; Briefing Chart Format
Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out
Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

Briefing Chart Format

VIEWS: 11 PAGES: 36

  • pg 1
									Aeronautical Systems Center
    Birthplace, Home & Future of Aerospace

                   Risk Driven Strategy
                      in Competitive
                       Acquisitions
                      and other Risk Topics

                                Apr 2011
                               Marja Weaver
                               ASC/AQD
                               DSN 785-5553
                               Comm 937-255-5553
                               Marja.Weaver@wpafb.af.mil
                      Overview
                Birthplace, Home & Future of Aerospace


• Risk Management and Risk
  – Standardized” Process Steps
  – Which “risk” are we talking about?
• Competitive Acquisitions and Risks
  – Three common areas of acquisition risk
• Risk Handling, Tracking and
  Communication
• ASC’s Risk and Issue Management Guide



                                                         2
                     AF Life Cycle Risk Management
                                       Birthplace, Home & Future of Aerospace

    Risk Management: the practice of dealing with future, potential,
    negative events -- Forward-looking, structured, continuous
    n   Standardized Process Steps (at the Macro Level)

         n   1   Risk Management Planning
                 -
         n   2   Risk Identification
                 -                         1. Risk
                                        Management
         n   3   Risk Analysis
                 -                        Planning

         n   4   Risk Handling/Mitigation
                 -                                                                          5. Risk Mitigation
                                                                                             Implementation
                 Planning                                            2. Risk
                                                                  Identification
                                                                                               and Tracking

         n   5 - Risk Mitigation Implementation
                 and Risk Tracking
                                                                                   3. Risk Analysis


                      These steps are covered in risk
                       workshops an Integrated Risk                                                         4. Risk
                           Assessments (IRA)                                                          Handling/Mitigation
                                                                                                           Planning


                                    All steps occur throughout life cycle
3
                     “Standardized” Process Steps
                                        Birthplace, Home & Future of Aerospace
AF LCRM Deming                  DoD          AF ORM           PMBOK              SEI      ISO 31000
   Plan           Plan      (Assumed)            N/A             Plan        (Assumed) Establish Context
 Identify                         Identify
                              Identify        Identify   Identify   Assessment
 Analyze                           Assess Qualitative & Analyze
                              Analyze
                                            Quantitative
                                              Analysis
                                  Analyze
                 Do                          Response
 Handle                  Plan     Control                  Plan      Treatment
                                               Plan
                                 Measures
                                  Decide/
                       Mitigate              (Assumed) (Assumed)
                                Implement
                                 Supervise/ Monitor &             Monitor & Review
                        Track                             Track
                                  Review      Control                  Risks
Mitigate
                                                                  Monitor & Review
& Track         Check (Assumed)     N/A      (Assumed) (Assumed)
                                                                    Framework
                                                                    Continually
                 Act (Assumed)      N/A         N/A        N/A        Improve
                                                                    Framework
Acknowledgements to S Glazewski, AFIT
                                                                                                           4
                                   What is Risk?
                                   Birthplace, Home & Future of Aerospace

• DoD/AF use “Risk” in at least two different ways:
  – RISK as a Measure
          • Big Picture look at probability and consequence
          • Can be qualitative with substantiating data
          • Informs decision makers              Also referred to
                                                                                    as a “future
     – Risk as a future negative Event *                                            root cause”
          •   Narrow Focus – discrete events/situations
          •   Allows focused planning/day-to-day risk mgmt
          •   Analysis bounds uncertainty for each event
          •   Informs risk measurement analysis teams
          •   Root causes tracked in risk databases
5 * AFPAM 63-128: “Most potential future negative events can be assessed and should be managed as risks”
                     Risk as a Measure
                         Birthplace, Home & Future of Aerospace

    • Applied to acquisition, Risk is a measure of the
      inability to achieve program objectives within
      defined performance, schedule and cost constraints
      due to one or more undesirable events
    • Three elements of risk:
      – Anticipates the future
      – Involves uncertainty
      – Negative consequence
    • Risk as a Measure used in source selections*:
      – Combined technical/risk rating
      – Separate technical risk rating

