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Army Cost Culture Initiative

May 2013 DASA(CE)

Ad-hoc Army today Cost Managed Organization

Brief to the Honorable Dr. Westphal

Changing Processes

Resource Informed Decisions (CBA)

Changing Technology

Enterprise Resource Planning (GFEBS, LMP, GCSS-A, IPPS-A)

Changing People

Training

Cost Management Changes the Army Culture

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Cost Management End-to-End Process

People1. Leadership Commitment2. Training3. RM Workforce

Technology4. Data Quality (ERP)5. Tools & Models

Process6. Cost Planning7. Cost Analysis (CBA,)8. Cost Integration to Requirement, Acquisition, & Resource 9. Cost Control (LSS)

Cost Management Changes the Cost Culture

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People1. Leadership Commitment2. Training3. FM Workforce (AFMO)

Technology4. Data Quality (GFEBS)5. Tools & Models

Process6. Cost Planning7. Cost Analysis (CBA, AoA)8. Cost Integration to Requirement, Acquisition, & Resource 9. Cost Control (LSS & AFBRT)

as of May 2013

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Goal: Better Value for Lower Cost• Stewardship of nation’s resources • Cost informed decision making• Continuous improvement• Accountability for costs• Tracking progress

Cost Management Professionals

Cost Management E2E Processits Current Maturity

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Army Resource Informed Decisions(as of 09 May 13)

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3FY10 FY10 FY10 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 FY13 FY13 FY13

0

100

200

300

400

500

600

700

800

900

7 20 33 57

160

278361

453528

640715

775825 857

Cumulative CBAs Submitted into CBA Workflow ToolDecision Forum Totals

AROC 193Army Campaign Plan (ACP) 10Budget Review Program 12Concept Plan 224Congress 2EE PEG 10FDU 31II-PEG 28Insourcing 41Legislative Proposal 59MM-PEG 5OO-PEG 3Office of the Secretary of Defense (OSD) 3PBAT 4Planning Programming Budget C (PPBC) 5SLI 29SS PEG 12TT-PEG 18UU PEG 3Unknown 13Other 47report total: 752

* Not included are CBAs that have been withdrawn and those that did not include a decision forum

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GFEBS will provide Multiple Cost Views for

Decision Making at Every Level

… provide essential data to transform the Army

to a cost culture

Army Cost Management Framework

GFEBS TechnologyEnables Cost Management

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GFEBS Provides Total Cost Visibility

10 views (table) cost visibility for five dimension Polygon

2.Co

ntra

cts

3.Se

rvic

es

1

3

2 5

6

Total Cost Visibility Example:

1- Customers by Contracts2- Customers by Services 3- Customers by Funding4- Customers by Cost Centers5- Contracts by Service6- Contracts by Funding7- Contracts by Cost Centers8- Services by Funding9- Service by Cost Centers10 –Funding by Cost Centers

1. Customers

4.Fu

ndin

g5.

Cost

Ce

nter

s

2. Contracts

3. Services

4. FundingPE

7

8

9 104

N * (N-1) / 2for each FY

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Army Cost Management Training

ICAM• Cost Flow Methods• Analysis and Reporting• Practical Exercises• Complex Case Studies• Cost-Benefit Analysis

PCAM• Cost Terms• Cost Concepts• Fundamentals of Cost

Accounting and Cost Management

• Practical Exercises• Cost-Benefit Analysis

Principles of Cost Analysis and Management

Intermediate Cost Analysis and Management

CMEX• Cost• Leadership-Driven Cost

Management• Cost-Benefit Analysis• Value Proposition

CMCC• Managerial Cost Accounting• Operations Management• Cost Control and Cost-Benefit

Analysis• Organizational Development for

Cost Managers

Army Cost Management Certificate Course

Cost Management Executive Course

3 Weeks3 Weeks 4 Weeks

4-Hour CBA Training• What is CBA?• Why do we need CBA?• Who are the key

players?• What Army processes

call for CBA• What are the

processes and methodologies used

4-Day CBA Training• Policies,

Regulations, Methodology, and Roles

• Workflow Automation Tools

• Other Tools• Case Studies and

Exercises

GFEBS: Other Training Other Training• Online• Defense

Acquisition University (DAU)

• Force Management (FA50)

GFEBS General• GFEBS Overview• Integrated Process

Overview• Navigation and

Reports• Business Intelligence

Reporting • Fundamentals

GFEBS Other Training• Cost Management• Equipment and Assets• Financials • Funds Management• Plant Maintenance• Project Systems • Real Property• Reimbursable• Spending Chain

GFEBS Online Training Cost Benefit Analysis (CBA) Training

Cost Management Education

TBD

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CM Community of Practice

AKO Cost Management Community

Cost Warrior Newsletter

Cost Warrior milSuite web site

Cost Warrior RoundtableCost Warrior Listserv

CBA Field Trainers

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Senior Leadership Commitment

SECDEF Leon Panetta, 5 Jan 12: New DoD Strategic Guidance—Impact of fiscal constraints We are shaping a Joint Force for the future that will be smaller and leaner, but will be agile, flexible, ready, and technologically advanced.

