iceaa luncheon: portfolio analysis integrationwashingtoniceaa.com/files/presentations/2018/12... ·...

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


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


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.


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)


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


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


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)


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


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.


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 18 SSMPPublished Nov 2017Data through Dec 2016


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


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.


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


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


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


CapAx Cost Model Results:Strategic and Consistent Communication Through

the SSMP

17

FY19 SSMP: $61B - $90B, 64 projects, over a 25-year timeframe


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

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https://community.max.gov/x/3gWFQg


The Result: AoA Schedule

19


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


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


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


Questions?

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