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N A T I O N A L N U C L E A R S E C U R I T Y A D M I N I S T R A T I O N O F F I C E O F D E F E N S E P R O G R A M S
ICEAA Luncheon:Portfolio Analysis IntegrationSpeaker: Fana Gebeyehu-Houston (Director, Office of Cost Policy and Analysis)
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Agenda
Overview
– National Nuclear Security Administration (NNSA)
– Organization
– Office of Cost Policy and Analysis (OCPA, NA-143)
– Defense Programs Cost Improvement Initiative (CII)
– Stockpile Stewardship and Management Plan (SSMP)
Capital Acquisition (CapAx) Portfolio Analysis Process Example
– Defining Infrastructure Modernization
– High Level Process Diagram
– Cost Model Overview
– Results
Implementing Results for Capital Acquisition
Implementing Results for Life Extension Programs
2
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
National Nuclear Security Administration (NNSA) Mission
3
The NNSA is an agency within the U.S. Department of Energy responsible for enhancing national security through the military application of nuclear science.
Maintains and enhances the safety, security, and effectiveness of the U.S. nuclear weapons stockpile without nuclear explosive testing
Works to reduce the global danger from weapons of mass destruction
Provides the U.S. Navy with safe and effective nuclear propulsion
Responds to nuclear and radiological emergencies in the U.S. and abroad
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
The Nuclear Security Enterprise:NNSA Sites
4
National Security Laboratories develop and sustain nuclear weapon design, simulation, modeling, and experimental capabilities to ensure confidence in the stockpile without nuclear explosive testing.
Nuclear Weapons Production Facilities conduct a range of stockpile maintenance and management activities.
The National Security Siteprovides facilities, infrastructure, and personnel to the national security laboratories to conduct unique nuclear and non-nuclear experiments essential to maintaining the stockpile.
NNSA Headquarters implements the overall nuclear weapons strategy in collaboration with its Management & Operating (M&O) partners and oversees and coordinates activities to ensure these are accomplished in an efficient, fiscally responsible manner.
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Organization
5
Direct-funded Programs
Support to Deputy Administrator for Defense Programs
(DADP)
National Nuclear Security Administration
(NA-1)
Defense Programs
(NA-10)
Decision Support
(NA-14)
Office of Strategic Planning and
Programming (NA-141)
Office of Budget Formulation and
Execution (NA-142)
Office of Cost Policy and Analysis
(NA-143)
Systems Engineering and Integration
(NA-18)
Research, Development, Test, and Evaluation
(NA-11)
Stockpile Stewardship (NA-12)
Secure Transportation (NA-15)
Major Modernization
(NA-19)
Defense Nuclear Nonproliferation
(NA-20)
Naval Reactors
(NA-30)
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Office of Cost Policy and Analysis (OCPA)
OCPA was stood up in February 2011 to provide the Deputy Administrator for Defense Programs an independent analytical arm
Mission– The Office of Cost Policy and Analysis (NA-143) executes independent cost estimates, leads analyses of
alternatives, and manages cost analysis systems with the Office of Decision Support on behalf of the Deputy Administrator for Defense Programs
Support Functions– Cost Analysis
• Lead independent cost estimates on behalf of the Office of Defense Programs• Develop modeling and simulation tools for cost estimating applications• Provide cost estimating subject matter expertise on behalf of Defense Programs for planning,
programming, budgeting and evaluation (PPBE), program execution/management and strategic messaging
• Develop and provide cost estimating training to cost estimators and program management teams– Capital Acquisition Planning and Analysis
• Develop annual integrated capital asset project schedule for Defense Programs in coordination with other NNSA organizations
• Lead portfolio analysis, integration, and prioritization on behalf of the Office of Defense Programs, including, but not limited to the capital asset portfolio
• Lead portfolio resource planning and evaluation in the DP PPBE process as requested, and• Develop and provide portfolio integration training materials to program management and program
execution members, including, but not limited to analysis of alternatives and capital asset portfolio training
6
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Early Wins
2011 B61-12 Life Extension Program (LEP) Independent Cost + Schedule Estimate– Key Outcomes:
• $7B estimate vs. $4B
• FY19-20 First Production Unit vs FY17
2012 W76-1 LEP Fixed/Incremental Production Study– Key Outcome:
• Provided alternative funding scenario based on actual cost data to address funding cuts during ramp up to Full Rate Production (FRP)
2013 CBA of Legacy Weapon Modernization Plan vs Administration’s 3+2 Strategy– Key Outcome:
• Analysis used to justify mod consolidation and interoperability
2013 Independent Estimates for Long Range Standoff Warhead AoA
2013 Estimate for Mixed Oxide Fuel Facility operating costs for Deputy Administrator– Key Outcome:
