Cover: Toward Affordable Systems III

Toward Affordable Systems III

Portfolio Management for Army Engineering and Manufacturing Development Programs

Published May 8, 2012

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

Download

Download eBook for Free

Full Document

FormatFile SizeNotes
PDF file 0.8 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Summary Only

FormatFile SizeNotes
PDF file 0.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Purchase

Purchase Print Copy

 Format Price
Add to Cart Paperback86 pages $32.50

Research Questions

  1. What is the optimal remaining research and development (R&D) budget, and the optimal total remaining lifecycle budget for ongoing projects (N/EMD) that are near — engineering and manufacturing development, engineering and manufacturing development, or ready-to-be-fielded?
  2. Which N/EMD projects should be terminated and which continued for any given R&D and lifecycle budget — including budget cuts?

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 N/EMD 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.

Research conducted by

The research described in this report was sponsored by the United States Army and conducted by the RAND Arroyo Center.

This report is part of the RAND monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.