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© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 1 © 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence
U.S. Army PEO STRI Cost Management
Implementation Anthony A DeMarco
PRICE Systems, LLC
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 2
Outline
Who - PEO STRI Overview – Dr. James T. Blake, SES, Program Executive Officer
Why - Improving Software Cost Estimates – Mr. James A. Golden, Associate Chief Financial Manager – Cost
How – Cost Management Implementation Details – Anthony A DeMarco, President, PRICE Systems
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 3
Washington
Dr. James T. Blake, SES
Program Executive Officer
for
Simulation, Training, and Instrumentation
United States Army
24 October 2013
Approved for public release; distribution is unlimited.
Vision: To be the Nation’s Acquisition and
Contracting Center of Excellence for Training, Testing, and Simulation Solutions.
Mission: Acquire and Sustain Training, Testing,
and Simulation Solutions in Support of the Nation.
Strategic Goals
as of OCT 2012
1.0 - Provide STRI capabilities
to support Decisive Action
Operations
2.0 - Ensure capabilities meet the needs of the
Integrated Training and T&E
Environments
3.0 - Develop a workforce with
expert level acquisition,
technical, and leadership skills
4.0 - Promote and sustain
excellence in the execution of contracting
activities
6 Approved for public release; distribution is unlimited.
7
Simulation Is Safe, Saves Time, Money, Fuel and the Environment
Safety – less training injuries
Minor Fuel Needs
No Ammo Required
Limits Environmental Impact
▫ Air Pollution
▫ Noise Pollution
▫ Terrain Damage
Inexpensive to Operate
Simulation Enhances Live Training Approved for public release; distribution is unlimited.
• Army Training Inventory
• 335,000 training devices
located at over 600 sites
worldwide
• Sustained by 7,000 people
• Valued at $3.9B
• Life-Cycle Management Plan is
required to support training
systems
• MDEP WCLS is PEO STRI’s
sustainment budget line for
Army accepted TADSS
• Field OPS operates 24/7 around
the world – “the sun never sets
on their support”
Life-Cycle Support
Iraq – 0 (As of 31 Aug 13)
Afghanistan – 759
Kuwait – 63
• 850 Field OPS Contractor personnel deployed in SWA at over 25 locations.
• Since March 2003, we have supported over 2,126,000 individual soldier training events in
SWA.
Joint Forces: Army, Navy, Marine Corps, Air Force and SOCOM.
11+ Coalition Nations including the United Kingdom, Australia, Italy, Norway, Poland, France,
Netherlands, Lithuania, Canada, New Zealand and Germany.
More than 560,000 Iraq Army and Afghanistan National Army soldiers trained to date.
Approved for public release; distribution is unlimited.
Foreign Military Sales
52 Active Country
Programs
NZ
Open Cases 204
Open Requisitions 1528
FY13 $ Value $ 451M
Total Value $2.11B
Foreign Military Sales - Across the World
Approved for public release; distribution is unlimited.
Mr. James A. Golden Associate Chief Financial Manager – Cost
Program Executive Office for
Simulation, Training, and Instrumentation
24 October 2013
Approved for public release; distribution is unlimited.
11
Approved for public release; distribution is unlimited.
• Problem: Software development cost estimates may be
overstated by 30-56%, negatively impacting ability to provide
timely and affordable capabilities
• Goal: Significantly reduce growth factors in software cost
estimates:
• Improve AFFORDABILITY of software-intensive programs.
• Deliver more CAPABILITY; eliminate arbitrary growth factors.
• Decrease CYCLE TIME to develop software cost estimates
• DEFENDABLE and CREDIBLE software cost estimates
• Develop solution set using Lean Six Sigma (LSS) process by
initiating a LSS Black Belt project to improve software cost
estimates at PEO STRI
• In Scope
• PEO STRI ACAT II and III programs with a software
development requirement, including:
• All appropriations (RDTEA, OPA, OMA)
• All software development effort (e.g., P3I, PPSS, PDSS)
• Contractor software data
• PM software data
• PEO STRI software data collection process
• Out of Scope
• ACAT I and Non-ACAT programs
• PEO STRI management systems (e.g., CIO-developed, GFEBS)
12
Approved for public release; distribution is unlimited.
