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Industry: Email Alert RSS FeedArmy set to introduce "CAT": Cost As an Independent Variable analysis tool - CAIV - Reducing Total Ownership Costs
Program Manager, Jan, 2002 by Terrell W. Mathews
The Assistant Secretary of the Army for Acquisition, Logistics, and Technology (ASA/ALT) Army Total Ownership Cost (ARTOC) Directorate designed, developed, and tested a beta-version of a Cost As an Independent Variable (CAIV) analysis tool. Dubbed CAT, for CAIV Analysis Tool, PM Teams may use CAT to perform CAIV analysis of their proposed products and product improvement initiatives. CAT is a Microsoft[R] Excel(c) tool that offers many advantages:
* Provides a point-and-click user interface to navigate through the data entry menus.
* Presents real-time CAIV Analysis in a graphical chart.
* Implements the latest version of DoDI 5000.2.
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* Adheres to MIL-HNBK-881B Work Breakdown Structure (WBS).
* Allows users to view Total Ownership Costs (TOC) at various WBS levels.
* Summarizes TOC into apportionment categories with pie and bar charts.
* Interfaces with Tecelote's Automated Cost Estimator Integrated Tool (ACEIT(c)) used by the Army's Cost and Economic Analysis Center (CEAC).
CAT's Start Menu, consisting of the following 14 steps, allows the Program Management (PM) Team to easily point-and-click through the data entry menus:
Step 1 Enter the Point-of-Contact's Information
Step 2 Enter the Product's Description
Step 3 Enter the Start Year and Program Schedule
Step 4 Enter the number of Major End Items (MEI) per Battalion
Step 5 Enter the Battalion Fielding Plan
Step 6 Enter the Battalion Disposal Plan
Step 7 Enter the Procurement Plan
Step 8 Enter the Number of and Cost for Personnel in a Battalion
Step 9 Enter the Cost for Each Sub-System
Step 10 Enter the Performance Parameters for Each Sub-System
Step 11 Enter the Fuel Cost
Step 12 View the CAIV (Cost As an Independent Variable) Charts
Step 13 Select the Sub-Systems
Step 14 View the Acquisition Phase and Fund Information
A CAIV analysis, including a CAIV scatter chart in Step 12 (Figure 1), is immediately available to the PM Team after they fulfill the initial 11 process steps. After the Team selects the component or sub-system in Step 13, CAT allows the Team to view the planned expenditures by acquisition phase and by appropriation fund.
Provides Real-Time
CAIV Analysis
Upon completing the 14 steps, the PM Team arrives at a CAIV and Fund analysis. CAT allows a PM to more easily select the best product based upon performance vs. TOC. Figure 1 provides an example of a CAIV scatter chart, showing real-time CAIV analysis.
The CAIV scatter chart plots the normalized performance as a function of TOC. Using Figure 1, for example, users can easily determine that CAIV HyperSpectral Imagery (HSI) provides little additional performance and costs about $175 million more than does HSI 3 over the life of the hyper-spectral component. This analysis is one of the tenets of CAIV--best performance/less TOC. How does CAT assist the Team in performing CAIV analysis? The following discussion provides a cursory description of CAT CAIV.
The PM Team must provide cost and performance estimates to generate the CAIV graphs. CAT allows the PM Team to enter a product's estimated cost for Research, Development, Test & Evaluation (RDT&E); Procurement; and Operations and Support (O&S), which includes Annual Integrated Logistics Support [ILS] and Training Costs.
After the Team provides the cost estimate, they enter the anticipated performance of the component with respect to the Key Performance Parameters (KPP), Measures Of Effectiveness (MOE), and/or Measures Of Performance (MOP).
CAT normalizes the performance in order that any weight factors the Team chooses to use are meaningful. For example, if an MOE required an airborne electronic intelligence system to detect emitters at a specific range and within a specific time interval, the Team might consider the altitude and the speed at which the various aircraft candidates can operate.
Typically, altitude is measured in thousands of feet and speed in hundreds of knots. When the altitude is on order of magnitude higher than speed, the Team is able to understand one reason why CAT allows them to normalize performance. Therefore, CAT assists the PM Team to avoid induced weighting anomalies. Figure 2 illustrates the concept behind the normalization algorithm.
After normalizing the performance, CAT immediately generates a CAIV chart that graphically compares the performance as a function of TOC for the PM (Figure 1).
Implements DoDI 5000.2,
Oct. 23, 2000
CAT summarizes TOO for each of the phases defined in the latest version of DoDI 5000.2:
* Concept and Technical Development (C&TD)
* System Development and Demonstration (SD&D)
* Production and Deployment (P&D)
* Operations and Support (O&S).
Another useful advantage of CAT is the inclusion of the online phase and subphase definitions. The definitions are displayed using the pop-up technique. By merely placing the cursor over the phase or sub-phase title, CAT automatically displays the definition exactly as it appears in DoDI 5000.2.
Adheres to Military Handbook 881B (MIL-HNBK-88lB) Work Breakdown Structure
CAT describes three generic products in accordance with the WBS defined in MIL-HNBK-881B. Currently the three generic products are an aircraft system, a ground system, and a common ground station. Under a ground system, for example, CAT displays a Work Breakdown Structure for a "PRIMARY VEHICLE" as defined in MIL-HNBK-88lB. Underneath "PRIMARY VEHICLE" are the other components such as "HULL/FRAME" or "SUSPENSION/STEERING."
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