Affordability - SE Trade-off Analyses

About

Affordability is the degree to which the capability benefits are worth the system???s total life-cycle cost and support DoD strategic goals. Systems engineering (SE) trade-off analyses for affordability, a special application of the Decision Analysis process (see Systems Engineering (SE) Guidebook, Section 4.1.2) should:

Timelines

Public Law 114-328 Sec. 807, implemented in 10 USC 4271 requires the Milestone Decision Authority (MDA) to establish tentative cost and inventory goals at Materiel Development Decision (MDD) and affordability goals at Milestone A to inform early requirements and design trade-offs. Affordability caps are set at the Development RFP Release Decision, Milestone B, and beyond for unit procurement and sustainment costs. According to Public Law 114-328 Sec. 807, implemented in 10 USC 4271, affordability caps are established as fixed-cost requirements equivalent to Key Performance Parameters (KPP).

SE Trade-off Analyses

The affordability goal forms the basis for the SE trade-off and sensitivity analyses conducted to ensure that requirements are affordable and technically feasible, and to inform the validation of the Capability Development Document (or equivalent requirements document) from an affordability standpoint. SE trade-off analyses also support the establishment of affordability caps at the Development RFP Release Decision, Milestone B, and subsequent reviews. The affordability goal is nominally the average unit acquisition cost and average annual operations and support cost per unit. For indefinite quantity of production units, the affordability goal may be the total acquisition cost

The independently generated will-cost estimate is used to defend the program budget but does not account for potential efficiencies. The should-cost target is based on the efficient use of resources and effective implementation of processes identified as should-cost initiatives, and is the focus of SE activities and program management decisions across the life cycle. Should-cost management is implemented in all acquisition programs (all ACATs) regardless of the life-cycle phase in accordance with DoDI 5000.85, 3C.3.c.(2).

The SE trade-offs are conducted among cost, schedule and performance objectives to ensure the program is affordable. The Program Manager (PM) should identify the design performance points that are the focus of trade-off analyses to establish cost and schedule trade space. The PM presents the results of the trade-off analyses at program milestone/technical reviews, showing how the system???s life-cycle cost varies as a function of system requirements, major design parameters and schedule. The results are used to identify cost and affordability drivers and to demonstrate how the cost-effective design point is established for the system.

The PM, Systems Engineer and Lead Software Engineer use the results of SE trade-off analyses for affordability to inform system requirements and ensure that, when taken collectively, the requirements are compelling, affordable and achievable within the time frame available to the program.

The SE trade-off analyses are executed by a resourced team that consists of a decision maker with full responsibility, authority and accountability for the trade at hand; a trade-off analyst with a suite of reasoning tools; subject matter experts with performance models; and a representative set of end users and other stakeholders.

Throughout the system life cycle, the Systems Engineer continuously monitors affordability drivers, identifies opportunities to reduce life-cycle costs (should-cost initiatives), and conducts SE trade-off analyses as needed to meet program cost, schedule and performance requirements.

Products and Tasks

Product Tasks
10-2-1: Provide affordability target to support the milestone A decision
  1. Identify capability needs, requirements, and assumptions to establish the acquisition???s overall decision context.
  2. Identify program stakeholders.
  3. Obtain stakeholders??? inputs and recommendations for affordability target(s).
  4. Develop affordability target for the acquisition.
  5. Provide the affordability target as a program input to the milestone A review.
10-2-2: Perform systems engineering (SE) affordability trade-off and sensitivity analysis
  1. Identify capability needs, requirements, and assumptions to establish the acquisition???s overall decision context.
  2. Document and track assumptions regarding quantity and funding for the acquisition.
  3. Identify methods and tools to be used in the systems engineering (SE) trade-offs analyses.
  4. Develop decision criteria for SE trade-off and sensitivity analyses.
  5. Identify alternatives to be evaluated.
  6. Analyze alternatives against decision criteria.
  7. Provide output of the SE trade-off analyses for submission to the affordability design consideration section the program???s system engineering plan (SEP).

Source: AWQI eWorkbook

Resources

Key Terms

Source:
DAU ACQuipedia
DAU Glossary

Poliocy and Guidance

DAU Training Courses

DAU Media

On this page

  1. About
  2. Timelines
  3. SE Trade-off Analyses
  4. Resources
Back to top