      * 4 Mar 11 memo on DoD Source Selection Procedures
6
                     Risk as an Event
                      Birthplace, Home & Future of Aerospace
A Risk is a negative, future event that could cause an
execution failure in the program and you are able to
estimate the probability and consequence
 – Probability (likelihood) of risk is between 5-99%
 – Always a future event with negative consequences
 – Impact of the consequences rated in terms of:
     • Performance, Cost, and/or Schedule
 – written as an “if-then” statement:
“If the engine performance is less than required (risk), then engine
 redesign will have to occur (consequence), causing a X schedule
 slippage and $Y budget overrun (impacts). The risk is tied to IMS line
 item number A and Work Breakdown Structure element B. The worse
 case: the performance lags by Z requiring a redesign of the 2nd stage”


  Assess probability of “IF”; consequence of “THEN”                       7
                             Probability & Consequence
                                         Birthplace, Home & Future of Aerospace

 •   Probability of each risk                               • Consequence: Effect on
     occurring defined in levels,                             program if risk becomes a reality
     percentage bands and/or                                   - Rate Impact of “then” phrase.
     likelihood                                             • Each risk assessed for impact in
     - Assess the “IF” phrase                                 performance, cost, and/or
           Probability                                        schedule
     Level     of                     Likelihood                                   Consequence
           Occurrence
                                                                                                   High
      5       81 – 99 %             Near Certainty


                                                                  Probability
      4       61 – 80 %              Highly Likely
                                                                                        Moderate
      3       41 – 60 %                   Likely
      2       21 – 40 %             Low Likelihood                                Low

      1        5 – 20 %                Not Likely
 AF Stds for Probability, Consequence Rating of Performance, Cost, & Schedule*
* See back-up slides or AFPAM 63-128 Chap 12 for AF Std ratings                                           8
      Competitive Acquisitions and Risks
                  Birthplace, Home & Future of Aerospace

• “Pre-award” workshops should reveal risks in:
   – Market availability for competitive sourcing
   – Duration of planned acquisition
    – Profitability
    – Diminishing Manufacturing Sources
    – Program dependencies
  – Seemingly contradictory requirements
    – Required need date/requirement to compete
    – Funding profile
  – Data rights
    – Who has them vs who needs them
  – Other program spscific areas
                                                           9
            Pre-Award Risk Management
                     Birthplace, Home & Future of Aerospace


• Pre-Award risk ID and handling should:
  – Shape you RFP
  – Influence the contract type
  – Help establish business practices
  – Influence source selection process
      • Lead you to “discriminators”
• Goal of pre-award risk assessment is NOT:
  – Creating a risk matrix for the ASP briefing
  – Identifying just risks to get on contract
Pre-Award Risk ID and handling are elements of long-range planning
                                                                     10
                         Data Rights
                  Birthplace, Home & Future of Aerospace

• Data rights and direction to compete acquisition
• If we don’t have sufficient data rights, then we
  can’t use a competitive source selection… or
  can we???
  – What kind of data rights does the gov’t have?
  – What does an offeror need?
  – How do we inform the offerors in the RFP?
     • Give offerors a way forward
  – How do we evaluate their responses?



                                                           11
               Commercial Derivatives
                  Birthplace, Home & Future of Aerospace

• Green Aircraft with Military Mods
• If aircraft requirements are too narrowly defined,
  then competitive source selection is precluded
   – Market Research – who’s in the hunt/what can they do?
   – What’s the trade space we’re willing to use to ensure
     competition?
   – How do we ensure a good deal for the AF? – time vs
     money
   – Is there a source selection strategy that allows more
     capability at only slightly more cost?


                                                           12
                                  DMS
                   Birthplace, Home & Future of Aerospace

• Diminishing Manufacturing Sources
• Strategies to reduce impact of DMS during
  productions:
  – Require a tech refresh prior to production
  – Transfer responsibility to contractor for minor parts
    updates at no additional cost
     • Contract clause for redesign
  – Reduce # production years, if possible
     • Lifespan of electronic parts




                                                            13
         ASC Acquisition Center of
               Excellence
              Birthplace, Home & Future of Aerospace




ACE has contracting professionals to advise
teams in crafting competitive acquisition RFPs,
source selection strategies and contract types

