5,353.03 -
F/A-18E/F Super Hornet 1999 3,887.90 -
Quoted values may differ somewhat from the value here if, as is not unknown, someof the costs of the project are carried by budget lines
other than the project itself or if the budget line for the project supports part of other projects also. As unit program acquisition cost.
No Context Size Data Available No Context Data Available
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1954 1964 1974 1984 1994 2004 2014
ISD
BME, kg
Past Data
Estimate
Mean
10% Confidence
25% Confidence
75% Confidence
90% Confidence
100
1000
10000
100000
1954 1964 1974 1984 1994 2004 2014
£
ISD
Production Cost (in £, 2012) per BME, kg
Past Data
Estimate
Mean
10% Confidence
25% Confidence
75% Confidence
90% Confidence
Previous Cost Spread Save Input Data
Past Data Confidence IntervalsPast Data Confidence Intervals
Main Menu Select Model
Include on Charts
Print Inputs
Unit Programme Cost
1954
2021
Abs
Notes
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100
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Dev
elop
men
t Tim
e, m
onth
s
Technology Year
Development times for Major Military Projects from new
Trendline 25% Confidence 75% Confidence Historic Data USER DATA Specific Equipment
Additional user defined points can also be added to each context plot Table shows historical data points
©Decision Analysis Services Ltd 2013
Cost Forecasting Spread Results
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 18
• The Cost Spread results contains outputs in the form of a programme Gantt chart, a breakdown of cash flow costs, line graph of total costs and table breakdown of costs
18
Inputs for user budget can be displayed against total cost
• These results can be saved for use in the Budget model
©Decision Analysis Services Ltd 2013
Cost Analysis: Historical Trend Analysis (HTA)
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 19
• The following chart shows the DAS estimate (red triangle) in the context of historical cost data for logistic supply ships.
Historic Data Points
ISD
Amsterdam 1995
Berlin 2002
Blue Rover 1969
Cimmaron 1981
Fort Victoria 1993
H.J.Kaiser 1986
Largs Bay 2004
Supply 1994
• This estimate sits within the trend lines but to the higher end which reflects the capability of the desired JSS platform.
©Decision Analysis Services Ltd 2013
User Data Selection: User Domain Selection:
Y/N Data Point Y/N Sub Groups
Y A4B Skyhawk Y Fighter Strike Aircraft
Y AV-8A Harrier Y Bomber Aircraft
Y F-104A-D Starfighter Y Tanker/Transport Aircraft
Y F-111A Aardvark Y Primary Trainer Aircraft
Y F-14A Tomcat Y Advanced Trainer Aircraft
Y F-15A Eagle Y Electronic Platform Aircraft (AEW)
Y F-15E Eagle
Y F-16A-D Falcon
Y F-22 Raptor
Y F-4A/B Phantom II
Y F/A-18A-C Hornet
Y F/A-18E/F Super Hornet
Y F/A-18F Super Hornet
Y Gripen
Y Harrier GR1
Y Mirage 2000-5 Mk2
Y Rafale M
Y Rafale F2
Y T-45A/B Goshawk
Y Tornado F2
Y Typhoon (Eurofighter)
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10,000
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1950 1960 1970 1980 1990 2000 2010 2020
Pro
du
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n C
ost
(£
Ab
s 2
01
3) p
er
BM
E, k
g
ISD
Cost/Size Plot for Manned Fixed Wing Projects
Typical Value User Domain Projects 25% Confidence
Trendline 75% Confidence User Selected Projects
Test 1 Test 2 Test 3
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10,000
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1950 1960 1970 1980 1990 2000 2010 2020
BM
E, k
g
ISD
Size Plot for Manned Fixed Wing Projects
25% Confidence 75% Confidence Trendline
User Domain Projects User Selected Projects Typical Value
Test 1 Test 2 Test 3
Include Original Domain Line
Cost Analysis: HTA User Selection
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 20
• The DAS HTA model allows the user to change the data used to generate either the trend line or the predicted range for both cost and time analysis.
Change selected sub
groups to change
domain trend line and
historic data points
shown in blue
Change selected data
points to change
predicted range, and
historic points shown
in green
Graphs to right are
updated automatically
©Decision Analysis Services Ltd 2013
Case Studies (4)
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 21
• Cost Benefit and Option Analysis
We undertook the cost benefit analysis using Multi-Criteria Decision Analysis, or MCDA. It allowed for the overall ordering of options preference choices whilst recognising:
• The need for a structured and auditable framework to disaggregate decision making.
• Accommodation of judgement and hard data.
• A mixture of monetary and non-monetary objectives.
• Sensitivity analysis to test robustness of decisions and outputs.
• Consensus building between decision makers.
Our approach was to develop a model that represents the various capability options that are available to deliver the total MPSC solution
©Decision Analysis Services Ltd 2013
Measuring the impact of aspirational concepts on the cost benefit envelope
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 22
• Enhance option lies on the value frontier representing a best value for money option
• The Enhance plus LCM is only marginally sub –optimal. This is due to Ice Class 1A position ahead in the order of priority
Order of Priority
Option Traded In
0 Renew
1 Military Stability
2 2x Shaft and Tunnel
3 Ships Ops & CPR
4 As New + Crane
5 2Shaft,Tunnel+Thrust
6 Role 2+ Surgical
7 Weatherdeck LIMS
8 70+50(austere)
9 Mini Typhoon GS
10 65t Cranes
11 Organic NH90
12 18kts
13 Hybrid Propulsion
14 120 Berths
15 Vehicle Deck LIMS
16 As Option2 + CH47
17 Ice 1A
18 Deep Magazine
19 2 x LCM
20 CIWS
21 20kts
Renew
Enhance+
Enhance
Value envelope for commercial build positioning (normalised benefit and costs UAC NZ$M 2012 e.c.)
©Decision Analysis Services Ltd 2013
Combining the value frontiers for commercial and military pricing positions allows comparisons to the Defence Capital Plan
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 23
Value frontiers for commercial and naval auxiliary build positioning (normalised benefit and UAC NZ$M 2012 e.c.)
• It appears that if commercial price positioning by the shipyard can be achieved, then the Enhance option falls within the endorsed budget
• Achieving this will be an important aspect of the procurement strategy
©Decision Analysis Services Ltd 2013
Agenda
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 24
• Company brief
• Case studies
• Questions and discussion
©Decision Analysis Services Ltd 2013
Questions & discussion ?
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 25
We would welcome the opportunity for a more focussed discussion aligned with any specific requirements. Please visit our stand or speak to me later.
©Decision Analysis Services Ltd 2013
Contact Details
DAS MP-092 SCAF Vendor Day November 2013 Commercial in Confidence 26
Peter Cook Decision Analysis Services Ltd [email protected] +44 7770 224844 www.das-ltd.co.uk
Arthur Griffiths Decision Analysis Services Ltd [email protected] +44 7792 911279 www.das-ltd.co.uk
Eric Phillips Decision Analysis Services Ltd [email protected] +44 7760 993512 www.das-ltd.co.uk