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Choosing the options : mystery or method ?
Society for Cost Analysis & Forecasting Workshop 21 April 2010
George Pickburn FORS FIMA CDipAF
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Everyone talks about the weather
but nobody does anything about it.
Mark Twain
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
SITREP
• Resource allocation studies – structured approach• Rigorous Operational Research methods for benefits
measurement & optimisation• Costing well understood (?)• Endorsed at top level – the Combined Operational
Effectiveness & Investment Appraisal (COEIA) in MOD• But . . . . Whence the options?
– Scope for manipulation– Entryism at programme level
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Resource Allocation Study
Understand client domain
Identify client’s values and the benefits he seeks
Propose methods to evaluate benefits
Instantiate the methods - modelling
Execute the methods
Trade evaluated benefits with costs
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Resource Allocation Methods
• Extensive suite of techniques . . . .
• . . . all grounded at conceptual / theoretical level
• . . . structured, explainable, approaches
• . . . yielding quantitative assessments
• . . . benefits measurement
• Optimisation methods . . .
• . . . well developed
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Cost estimation
• Highly developed – management accounting paradigm
• But with question marks . . .– time horizon ?
– “through – life” ?
– inflation ?
– technology insertion ?
– ‘private’ finance ?
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Integration of benefit and cost
• Combined Operational Effectiveness and Investment Appraisal : COEIA
• Benefits = “Effectiveness” (non-financial effects)
• Cost = Net financial consequences
• HM Treasury approved – leading to delegated powers
• Congruent with evidence based policy
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
COEIAOperational
Effectiveness / Benefit
Net Cost
A
B
E Do Nothing
C Do Minimum
D
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
OperationalEffectiveness / Benefit
Net Cost
A
B
E Do Nothing
C Do Minimum
D
. . . with uncertainty
COEIA
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
How are the options chosen ?
• New / novel technology
• Professional / emotional attachment
• Pet rocks
• ‘Hidden’ characteristics
• ‘Conspiracy’ of optimism
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Option ‘dimensions’ – PEMP-M
•Processes
•Environment
•Migration
•Procurement Mode
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
G. A. Pickburn 2001
G. A. Pickburn 2001
Environments
Processes
Migrationstrategies
Procurementmodes
Options1…2…3…....n …
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Processes Dimension
• Key consideration in the implementation
• What is to be done (to achieve the declared objectives)
• Why doing it is important
• What are we trying to achieve ?
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Environment Dimension
• Physical resources and conditions in which the system’s processes will be required to operate
• Includes people, buildings, information technology, transportation, . . . .
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Migration Dimension
• How the system implementation with proceed from the current approach and arrangements to the desired future provision and organisation
• Linkage with other related projects
• Wider political considerations
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Procurement Mode Dimension
• How the new arrangements will be resourced
• What relationships with potential suppliers of real resources (equipment, buildings, etc.)
• Partnerships?
• Provision of finance ?
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Defence Lines of Development
Option Dimensions
Processes Environment Migration Procurement Mode
Training P P
Equipment ? P P
Defence Personnel P ? ?Lines Information P
of Doctrine P
Development Organisation ? P P
Infrastructure P ? ?Logistics P P
TEPIDOIL
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Example
Processes Environments Migration Strategy
Procurement Mode
Centralised Bespoke Info Technology Big Bang In House
Distributed amongst Regional Centres
Paperbased Country by country
Conventional Acquisition
Federalised by Country
Spreadsheets & E-mail
Function by function
Partnership with Industry
Regional Independence CD exchange
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Defence Inventory Management
• Stock picture –comprehensive andcurrent
• Ownership• Services’ processes• IT ruggedness• Paper records• Extant arrangements• Role of industry
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
At-sea equipment repair
• Processes derive from equipment failure types
• On land / in harbour / coastal / open ocean
• Equipment development plans
• Who should own the capability?
© Dstl 2001Dstl is part of the Ministry of Defence
28 April 2010
Summary
• Options need no longer ‘emerge from the mist’
• Options dimensions enable open debate about objectives and values
• Processes / Environment / Migration / Proc Mode is a viable dimensions set :
– general purpose
– compact
– proven