Do your homework first:
    – Know your requirements
    – have your market research
    – Identify risks to program execution


                                                       14
                          Risk Management –
                             Handling and Tracking
                            Birthplace, Home & Future of Aerospace

• Risk Management: the practice of dealing with future,
  potential, negative events -- Forward-looking,
  structured, continuous
n   Standardized Process Steps (at the Macro Level)

     n   1   Risk Management Planning
             -
     n   2   Risk Identification
             -                         1. Risk
                                    Management
     n   3   Risk Analysis
             -                        Planning

     n   4   Risk Handling/Mitigation
             -                                                                   5. Risk Mitigation
                                                                                  Implementation
             Planning                                     2. Risk
                                                       Identification
                                                                                    and Tracking

     n   5 - Risk Mitigation Implementation
             and Risk Tracking
                                                                        3. Risk Analysis




                                                                                                 4. Risk
                                                                                           Handling/Mitigation
                                                                                                Planning


                           All steps occur throughout life cycle
                                                                                                                 15
               Risk Handling Planning
                   Birthplace, Home & Future of Aerospace

 Risk Handling Planning is a proactive approach to
addressing risk. The risk hasn’t occurred yet, so you can still
plan to reduce probability, change the consequence or reduce
the impact if the risk occurs.

• AFPAM 63-128 lists five different handling options:
  • Accept - Monitor - Research – Transfer - Mitigate
• When developing a risk handling plan, more than one
handling option may be used to address a risk.
• Document risk handling processes your program will use in
your Risk Management Plan

                                                                  16
                  Risk Handling Strategies
                         Birthplace, Home & Future of Aerospace

Accept -- Accepting the risk means assuming the level of risk
and continuing with the current program or project plan.
Monitor -- Monitoring the risk means watching for changes,
but not taking any immediate action.
Research -- Researching entails collecting additional
information in order to make an educated decision about the
risk or to reduce the uncertainty surrounding risk elements
Transfer -- When the root cause of a risk is shifted
elsewhere, this is called transferring the risk.
Mitigate -- Mitigating the risk applies methods aimed at
eliminating the risk, or reducing the likelihood and/or
consequence of the risk
Note: some of these handling options overlap and more than one may be needed   17
                     Risk Handling Example
                          Birthplace, Home & Future of Aerospace

                    Risk my house will flood
         RESEARCH:
  topography, zoning, soil,
  flow volume, observation
       ACCEPTANCE:
       comfortable with
    current risk of flooding
       MONITOR:
   development of field
TRIGGERS/THRESHOLD:
Zoning change notice; Info
  from HOA; Surveyors
                 TRANSFER:                                  MITIGATE:
           Influence zoning board;                    Buy adjacent property to
       Buy flood insurance – reduce my                ensure adequate run-off
              cost consequence                              absorption
                                                                                 18
                     Risk Handling Planning
                           Birthplace, Home & Future of Aerospace

• Determine which actions to take, and when
   – Some risks should be handled immediately
   – Other risks are best handled after thresholds are crossed
   that increases the probability of the risk event
      • Thresholds are pre-identified measurements that
      when reached, trigger the need for action
• Mitigations - RHPs that break the chain of root
 causes leading to the risk event
   – Usually reduces or eliminates probability of risk occurring
• Contingency plans – Should be linked to thresholds
   – Usually don’t reduce probability of risk
   – Too often planned for implementation after risk occurs
  Don’t let Today’s Risk Contingency Plan = Tomorrow’s Issue Corrective Action Plan
                                                                                      19
                       Risk/Issue Handling Plan
                           Birthplace, Home & Future of Aerospace

 Requirement: Training devices must be fully ready for training 60 days prior to first
                  air vehicle delivery at each bed-down location
Risk Statement: If Training facilities not available 120 days prior to training start date


 Impact: Then delay in installing simulators disrupts start of training at new locations

        Impact Rating: Highly Likely – Moderate                     Risk Rating: Moderate