• Software Resources Report (SRR):
• SLOC count based on logical lines of code as defined by the
University of Southern California (USC) Code Counting Tool
• Skill hours (Resource Effort)
• Provided to the program office by contractors and
summarized into consolidated report
• Code counts will be automated using the USC Code Counting
Tool and a PRICE Systems provided Excel spreadsheet
• Collection of the appropriate amount of data necessary to
provide defendable cost estimates based on historical data
• Identify and validate a collection process / set of procedures
which minimizes burden / cost impact to the program and
contractors
13
Approved for public release; distribution is unlimited.
• Quantitative Benefits:
• Program cost savings of over $90M indicated by pilot
• Across six years – life cycle usually full operational capability +20
• Using only a 15% reduction in growth factor – actual reduction higher
• Pilot looked at only eight software-intensive programs
• Cost savings on program life cycle costs significantly reduced
• Cost savings can be reinvested in new technology and to reduce funding requests
• Revenue generation increases as PEO STRI lowers cost to take on more work
• Effective measurement of the productivity of contractors’ software development efforts for future pricing/cost estimates.
14
Approved for public release; distribution is unlimited.
• Qualitative Benefits:
• Compliance – valid and reasonable software cost estimate
IAW policy
• Quality – standardized methodology across domains
• Efficiency – faster cycle time to gather data and estimate
costs
• Credibility – defendable estimates based on historical data
• Accuracy – improved accuracy of cost estimates and funding
requests
• Improve contractor software data collection process
15
Approved for public release; distribution is unlimited.
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence
Cost Management Implementation Details
Anthony A DeMarco
PRICE Systems, LLC
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 17
Data Driven Estimation
Not a new idea – just a new focus on what’s behind an estimate
More credible and lends a a sense of defendability to any estimate
“Data-driven” estimation IS…
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 18
Data Driven Estimation
Based on data extrapolation from analogous systems
Based on a model using analogous systems to determine model inputs
Based on a model calibrated to historical data
A “data-driven” estimate MAY BE…
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 19
Data Driven Estimation
Transparent as to what data was used
Obtained from a credible, identifiable source
Clear about how that data was used
A “data-driven” estimate MUST BE…
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 20
How do you achieve Data-driven Cost Management?
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 21
Steps 1 & 7 – Software Data Collection & Integration
Software data collection and analysis to support more defendable estimate
–Army Program Executive Office for Simulation, Training, and Instrumentation (PEO STRI)
–No data collection processes in place
– Pilot involves one large, complex program – two contractors – one does primarily development, one primarily integration
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 22
PEO STRI Data Collection
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 23
Software Pilot – Software Resource Report
Approved for public release, distribution is unlimited
Collection Tool
Unified Code Count (UCC)
Free code counting tool developed by University of Southern
California Center for Software Excellence (USC-CSE)
Implements popular code counting standards
Supports over 21 software languages and performs source
differencing
• Key to identify new, deleted and unchanged code base
Approved for public release, distribution is unlimited
Data Collection Process
What, when and how to collect
Build reporting frequency
Typically every 10-12 weeks
Three lane data collection
Capability Development
Integration and Test
Release
Allows for segregation of effort
in a way that would help
determine productivity levels
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 26
Step 2 – Data Mining & Analysis
Task minimized because we designed the form and the process together!
– Project Attributes measured to match TruePlanning software model cost drivers
– Effort collected by activities and capabilities to align to desired outcomes
–Normalization guidelines developed
–Documentation of these understandings and guidelines in a clear, concise, understandable and repeatable fashion.
–Automation to ease the collection process, ensures consistency in the process and facilitates the process of normalization
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 27
Data Collection – Keys to Success
Use of an Integrated Product Team (IPT)
Data Item Dictionary created to define…. – What data to collect
– A clear understanding of the data and potential uses
– How often to collect it
– How to align project specific data to more general categories (across multiple contractors)
PEO STRI
PRICE
Contractors
Lots of collaboration between PEO STRI personnel, contractors and the PRICE team resulting in…..
