Navigating the Business Case Analysis (BCA) Minefield

1
Navigating the Business Case Analysis (BCA)
Minefield

• By
• Thomas J. Barthel
• Belzon, Inc.

2
The BCA What does this guy know?

• Member of the AMCOM IMMC Maintenance Directorate
  
• PBL and Analysis Branch
• AMCOM Alternate PBL Coordinator
• Logistician w/combat experience
• Maintenance and Operations Background
• Infantry Aviation Officer
• Working on PBL / BCA development
• Developing BCAs for legacy systems and assisting
  PM
• FCS PBL

3
The BCA A Support Tool

• Decision support and planning tool
• Projects financial and non-financial (Log/Risk)
  consequences of recommended alternatives
• Each Cost/Benefit has logistics impact and risk
  factor
• Basic risks include
• Cost/Schedule/Performance/Supportability
• Build and support your case
• Cost data and Non-Cost data Supports
  Recommendations

4
The BCA - Lets discuss

• What type of BCA must we do?
• Who Needs to be on our BCA Team?
• We have numerous outlines...Now What?
• What should our timeline be for BCA completion?
• Do we NEED weapon system experts?
• What are adequate assumptions?
• Are our BCA statements and findings flowing back
  to
• the supporting data?
• Have we identified and verified applicable
  risks?
• Who should validate our BCA?
• The BCA is completed...NOW WHAT?
• Questions and answers!

5
The BCA - What type of BCA must we do?

• EA vs. Cost / Benefit comparison
• Need a waiver from DA (ASAALT)
• Type I BCA
• Type II BCA
• Requirement is to adapt pre-policy EAs to Type II
  BCA after five years
• This means LOGISTICS IMPACTS and applicable
  assumptions are included with cost and risks

6
The BCA - Who needs to be on our BCA team?

• Perfect World - Same members as Supportability
  IPT
• The Lead for the BCA A PM designated decision
  maker
• The Team
• Logistics
• Acquisition
• Cost Analysis Directorate (CAD)
• Army Working Capital Fund (AWCF)
• Item Managers
• Depots
• PBL / BCA SMEs PBL Branch
• Engineering
• OEM
• Dedicated staffing until completion
• Complexity drives membership
• Cross-Organizational Input/Ownership/Communication
  s

7
The BCA - We have numerous outlines...Now What?

• DAU / WWW / Everyone Elses Interpretation
• The Main Focus is
• Sequence/Flow - Relevant Data (from Scope)
  Valid / Executable Recommendations
• Intro - Subject/Purpose/Scope
• Methodology and Assumptions
• Logistics Considerations
• Cost
• Risk/Sensitivity Analysis
• Conclusion
• Recommendation
• Implementation Timeline

8
The BCA - Format

• Sequence / Flow / Data (from Scope) /
  Recommendations
• Is the BCA readable?
• Can the preceding section segue into the next?
• Does data relate to each section or is a search
  required?
• Is their TOO MUCH data that is simply noise?
• Can the decision maker determine if
  recommendation is appropriate w/o re-reading?

9
The BCA - Introduction

• The X Program BCA Introduction Section
• Subject What is this case about?
• This is important Drives the initial focus for
  data
• Purpose Why, for whom, and for what use
• Decisions from results will be used to...
• Scope Drives what specific data will be utilized
• Who, what, when, where and how period

10
The BCA - What are adequate assumptions?

• The scope determined the focus of assumptions -
  what we studied, i.e. SC, TMs, Test Equipment,
  Infrastructure, etc.
• What Programmatic changes / business rules / case
  foundation / etc. will invalidate the BCA outcome
  if altered
• The results of the BCA will now require BCA
  update and validation
• Changes in Assumptions
• This change affects costs and support (LOG)
• Use Sensitivity Analysis and Weights to determine
  impact
• How sensitive are results to assumptions gt10 -
  noise?
• Major Assumptions change is a BCA schedule
  killer!