• Provided life cycle costs that informed project cancellation decision
7
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
NA-10 Initiated the DP Cost Improvement Initiative (CII) to Address Concerns from GAO and Congress
The DOE received substantial criticism of highly inaccurate cost estimates from both GAO and Congress
The CII outlined 7 principles for near-term cost estimating improvements and future cost estimating leadership including:– Principle #1: Improving Project Work Scope and Requirements
– Principle #2: Improving Resource Loaded Schedules
– Principle #3: Addressing Management Reserve and Contingency
– Principle #4: Improving Cost Estimating and Analysis Communication
– Principle #5: Ensuring Accountability
– Principle #6: Developing a DP Cost Database
– Principle #7: Enabling 21st Century Cost Estimating
8
OCPA was tasked to address and implement the 7 principles within the Office of Defense Programs (DP)
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Addressing Enterprise Level Challenges
9
Built CapabilityIndependent Cost EstimatesAnalysis of AlternativesCost Analysis
Tied to Programmatic Milestones
AcquisitionAd Hoc
Enabled Stakeholder SupportFederal Program OfficesM&O ContractorsCongressional StaffInteragency
Applied capability to PPBE + acquisition process using SSMP, AoAs, and Capital Acquisition as
tools
Established the Cost Estimating Analysis Group and Cost Estimating Community of
Practice to increase quality across the enterprise
Cost Improvement
Initiative
CII was developed to address enterprise-level cost estimating and analysis challenges
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Schedule for FY 2019 Stockpile Stewardship and Management Plan (SSMP)
10
Develop schedule & lessons learned
MAR 2017
Review design definitions
APR 2017
Initial technical assessment of project scope
MAY 2017
Multiple reviews by SME, Program Office
and NA-143
JUN – OCT 2017
Update models & produce estimates
NOV - DEC 2017
Present draft LEP estimates & collect
feedback
JAN 2018
Finalize estimates, draft cost chapter, publish
FY 2019 SSMP
FEB/MAR 2018
Validated project scope
Validated SME InputInitial Estimates
Published FY 2018 SSMP
Nov 2017
Key Deliverable
Key DeliverableKey Deliverable
Final DeliverableTo Congress
FY 2018 SSMP
1.
2.
3.
4.5.
6.
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Product, the Annual SSMP
11
SSMP is a 25-year Program of Record with Costs forDefense Programs
Cost Estimates for future acquisitions are based on actual costs of completed projects
DP standard Work Breakdown Structure (WBS)
Definitions and assumptions are documented and consistently applied across SSMP by Subject Matter Experts (SME) from all PO’s, Labs, and Sites
SSMP estimates include an uncertainty range based on SME assessments and regression error
SSMP Cost Estimating process is a flexible tool that has been used to answer many ‘WHAT-IF’s’ in short time
periods
FY15 SSMPPublished April 2014Data through Dec 2013
FY 16 SSMPPublished Mar 2015Data through Dec 2014
FY 17 SSMPPublished Mar 2016Data through Dec 2015
FY 2019 SSMPPublished Mar 2018Data through Dec 2017
FY 18 SSMPPublished Nov 2017Data through Dec 2016
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
CapAx ProcessDefining Infrastructure Modernization
12
‘The most important [modernization] metric is the average age of facilities and weapon systems’– Gen. Hyten, US STRATCOM; NA-1 Town Hall at DOE HQ; May 15, 2018
10 % of NNSA’s assets are Major Facilities that would require line-items ( > $20 M) to replace The Capital Acquisition (CapAx) process plans, programs, and executes cost and risk-informed
modernization strategies The CapAx process uses Average Age and Deferred Maintenance as the primary metrics for HQ-level
planning and communications with external stakeholders
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
CapAx - High Level Process Diagram“Building the Process between Demand & PPBE”
13
M&O Site Staff ProjectProposals
Infrastr. D
eep D
ives
M&O Site CorporateProposals
Cap
Ax
Data C
alls
Determine
FederalSponsorship & Capability
Develop Ind. Cost Estimates
Federal Proposal Prioritization
Align With FederalModernization Strategies
RDT&E(In Development)
U
PuLi
Tri.
?
??
Ind. Schedule Development
MAPRecapitalization Process
Cap
Ax
Ou
tpu
ts890 SNL C972 SNL
Kauai 891 SNL
961 SNL 970 SNL
STAR ATL Trit Dev Lab
Pit Prod. HEF NGE 960 SNL DAF-2 ETC 6586 SNL
MSF DUE WETL RRF PX Cells WEF Surv NDC SNL Saturn WMESF
ECSE ASD TPC TMC ECFM WEF Power FSI HB Lab NDE C966 Tonopah TEF DCS
UCEP LPC MaRIE EC3E EMCF Z-Next 9215 Y12 C914 SNL C979 Sigma CMC
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Funded Defunded Unfunded
# C
D-0
Pla
nn
ed
FY19 Request:
890 SNL C972 SNL
Kauai 891 SNL
961 SNL 970 SNL
STAR ATL Trit Dev Lab
Pit Prod. HEF NGE 960 SNL DAF-2 ETC 6586 SNL
MSF DUE WETL RRF PX Cells WEF Surv NDC SNL Saturn WMESF
ECSE ASD TPC TMC ECFM WEF Power FSI HB Lab NDE C966 Tonopah TEF DCS
UCEP LPC MaRIE EC3E EMCF Z-Next 9215 Y12 C914 SNL C979 Sigma CMC
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Funded Defunded Unfunded
# C
D-0
Pla
nn
ed
FY19 Request:
Improved Coordination
WA Line-Item ScheduleSSMP & Roadmap Info
M&O Estimates
Project Proposal
WA Programming Inputs
?
