Together this and two companion monographs demonstrate a method, model, and simulation that the U.S. Army can use to analyze and manage portfolios at any stage of the research and development process. This monograph expands and applies RAND's portfolio analysis and management (PortMan) method to address the problem of selecting Army engineering and manufacturing development projects in order to develop affordable systems.

Toward Affordable Systems III

Portfolio Management for Army Engineering and Manufacturing Development Programs

Brian G. Chow, Richard Silberglitt, Caroline R. Milne, Scott Hiromoto, Christina Panis

ResearchPublished May 8, 2012

Finding itself in a currently frugal environment, the U.S. Army needs to find ways to ensure that its scientists and engineers are designing both effective and affordable systems. The third in a series, this monograph expands and applies RAND's portfolio analysis and management (PortMan) method to address the problem of selecting U.S. Army engineering and manufacturing development projects to develop affordable systems. This monograph describes the application of the method, model, and simulation developed and demonstrated in Toward Affordable Systems and Toward Affordable Systems II. While the previous two companion monographs accounted for the remaining research and development cost of each project, the total remaining lifecycle budget of systems to be fielded based on the project portfolio, and the uncertainty in the success of research and development projects to meet their objectives and lead to fielded systems, this monograph includes in the analysis uncertainty in the lifecycle costs of individual systems to be fielded and uncertainty in the total remaining lifecycle budget for the portfolio. Together these three monographs demonstrate a method, model, and simulation that the Army can use to analyze and manage portfolios at any stage of the research and development process.

Key Findings

Mapping Supply and Demand

  • RAND's portfolio analysis and management (PortMan) can evaluate the overall performance of a portfolio of near–engineering and manufacturing development and engineering and manufacturing development projects (the supply) and broadly expose potential problem areas — that is, which requirements (or areas of demand) are at risk of not being met by that particular portfolio.
  • Similarly, PortMan can identify where certain requirements will be met by too many projects, leading to unnecessary redundancies and certain requirements actually being overmet.

Setting Optimal Budgets

  • PortMan calculates how well supply matches demand when the budget is set at different amounts. It then identifies a sweet spot in the budget with which most of the ongoing projects will be funded, suggesting that the money saved by not funding projects that are recommended to be terminated can be more cost-effectively spent on new projects.

Selecting an Optimal Portfolio

  • The projects that PortMan selects for continuation are those that will produce systems that will provide the highest chance of meeting all capability requirements under a given budget.

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Document Details

  • Copyright: RAND Corporation
  • Availability: Available
  • Year: 2012
  • Print Format: Paperback
  • Paperback Pages: 86
  • Paperback Price: $32.50
  • Paperback ISBN/EAN: 978-0-8330-6039-6
  • DOI: https://doi.org/10.7249/MG1187
  • Document Number: MG-1187-A

Citation

RAND Style Manual
Chow, Brian G., Richard Silberglitt, Caroline R. Milne, Scott Hiromoto, and Christina Panis, Toward Affordable Systems III: Portfolio Management for Army Engineering and Manufacturing Development Programs, RAND Corporation, MG-1187-A, 2012. As of September 10, 2024: https://www.rand.org/pubs/monographs/MG1187.html
Chicago Manual of Style
Chow, Brian G., Richard Silberglitt, Caroline R. Milne, Scott Hiromoto, and Christina Panis, Toward Affordable Systems III: Portfolio Management for Army Engineering and Manufacturing Development Programs. Santa Monica, CA: RAND Corporation, 2012. https://www.rand.org/pubs/monographs/MG1187.html. Also available in print form.
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The research described in this report was sponsored by the United States Army and conducted by the RAND Arroyo Center.

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