  Risk Handling Plans :
• Extend aircraft contract Type 1 Training to support first base standup (contingency)
• Require sim contractor to participate in facility design and construction reviews
(mitigation only against delay due to mis-understood requirements)
• Transfer training to other locations if facility delay materializes (contingency)
• Use sim contractor provided temporary training facility (contingency)
• Place devices in temporary storage - POE has 6 months for storage (contingency)
• Make “availability of facilities” an interest item of at user MAJCOM PMRs (monitor)
NONE of the proposed actions reduces probability. Root cause of concern is timely
planning for MilCON by other MAJCOMs. Risk is accepted with some contingency
          planning ”in advance” to contain consequences if risk occurs.
    Post Mitigation: Impact Rating: Highly Likely – Minor Risk Rating: Moderate              20
                                                            Risk Tracking
                                                          Birthplace, Home & Future of Aerospace

 • Risk tracking is a continuous, systematic process to
 evaluate all identified risks and monitor handling plans
                                                    – Track risks to identify changes to the
1. RMPs


                                  5. Risk Imp
                                                    likelihood or consequences of the risks – NOT
          2. Risk ID              & Track
                                                    just to status handling plans
                       3. Risk Analysis



                                          4. RHPs   – Effective risk tracking involves returning to
                                                    the Risk Analysis step to assess changes in
                                                    likelihood and/or consequence for identified risks
   • Track risks over time to determine if the
                                                                                                   1. RMPs

   risk management strategy is correct, and                                                                  2. Risk ID
                                                                                                                                     5. Risk Imp
                                                                                                                                     & Track


   RMP is executed correctly and effectively                                                                              3. Risk Analysis




               – RMPs should not need frequent updates                                                                                       4. RHPs




                                                                                                                                                   21
               Risk Handling Advice
                   Birthplace, Home & Future of Aerospace


• The Decision Authority must be aware of risks
   – ADM documents moderate & high acceptance

• Evaluate risk handling plans simultaneously to
  de-conflict
     Remember: Mitigation plans expend resources.
       The choice to mitigate should consider the
    cost/schedule impact to mitigate compared to the
    cost/schedule/performance impact of a risk realized



Even a correct decision is wrong when it was taken too late.
                              Lee Iacocca                   22
          ASC RIM Process Guide
               Birthplace, Home & Future of Aerospace


• ASC Risk and Issue Management (RIM)
  Process Guide - Nov 2010                      https://cs.eis.afmc.af.mil/sites/TeamASC/procguidebook/default.aspx




  – Common process for all PEOs in ASC
• RIM Process Guide includes:
  – Issue Management
  – Standard Risk & Issue Quad Charts
    • PMRs with PEO
  – Risk & Issue Health Metrics
    • PM reviews and frequent status update
• Incorporates ASC’s IRA policy
                                                                                                               23
                  Risk Handling Plan Quad Chart
                                  Birthplace, Home & Future of Aerospace


Risk #2A: Potential Delays in Hardware Lead Times                                       As of: 4/25/10
  Owner(s): WS Contractor                                          Risk Handling Plan                     A/ECD
                                                                                                         12/01/09(A)
                                                       1.) Coordinate with supplier to develop
                                                           equipment monitoring plan
 Description:
                                                       2.) Establish supplier recovery plan              2/15/10(A)
 IF supplier hardware lead times increase due to aging
production equipment, THEN subassembly, and            3.) Continuous supplier monitoring for            4/15/10(A)
subsystem testing will have to be re-planned               threshold triggers
                                                       4.) Execute supplier recovery plan                If req’d




Closure Date: 6/21/10
Impact
         Cost: Increases commensurate with delays      High

                                                                     1
   Schedule: Day per day slip
                                                                                2
Performance: Inability to meet customer expectations   Moderate
                                                                                           3
 EMB Impact: None
   Closure: Sufficient assets available to meet                                                           4
             customer obligation or new production     Low
             equipment in place
     Status: Continuous supplier monitoring to
                                                       9/09       12/09       2/10             5/10            8/10
             ensure schedule
                                                                                                                       24
                        Risk Health Summary
                               Birthplace, Home & Future of Aerospace

Hypothetical Example
     Situational Awareness Display System (SADS) Risk Summary             As of: 22 June 10

    Priority Risk #       Short Title       Mar    Apr     May    June   July   Aug    ECD

      1       2A      Hardware Lead Times                                             10/10 (E)

