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Front Cover Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 1 1

EXPLOITING SIMULATION METHODS TO EVALUATE WHOLE-LIFE COST RISKS Presentation to SCAF 24 November 2009 Colin Smith – Principal WLC Consultant Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 2

Contents Investment Decision Support through rigorous cost analysis across all Defence Lines of Development (DLoDs) ► Introduction: Affordability as a function of planning ► Recognising the constraints on WLCM ► How simulation can help ► Summary ► Questions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 3 3

Contents Investment Decision Support through rigorous cost analysis across all Defence Lines of Development (DLoDs) ► Introduction: Affordability as a function of planning ► Recognising the constraints on WLCM ► How simulation can help ► Summary ► Questions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 4 4

Affordability as a function of Planning (1): Why Worry ? “ the Ministry of Defence has a substantially overheated equipment programme, with too many types of equipment being ordered for too large a range of tasks at too high a specification. This programme is unaffordable on any likely projection of future budgets…….” “……Unfortunately the current system is not able to flush out at an early stage the real costs of this equipment, nor does it make effective prioritisation or rationalisation decisions ” (Review of Acquisition for the Secretary of State for Defence – Gray Report) Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 5 5

Affordability as a function of Planning (1): Designing for Affordability ► Projects do not have access to limitless funds. This means that TLCM must consider affordability vs capability from the earliest stages of the lifecycle. ► The MOD must also be able to make informed and justified decisions regarding capability vs budget. ► The result is that a compromise must be reached between the available budget ……. and the capability that can be procured and sustained for the required system life-cycle. Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 6 6

Affordability as a function of Planning (2): Designing for Affordability Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 7 7

Contents Investment Decision Support through rigorous cost analysis across all Defence Lines of Development (DLoDs) ► Introduction: Affordability as a function of planning ► Recognising the constraints on WLCM ► How simulation can help ► Summary ► Questions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 8 8

Recognising the constraints on WLCM (1): What limits the value of WLCM ? ► WLCM is often limited in value because it must: ► Deliver accurate forecasts of budgeted costs when the least information is known ► Support trade-off and down-selection of options when it is not possible or cost-effective to build a system/process in order to evaluate them Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 9 9

WLC Decisions Need to be Made Early in the Programme Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 10

WLCM is Typically Used to Enable Trade-Off Decisions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 11

Contents Investment Decision Support through rigorous cost analysis across all Defence Lines of Development (DLoDs) ► Introduction: Affordability as a function of planning ► Recognising the constraints on WLCM ► How simulation can help ► Summary ► Questions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 12 12

Simulation will help to reduce decision costs/time Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 13

Simulation Enables Multiple Scenario Modelling ► Simulation Modelling enables evaluation of trade-space through: ► Handling of complex interactions for defined scenarios and Measures of Effectiveness (MOEs) (e.g.) ► Simple mission reliability/availability ► Multiple or multi-cycle operations ► Variation in fielding approaches and availability of assets on cost accrual ► End-To-End (E2E) Logistics Support chain evaluation ► Efficiency of specific Maintenance or Production processes ► Evaluation of service provision metrics and performance achievements ► Through-Life, Cross–Defence Line of Development (DLoD) influences on the capability ► Through-life cost accrual for WLC modelling ► Sensitivity of DLoD drivers on the system Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 14

Simulation Can Evaluate Complex Systems at Low Expense UK Support Environment In-Theatre Support JFHQ WARNING ORDER ISSUED Communications link Force HQ SOSI BG AIR BRIDGE READINESS REPORTS THEATRE HQ/CO Move to FOB OEMs TRANSPORT TO POE SEA BRIDGE Move to Engage LEVEL 3/4 REPAIR APOD/SPOD FOB FACILITY UK MOB LEVEL 2 REPAIR LEVEL 1 REPAIR FACILITY FACILITY PURPLE GATE Vendors SUPPLY/RETURN LADs GPS Store FRTs Force ES (Battn/Coy) GS Coy Service MOVE PEP FORWARD ON DEMAND Suppliers PEP Store A1,A2,B SPARES MOVE DSP FORWARD ON DEMAND DSP Store DSP In- Deployed PEP GENERATE FORCE BALANCE Theatre WFM Storage POTENTIAL SCOPE OF SUPPORT Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 15

Enabling rapid understanding of where costs/risks are driven ► End-To-End Simulation of the Joint Supply Chain to elicit: ► Supply Chain Inefficiencies ► Potential Resource Limitations/ Opportunities ► Long Term Ao of Capabilities ► Support Cost Drivers Identification Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 16

Quickly focus on areas where risks become evident Control Usage ? Improve Flow ? More Spares ? More Personnel ? Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 17

Reducing The Risks Inherent In Project/Program Planning ► Generating common understanding of the support chain as it specifically applies to a project ► Rapidly evaluating multiple scenarios to elicit key drivers – reducing the time necessary to identify trade-off candidates and options for down-selection ► Reducing the cost of assessing project risk by being able to represent the system conceptually rather than having to build it in reality to test it. Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 18

Contents Investment Decision Support through rigorous cost analysis across all Defence Lines of Development (DLoDs) ► Introduction: Affordability as a function of planning ► Recognising the constraints on WLCM ► How simulation can help ► Summary ► Questions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 19 19

Summary ► Affordable TLCM depends upon an evolving assessment of cost risk vs capability delivered over time ► Assessment of WLC, as it relates to TLCM, is complex and difficult to achieve with deterministic methods and models ► Simulation modelling has shown great potential to deliver a flexible and scalable response to the evident modelling challenges ► Simulation tools, appropriately applied, will stretch the boundaries of TLCM assessment and help to reduce project cost, performance and timescale risks Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 20

Contents Investment Decision Support through rigorous cost analysis across all Defence Lines of Development (DLoDs) ► Introduction: Affordability as a function of planning ► Recognising the constraints on WLCM ► How simulation can help ► Summary ► Questions Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY PERSIDES PROPRIETARY 21 21

Questions ? Delivering Capability in Defence and Aerospace PERSIDES PROPRIETARY 22