11
The BCA - Logistics Considerations

• Cost is important but so is non-cost
• We are dealing with PB L
• Subaru vs. Ford
• PM VS OEM as PSI
• Compare cost and benefits Weight?
• Now look at the The rest of the story.
• Will ALSO affect
• gas mileage, speed, what else?
• Staffing/transportation/engineering/contracts/IT/
• funding stream/training/SMEs/etc.

12
The BCA - Cost

• The EA fits nicely when placed here
• Cost data collection is determined by the scope
  of the BCA
• Modeling Methodology for Costs
• Validation
• Other costs
• Very difficult if scope is moving
• BCA is OBJECTIVE cost data is revealing!

13
The BCA - Risk/Sensitivity Analysis

• Identify Major Risks
• Cost / Schedule / Performance / Supportability
• Cost/Schedule/Performance/Supportability
• The sensitivity analysis shows weighted risks
• Use to determine effects of assumptions change
• Weight and sensitivity determined by the PM

14
The BCA Other Risk?

• Dont forget to consider other Risks?
• Whose Risks Programmatic / PMO
• Contractual
• Budget
• Political
• Methodology
• Unknowns
• Experience
• Transition

15
The BCA - What should our timeline be for BCA
completion?

• Type I BCA 4 mos. (2)
• Limited Scope Type II BCA 3 mos (1.2)
• 23 System BCA 6 mos. (5 FT)
• New System Type II 6 Sub-BCAs to 1 2yrs (1.2)
• The Scope (Depth Complexity) of the BCA will
  drive the Time and Resource Requirements

16
The BCA - Do we NEED weapon system experts
participating?

• Who will write to the Logistics, and Risk
  Sections?
• The BCA should address (assess) the Logistics
  process of the Status-quo and the effects on
  Logistics for each Alternative
• Co-Locating within the PM organization

17
The BCA - Are BCA statements and findings flowing
back to the supporting data?

• Lack of Supporting data is like handing in a
  Master Thesis with no Reference Pages
• This is a business CASE...wheres proof?
• Sometimes the comparisons are not as close as you
  would like.
• C13O wing data is not the same as C17 wing data
  but may be all you have, especially new
  acquisitions!
• Sometimes data doesnt even exist...dont waste
  extra time looking (alter estimating
  technique...corollary COST, Future RAM-T
  estimates, etc.)

18
The BCA - Who should validate our BCA?

• CAD validates the EA and Cost Sections of the BCA
• Based upon policy ACAT Army Acquisition Exec
  (AAE)

• Heres the twist...Who Validates the Logistic
  Impacts, Risks, Sensitivity Analysis and...
• Can you validate your own costs?

19
The BCA - The BCA is completed...NOW WHAT?

• Remember Recommendations
• Does data support the reason for recommending?
• The implementation Plan and Timeline should be
  developed for EACH alternative
• The decision maker needs to know how long to
  implement after he makes a decision
• The BCA approval process - Takes time

20

• What is a good BCA Toms Opinion
• Well defined Subject/Purpose/Scope
• Clear, relevant and up-front
• Logistics Section will detail consequences of
  actions/decisions for each alternative
• Rationale/supporting methodology for cost and
  non-cost inclusion
• Determines what needs to be managed to achieve
  outcome
• (predicted results)
• Makes a valid recommendation supported by all
  data (cost/non-cost) with timeline for
  implementation
• Recommendations showed success when implemented
  that aligned with BCA data

21
The BCA Lessons Learned

• The BCA process is difficult w/o timelines
• Determining proper scope w/o requirements creep
• Data Collection will be difficult
• Teams not staffed for Full Time BCA work
• An Objective PBL BCA is difficult in a
  Transaction based environment
• Who and how do we pay for the BCA?
• You can collect too much data
• You can do too much modeling
• Who is tracking BCA Lessons learned?

22
The BCA

• Questions !
• THANK YOU FOR COMING!
• Contact
• Thomas J. Barthel
• Belzon, Inc. 256-461-6039
• Huntsville, AL
• thomas.j.barthel_at_conus.army.mil