                                                                 Issue
      2       4B       Weight too High                                                12/15 (E)

                      More new Code than
      3       5C            planned                                                    7/1 (E)




Upper Left                                               Lower Right
  Risk                       Risk Handling Plan (RHP) in Place & On track
  Impact
  Ratings                    RHP in Place, Event(s) missed; ECD/Objectives are Recoverable

                             RHP Not Established and/or In Place; ECD/Objectives at risk

                                                                                                  25
                Issue Management
                 Birthplace, Home & Future of Aerospace

• Covers Issues and Problems
  – 100% probability of occurring (issue)
  – Negative event has occurred (problem)
• Issue Quad & Health charts similar to Risk
• Uses “top row” of Risk Matrix to “rate” issues
  – Consequence ratings same as Risk
• Monitors Corrective Action Plans (CAP)




                                                          26
                          Summary
                 Birthplace, Home & Future of Aerospace

•   Risk Management and meanings of “risk”
•   How risks influence competitive acquisitions
•   Risk handling and tracking
•   Highlights of ASC’s RIM Process Guide




Risk comes from not knowing what you`re doing.
                         Warren Buffett
                                                          27
                      REFERENCES
                  Birthplace, Home & Future of Aerospace

• DODI 5000.02, Operation of the Defense Acquisition
  System, 8 Dec 2008
• AFI 63-101, Acquisition and Sustainment Life Cycle
  Management, 17 Apr 2009
• AFI 63-1201, Life Cycle Systems Engineering, 23 Jul 2007
• Risk Management Guide for DOD Acquisition, Aug 2006
• AFPAM 63-128, Guide to Acquisition and Sustainment
  Life Cycle Management, 5 OCT 2009
• ASC Risk and Issue Management (RIM) Process Guide,
  Nov 2010
• AFIT Life Cycle Risk Management Course, SYS 118


                                                           28
   Birthplace, Home & Future of Aerospace




Questions/Comments?




                                            29
                Risk Workshop vs IRA
                     Birthplace, Home & Future of Aerospace

    Risk Workshop                   Integrated Risk Assessment
• Pre-Contract award         • Post-award, annually through
• Output: Reqm’ts & Risks      acquisition cycle
  identified, 5x5 matrix     • Risk workshop outputs plus:
                                – Schedule and cost statistical
• Duration: 1-2 days
                                  analyses assessing additional
• Involves Program Office,        time and budget
  user, sometimes contractor      required to complete
                                  program
• Technical Evaluation
  accomplished on ability to • Duration: Two mtg events,
  execute contract and met     homework between events
  program objectives           and post-event analysis
                                ~ 6-8 wks from Week 1 to cost est.
• No schedule or cost
                             • Location: Offsite, prime
  analysis
                               contractor’s facility              30
                      The Risk Assessment Mechanics
                                       Birthplace, Home & Future of Aerospace

        Steps 1-3 are common to Risk                              Integrated Risk Assessments (IRA)
            Workshops and IRAs
                                                                    • Detailed homework:
        Part 1             Part 1                  Part 1             Best case/Worse Case/Most
       Step 1             Step 2                  Step 3
                                                                    Likely Outcome if the risk Occurs
                       Develop Risk
     Identify
     Requirements      Statements
                                              Rate
                                              Probability &
                                                                    • Homework Adjudicated:
                                              Consequence            Consequences rating Re-eval’d
       1 – Award …       1 – Award…
       2 – Provide…        A – If lack…       1A – If lack of …
       3 – Develop…        B – If protest
                         2 – Provide…             X % Chance
                           A – If unable..        Performance          IRA and Risk Workshops
                                                  Schedule
                                                  Cost
                                                                   • Develop Risk Handling Plans
                                                                    − Determine risk lowering events
            Pre-award Risk Workshops                               • Track Risk Reductions
       • Outputs Shapes RFP                                        • Evaluate if RHPs on track
       • Outputs Influences:
            − Contract Type                                          Use Probability/Consequence
            − Source Selection Strategy                            Screening (P/CS) Tool to Facilitate
31
                  Standardized AF Consequence Rating
                             (Performance)
                                      Birthplace, Home & Future of Aerospace


     Level                       Standard AF Consequence - Performance

                  Minimal consequence to technical performance but no overall impact to the
        1         program success. A successful outcome is not dependent on this issue; the
     Negligible
                  technical performance goals or technical design margins will still be met.

