an introduction to das ltd - society for cost analysis and ... introduction to das... · –...

©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

mailto:[email protected]



http://www.das-ltd.co.uk/



©Decision Analysis Services Ltd 2013

Agenda


• Company brief

• Case studies

• Questions and discussion


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



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



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



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


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


Agenda


• Company brief

• Case studies



Case Studies (1)


• 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


We can develop force structure-based futures, develop a cost and compare to the macro-economic budget envelopes


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


Latest MoD reporting suggests that total defence spend by 2020 planned to be around £42bn cash


• 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)


Case Studies (2)


• 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


Key components of the model


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


We can develop and visualise the programme on a single sheet


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:


We can rapidly visualise resulting costs profiles - a possible deterrent plan baseline


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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


Case Studies (3)


• 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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UPC $M 2009

Typical UPC 10% confidence 25% confidence 75% confidence

90% confidence Level 0 Estimate SAR Estimate

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Cost Forecasting Results


• 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


Cost Forecasting Context Results


• 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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ISD

BME, kg

Past Data

Estimate

Mean

10% Confidence

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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

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2021

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Notes

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elop

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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


Cost Forecasting Spread Results


• 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


Cost Analysis: Historical Trend Analysis (HTA)


• 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.


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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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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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


• 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


Case Studies (4)


• 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

http://www.google.co.uk/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=ikb-zdPF1qtw5M&tbnid=sVsAFSOEnfQOPM:&ved=0CAUQjRw&url=http://117.55.225.121/Publication:Navy_Annual_2007/Up_the_creek_with_a_paddle&ei=loq1UZPtN4af0QWWxYGgBA&bvm=bv.47534661,d.ZG4&psig=AFQjCNFmgFjRDsh-DKiJV35GyvAKfbhmqA&ust=1370938301183976


Measuring the impact of aspirational concepts on the cost benefit envelope


• 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.)


Combining the value frontiers for commercial and military pricing positions allows comparisons to the Defence Capital Plan


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


Agenda


• Company brief

• Case studies



Questions & discussion ?


We would welcome the opportunity for a more focussed discussion aligned with any specific requirements. Please visit our stand or speak to me later.


Contact Details


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
























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