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 28
Data Collection – Keys to Success
Requirement added to Contract Deliverable Requirements List (CDRL) making data collection a contractor requirement
Creation of automated code counting tools by wrapping USC’s Code Counting tool with Excel to help ensure consistency of data
Software Resource Report (SRR) developed to align with output of code counting tool, automate mapping processes and align with potential uses
Lots of collaboration between PEO STRI personnel, contractors and the PRICE team resulting in…..
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 29
Step 3 – Turn data into information for estimating
Calibrate the inputs of interest in TruePlanning® using data from TrueFindings ™ – Organizational Productivity
– Functional Complexity by capability by language
Import the calibrated inputs into TrueFindings™ file
Drive inputs values using the “findings” from TrueFindings™ inside TruePlanning® to create defendable estimates.
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 30
Introducing TrueFindings find•ing /ˈfīndiNG/ Noun
A conclusion reached as a result of an inquiry, investigation, or trial.
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 31
Step 4 –Produce Estimates with Calibrated Data
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 32
Step 4 – Contour Projects to FY Funding
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 33
Step 5 – Map to Army Cost Budget Structure
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 34
PEO STRI is doing Data-driven Cost Management!
• Quantitative Benefits:
• Program cost savings of over $90M indicated by pilot
• Across six years – life cycle usually full operational capability +20
• Using only a 15% reduction in growth factor – actual reduction higher
• Pilot looked at only eight software-intensive programs
• Cost savings on program life cycle costs significantly reduced
• Cost savings can be reinvested in new technology and to reduce funding requests
• Revenue generation increases as PEO STRI lowers cost to take on more work
• Effective measurement of the productivity of contractors’ software development efforts for future pricing/cost estimates.
35
Approved for public release; distribution is unlimited.
• Qualitative Benefits:
• Compliance – valid and reasonable software cost estimate
IAW policy
• Quality – standardized methodology across domains
• Efficiency – faster cycle time to gather data and estimate
costs
• Credibility – defendable estimates based on historical data
• Accuracy – improved accuracy of cost estimates and funding
requests
• Improve contractor software data collection process
36
Approved for public release; distribution is unlimited.
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 37
Data Collection - Lessons Learned
Alleviate contractor concern about being ‘measured’ or misuse of data
Facilitate determination of data collection targets
Need buy in from the data collectors
Entire team needs to understand motivation for data collection
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 38
Data Collection - Lessons Learned
Creates consistency
Creates efficiency
Reduces impact on contractors
Promotes harmony
Only means to handle such large code counts / bases
Facilitates normalization and enforces normalization guidelines
Automation is key to success
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 39
Data Collection - Lessons Learned
Communication, teamwork and building trust are paramount
Data needs to be inspected for quality and ported into an environment for easy analysis.
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 40
Conclusions
The need for data driven estimation is driving many organizations in Aerospace and Defense and industry in general to look for new ways to collect and use data
Data driven estimation is really nothing new – we have been using data (real or experiential) to justify our estimates forever. The new requirement is transparency and openness about the data and how it is being used.
To support this effort organizations may need to establish formal processes for collecting their project data. – CDRL, Data Collection Form with Definitions SRR
– Standard Code Counting Tool USC Code Counter
– Standard Estimating Tool PRICE TruePlanning Software Model
When doing this it is important to understand the importance of – Communication
– Automation
– Flexibility
– Buy in across all the stakeholders
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 41
Vision: To be the Nation’s Acquisition and
Contracting Center of Excellence for Training, Testing, and Simulation Solutions.
Mission: Acquire and Sustain Training, Testing,
and Simulation Solutions in Support of the Nation.
Strategic Goals
as of OCT 2012
1.0 - Provide STRI capabilities
to support Decisive Action
Operations
2.0 - Ensure capabilities meet the needs of the
Integrated Training and T&E
Environments
3.0 - Develop a workforce with
expert level acquisition,
technical, and leadership skills
4.0 - Promote and sustain
excellence in the execution of contracting
activities
41 Approved for public release; distribution is unlimited.
© 2013 PRICE Systems, LLC All Rights Reserved | Decades of Cost Management Excellence 42
Questions