                  Minor reduction in technical performance or supportability, can be tolerated with
        2         little impact on program success. Technical performance will be below the goal or
       Minor
                  technical design margins will be reduced, but within acceptable limits.

                  Moderate shortfall in technical performance or supportability with limited impact on
        3         program success. Technical performance will be below the goal, but approaching
     Moderate     unacceptable limits; or, technical design margins are significantly reduced and
                  jeopardize achieving the system performance threshold values.
                  Significant degradation in technical performance or major shortfall in supportability
        4         with a moderate impact on program success. Technical performance is
      Serious     unacceptably below the goal; or, no technical design margins available and system
                  performance will be below threshold values.

        5         Severe degradation in technical/supportability threshold performance; will
32    Critical    jeopardize program success; or will cause one of the triggers listed below
            Standardized AF Consequence Rating
                    (Performance, cont)
                          Birthplace, Home & Future of Aerospace


     Any root cause that, when evaluated by the cross-functional team,
     has a likelihood of generating one of the following consequences
     must be rated a Consequence Level 5 in Performance:
     • Will not meet Key Performance Parameter (KPP) Threshold
     • Critical Technology Element (CTE) will not be a Technical
        Readiness Level (TRL) 4 at MS/KDP A
     • CTE will not be at TRL 6 at MS/KDP B
     • CTE will not be at TRL 7 at MS/KDP C
     • CTE will not be at TRL 8 at the Full-rate Production Decision point
     • Manufacturing Readiness Level (MRL)* will not be a 8 by MS C
     • MRL* will not be at 9 by Full-rate Production point
     • System availability threshold will not be met
     * MRLs will be calculated in accordance with the DoD Manufacturing
        Readiness Assessment Deskbook.
33
                  Standardized AF Consequence Rating
                               (Schedule)
                                   Birthplace, Home & Future of Aerospace


     Level                       Standard AF Consequence - Schedule
        1         Negligible schedule slip
     Negligible


        2         Schedule slip, but able to meet key dates (e.g. PDR, CDR, FRP, FOC)
       Minor      and has no significant impact to slack on critical path.

        3         Schedule slip that impacts ability to meet key dates (e.g. PDR, CDR,
     Moderate     FRP, FOC) and/or significantly decreases slack on critical path
        4         Will require change to program or project critical path.
      Serious

        5         Cannot meet key program or project milestones.
      Critical




34
                  Standardized AF Consequence Rating
                                 (Cost)
                                     Birthplace, Home & Future of Aerospace

     Level            Standard AF Consequence - Cost (A-B refers to MS/KDP)
                  For A-B Programs: 5% or less increase from MS A approved cost estimate
        1         For Post-B & Other Programs: limited to <=1% increase in Program Acquisition
     Negligible   Unit Cost (PAUC) or Average Procurement Unit Cost (APUC) for current baseline
                  estimate, or last approved program cost estimate
                  For A-B Programs: >5% to 10% increase from MS A approved estimate
        2         For Post-B & Other Programs: <=1% increase in PAUC/APUC from current
       Minor      baseline estimate, or last approved program cost estimate, with potential for
                  further cost increase
                  For A-B Programs: >10% to 15% increase from MS A approved estimate
        3         For Post-B & Other Programs: >1% but <5% increase in PAUC/APUC from
     Moderate
                  current baseline estimate, or last approved program cost estimate
                  For A-B Programs: >15% to 20% increase from MS A approved estimate
        4         For Post-B & Other Programs: 5% but <10% increase in PAUC/APUC from
      Serious
                  current baseline estimate, or last approved program cost estimate
                  For A-B Programs: >20% increase from MS A approved cost estimate
        5         For Post-B & Other Programs: >=10% increase in PAUC/APUC from current
      Critical    baseline estimate (danger zone for significant cost growth and Nunn-McCurdy
35                breach), or last approved program cost estimate
ASC/CC Policy Memo 05-004
    Birthplace, Home & Future of Aerospace




                                             36

								
To top