SECDEF Robert Gates 24 May 11: …not repeat the mistakes of the past …salami-slicing” approach results in a hollowing-out of the force

DEPSEC William Lynn, 11 May 11: America’s cut forces after every war: WW II, Korea, Vietnam, Iraq…the Army had to reverse course, rebuild…we’re 0-for-4 in managing drawdowns

SECARMY McHugh at AUSA Oct. 10, 2011: Army Bracing for More Budget Cuts No matter what happens, we are not going to have a hollow force We have been analyzing the best ways to meet these challenges, …and do it in a way that truly makes sense.

USD (AT&L) Dr. Ashton Carter, June 28, 2010: Better Buying Power: Mandate … …we can't support our troops with the capability they need unless we achieve greater efficiency (doing “more without more”)

Army

• USA/VCSA memo (30 Dec 2009) Directed CBA's are to be prepared (For APGM and TGM, Force Design Updates, Concept Plans, Part of VCSA portfolio analyses, ACP, BRP, AR2B, etc..)

• SECARMY McHugh at AUSA, 10 October 2011

• USA Efficiency Memo, 2 September 2010

• ASA-FM&C Cost Management Memo, 7 January 2011

• Army Campaign Plan Object 9.4 and 9.8

OSD

• SECDEF Memo, 16 August 2010

• SECDEF Robert Gates 24 May 11

• SECDEF Leon Panetta, 5 Jan 12

• USD (AT&L) Dr. Ashton Carter, June 28, 2010 Better Buying Power

• DEPSEC William Lynn, 11 May 11

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Army Campaign Plan Objective 9

OBJECTIVE: Increase the number of Generating Force (Infrastructure) organizations executing quarterly cost management reviews, increase the use of cost benefit analysis and improve the Cost Management Maturity Model index score.

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Army Campaign Plan Objective 9

Measure Baseline & Target Initiatives Frequency

Output: The number of generating force organizations (operating on GFEBS) that are executing quarterly Cost Management process reviews.

- Organizations will be defined by Fund Centers within a Command (ACOM, DRU, and select ASCC).

- The baseline for number of organizations executing quarterly reviews will be assessed by Command at the beginning of year (assume start point is zero)

- Target Set to Achieve 90% of Army Organizations executing Quarterly Reviews by 2013.

- Cost Management Training (Cost Management Certification Course, Cost Mgmt 101, GFEBS Modeling and Deployment)

- Issue Survey by Command to Establish Baseline.- Develop requirement linked to GFEBS

deployment for conducting Quarterly Cost Management Reviews

- Define CP-11 Manpower Requirements to Adapt Workforce for more Analytical Skills

Measured Quarterly:

Calculated as “ Number of organizations executing quarterly CM reviews / Total number of organizations within command"

Output: The number of organizations utilizing Cost Benefit Analysis (CBAs) in making resource-Informed decisions

- Organizations will be defined by Fund Centers (for those on GFEBS) or Allotment Serial Number (for those on Legacy Financial Systems) within a Command (ACOM, DRU, and select ASCC).

- The baseline for number of organizations utilizing CBAs will be assessed by Command at the beginning of year (assume start point is zero)

- Target Set to Achieve 90% of Army Organizations making resource-informed decisions using CBAs by 2012

- USA/VCSA memo (30 Dec 2009) Directed CBA's are to be prepared (For APGM and TGM, Force Design Updates, Concept Plans, Part of VCSA portfolio analyses, ACP, BRP, AR2B, etc..)

- Prepare additional ASA(FM&C) guidance requiring use of CBA practices to support Resource-Informed Decision-Making throughout Army

- Continue CBA Training, CMCC and Cost Management Training Across Army

Measured Quarterly:

Calculated as "Number of organizations utilizing CBA's / Total number of organizations within command"

Output: The percent improvement in Cost Management Maturity Model (CM3) score index.

- Establish Baseline Index Score by organization- Initial Target Set as % Increase from Baseline

by Command (Measure Twice per Yr) than % Increase from Previous Period

- Direct Initial Army-wide Assessment using Cost Management Maturity Model Survey to Establish Baseline

- Reassess at Mid-Year and Year-End (Annually)

Measured Bi-Annually:

Calculated as “Percent change In index score from previous period by organization"

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Policy and Guidance

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4 5Data QualitY Tools & Models

3 ACDB 14 ACEIT 17 ACT 1

10 AMCOS 1 125 CBA-WM 1 127 CCDR 130 CKB 1 137 CSDR 147 FORCES 1 149 G-CC 150 G-CE 152 G-CO 153 GFEBS 154 G-WBS 160 ISR 1 163 JIAT 170 OSMIS 1 174 R2C2 178 SBC 181 TCVF 1