… and Formally Rejected Project Proposals
Portfolio Health Metrics (Age, BCI, MDI, etc.)Note: Nuclear Posture Review and other strategies inform the
Infrastructure Deep Dives, guidance, program-level strategies, and prioritization.
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
CapAx Planning Process for the FY20 SSMP Cycle:Cost Estimate Development
14
MARCH
Develop Annual Process and Provide Guidance
APRIL - MAY
Collect Updated Proposals and determine prelim. sponsorship
MAY - JULY
Collect likelihood of failure & cost estimation data on all proposals
JULY - OCTOBER
Program Reviews and Final Sponsorship Decisions
NOVEMBER
Update models & produce initial estimates & ADA Briefings
DECEMBER
DADP/ADA Approval of DP Schedule
JANUARY
Publish DP Schedule in SSMP
Issue FY+3 Programming Guidance
Identify and implement process and model improvements based on lessons learned from FY19 SSMP cycle
Continue to improve historical cost basis
Support FY20 Programming activities
Produce initial cost and project duration estimates for every new construction project
proposalConduct site visits (roadshow) to present
estimates and solicit feedback
Finalize project estimates
Integrate DP approved line-item schedule into a portfolio level cost profile
Review and validate site data received
Collect Section 2 and 3 data from sitesSection 3 Data requested:• Proposed CD-4 date• GSF by Hazard Category• Equipment (unit of measure, metric
range, % by complexity)• Site cost estimate (low, high)
Process and model Improvements:• Fidelity and validation of site technical
inputs• Modeling of OPCs• Equipment cost modeling• Historic Data Collection and Validation
Provide input to FY20 SSMP and FY21 Programming
Feedback requested from sites:• Identify and disposition major differences
between site and CapAxestimates, if any• Additional clarification on historic project
data • Cost model areas of improvement
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
0
5
10
15
20
25
30
35
$- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000
Du
rati
on
(Ye
ars)
BY$18M
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
BY18
$M
OPC TEC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$- $1.0 $2.0 $3.0 $4.0 $5.0
Pro
bab
ility
BY18$B
Cost Model Overview
15
Program Priorities
Fiscal Constraints
Normalized NNSA historic project costs
Future Project Information:programmatic and technical
Cost Estimating Relationships (CER)
Add-on: Custom Glovebox CER
Total Project Cost represented as 2 S-curves
(TEC/OPC)
Historic NNSA project durations
Total Project Cost from CER
Estimated Project Duration
Schedule Estimating Relationship
Cost Phasing Model
NNSA historic project phasing
Planning Cost Profile for the DP Construction Portfolio
Idealized Cost Profiles for both TEC and OPC
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
FY2020 SSMP Portfolio Level Results
16
14 of the 25 projects submitted in the FY2020 SSMP cycle would require a CD-0 prior to FY2021 to meet the M&O provided mission need date
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
CapAx Cost Model Results:Strategic and Consistent Communication Through
the SSMP
17
FY19 SSMP: $61B - $90B, 64 projects, over a 25-year timeframe
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
2 months 1 month 6 months 2-14 months* 7 months Feb 20XX Oct 20XX
Conceptual Design* CD-1
AoA Schedule LogicPlanning to Programming
12-24 months
18
Sept 20XX-1
CD-0 to PED Funding: 2-3 Years
Develop Basis of Estimate documentation to support
CD-0 activities
Conduct AoA Planning, Cost Estimating, and
Reporting
Support programming and conceptual design
activities
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
The Result: AoA Schedule
19
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Similar Process for Estimating LEP Costs
LEP Development (RDT&E)
– Total development costs are based on W76-1 and B61-12 actuals to date adjusted using SME agreed WBS complexity factors
– The total development cost is spread annually based on the standard Rayleigh development profile
– Development cost models are used for quick-turn answers to what if’s
LEP Production (Procurement)
– Annual production costs are based on fairly standard Cost-Growth models derived from the W76-1 actual production quantities and costs to date.
– Production cost models are used for quick-turn answers to what if’s
20
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Results, Independent Program Estimates
21
Future Years are represented the same as they are currently
Future SSMP graphics will include historic budget data
Historic budget appropriations will be included
6.X phases will be included
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
2018
22
25 Year LEP Portfolio Estimates
FY18$
25 Year SSMP Window
0
1
2
3
4
5
6
99 01 03 05 07 09 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
W76-1 $6.4
B61-12
$7.4 - $9.3
W80-4 $6.7 - $10.5
IW-1 $8.6 - $14.8
IW-2 $9.5 - $15.8
IW-3 $9.1 - $15.1
B61-13 $9.2 - $11.6
2043
N AT I ON AL N U CL E AR S E CU R I T Y AD M I N I S T R AT I ON OFFI CE OF D E FE N S E PR OG R AM S
Questions?
23