Technology

1 2 3Leadership

CommitmentTraining

WF Development

2 ABC 19 AFMO 1

12 AR2B 114 AROC 115 ARRG 116 ASARC 118 CAM 119 CARB 121 CBA 4D 122 CBA 4H 123 CBA-G 124 CBA-RB 126 CC 129 CE-CMC 1 132 CMC 1 133 CMCC 1 134 CMEX 136 CRB 138 CW 140 CW-RT 143 EA-M 145 EE 148 FP 1 155 IATC 156 ICAM 1 159 II 162 JCIDS 165 LSS 166 MDUR 169 OSD-CMI 171 PCAM 1 172 PEG 176 RM-J 179 SS 1

People

Cost Culture ActivitiesMapped to Process, Technology, and People

6 7 8 9

Cost Planning Cost Anal1sisCost

IntegrationCost Control

1 AAR 12 ABC 15 ACP 16 ACP-O9 1 18 AFBRT 1 1 1 19 AFMO 1

11 AoA 112 AR2B 114 AROC 1 115 ARRG 1 116 ASARC 1 117 BCA 119 CARB 1 120 CBA 1 124 CBA-RB 1 125 CBA-WM 130 CKB 131 CM 1 1 135 CP-TDA 1 136 CRB 139 CW-NL 142 EA 143 EA-M 144 EC 1 1 146 EVM 1 149 G-CC & CE 151 G-CMM 153 GFEBS 155 IATC 157 ICE 158 IGCE 162 JCIDS 164 LCCE 166 MDUR 1 172 PEG 173 PPBES 175 RA 178 SBC 181 TCVF 1

Process

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Cost Management Acronyms

1 AAR After Action Report2 ABC Army Business Council3 ACDB Automated Cost Database 4 ACEIT Automated Cost Estimating Integrated Tools5 ACP Army Cost Position6 ACP-O9 Army Campaign Plan Objective 9.4 and 9.87 ACT ARFORGEN Costing Tool8 AFBRT Army Financial Benefits Reporting and Tracking9 AFMO Army Financial Management Optimization

10 AMCOS Army Military-Civilian Cost System 11 AoA Analysis of Alternative12 AR2B Army Requirements and Resourcing Board13 ARFORGEN Army Force Generation14 AROC Army Requirements Oversight Council15 ARRG Army Working Capital Fund) Requirements Review Group16 ASARC Army Systems Acquisition Review Council17 BCA Business Case Analysis18 CAM Army Cost Analysis Manual19 CARB Coalition Acquisition Review Board 20 CBA Cost Benefit Analysis21 CBA 4D CBA training 4 Days22 CBA 4H CBA training 4 Hours23 CBA-G CBA Guide24 CBA-RB Cost Benefit Analysis Review Board25 CBA-WM CBA Workflow Management26 CC Cost Culture27 CCDR Contractor Cost Data Reporting28 CE Cost and Economics 29 CE-CMC DASA-CE Cost Management Certification30 CKB Capability Knowledge Base31 CM Cost Management32 CMC Financial Management Certification 33 CMCC Army Cost Management Certificate Course 34 CMEX Cost Management Executive Course35 CP-TDA Concept Plan (TDA Updates)36 CRB Cost Review Board37 CSDR Cost and Software Data Reporting38 CW Cost Warier 39 CW-NL Cost Warier Newsletter

40 CW-RT Cost Warier Roundtable41 DASA-CE Deputy Assistant Secretary of the Army for Cost and Economics 42 EA Economic Analysis43 EA-M EA Manual44 EC Early Costing Pre-Milestone-A45 EE Equipping PEG46 EVM Earned Value Management47 FORCES Force and Organizational Cost Estimating System48 FP Fellowship Program49 G-CC GFEBS Cost Center50 G-CE GFEBS Cost Element51 G-CMM GFEBS Cost Management Module52 G-CO GFEBS Cost Objects53 GFEBS General Fund Enterprise Business System54 G-WBS GFEBS Work Breakdown Structure55 IATC Institutional Army Transformation Commission56 ICAM Intermediate Cost Analysis and Management57 ICE Independent Cost Estimate58 IGCE Independent Government Cost Estimate59 II Installation PEG 60 ISR Installation Status Report 61 ITA Army Information Technology Agency 62 JCIDS Joint Capabilities Integration and Development System63 JIAT Joint Integrated Analysis Tools64 LCCE Life Cycle Cost Estimates 65 LSS Lean Six Sigma 66 MDUR More Disciplined Use of Resources - campaign67 MM Manning PEG68 OO Organizing PEG69 OSD-CMI OSD Cost Management Initiative70 OSMIS Operating and Support Management Information System 71 PCAM Principles of Cost Analysis and Management 72 PEG Program Evaluation Groups73 PPBES Planning, Programming, and Budgeting, and Execution System74 R2C2 Requirement Readiness Capacity Cost Analysis75 RA Redundancy Analysis76 RM-J Resource Management Journal78 SBC Service Based Costing79 SS Sustaining PEG 81 TCVF Total Cost Visibility Framework, GFEBS CM design (ITA, USASOC, .. )82 USASOC United States Army Special Operations Command

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