What is the textbook answer to defining cost, schedule, performance, and Risk? If applicable to different phasec of Acquisition Life Cycle, please explain or provide references.
Cost, Schedule, Performance, and Risk are the basic elements through which DoD acquisition professionals make tradeoffs and track program status. Risk cuts across the other three elements (Cost Risk, Schedule Risk, and Performance Risk). In DoDD 5000.01, paragraph 4.2. “The primary objective of Defense acquisition is to acquire quality products that satisfy user needs with measurable improvements to mission capability and operational support, in a timely manner, and at a fair and reasonable price.”
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The DAU Glossary defines Schedule, Performance, and Risk as follows:
1.) Series of things to be done in a specific sequence within a given period. 2.) A timetable. 3.) A listing of activities and events organized by time.
Those operational and support characteristics of the system that allow it to effectively and efficiently perform its assigned mission over time. The support characteristics of the system include both supportability aspects of the design and the support elements necessary for system operation.
A measure of future uncertainties in achieving program performance goals and objectives within defined cost, schedule, and performance constraints. Risk can be associated with all aspects of a program (e.g., threat, technology, maturity, supplier capability, design maturation, performance against plan) as these aspects relate across the Work Breakdown Structure (WBS) and Integrated
Master Schedule (IMS). Risks have three components: 1.) A future root cause (yet to happen), which, if eliminated or corrected, would prevent a potential consequence from occurring; 2.) a probability (or likelihood) assessed at the present time of that future root cause occurring; and 3.) a consequence (or effect) of that future occurrence. (Risk Management Guide for DoD
Acquisition, Sixth Edition)
The DAU Glossary does not separately define “Cost”, but DoD 5000.4-M, Cost Analysis Guidance and Procedures, December 1992, defines seven standardized cost terms. These seven cost terms are: development cost; flyaway cost; weapon system cost; procurement cost; program acquisition cost; operating support (O&S) cost; and life-cycle cost. This standardization of terminology provides a uniform and consistent frame of reference for identifying what is included or excluded from each cost term, and how each cost term relates to work breakdown structure elements, budget appropriations, as well as to life-cycle cost categories. These terms also establish a basic definitional structure for understanding DoD acquisition program costs when used in fiscal guidance, Program Objective Memorandums, Program Decision Memorandums, budget submissions (e.g. budget exhibits), and Selected Acquisition Reports.
These basic elements come into play across the entire program life cycle. Here are some examples:
1) The Analysis of Alternatives (AoA) shall focus on identification and analysis of alternatives, measures of effectiveness, cost, schedule, concepts of operations, and overall risk.
2) The PDR Report shall be provided to the MDA at Milestone B and include recommended requirements trades based upon an assessment of cost, schedule, and performance risk.
3) Systems engineering provides the integrating technical processes to define and balance system performance, cost, schedule, and risk within a family-of-systems and systems-of-systems context.
Specifically, the Acquisition Program Baseline (APB) contains Cost, Schedule, and Performance objective and threshold values. Here is an excerpt from an ACQuipedia article on APBs.
“Baseline that reflects the threshold and objective values for the minimum number of cost, schedule, and performance attributes that describe the program over its life cycle. Cost values reflect the life cycle cost estimate (LCCE); scheduled dates include key activities such as milestones and the Initial Operational Capability (IOC); and performance attributes reflect the operational performance required for the fielded system. Key Performance Parameters (KPPs) from the Capability Development Document (CDD) and Capability Production Document (CPD) are copied verbatim into the APB. The Key System Attributes (KSAs) from the CDD and CPD that support the Sustainment KPP are also reflected in the APB. Other significant performance parameters may be added by the Milestone Decision Authority (MDA).
Program goals consist of an objective value and a threshold value for each Key Performance Parameter and Key System Attribute parameter. Cost, schedule, and performance are intrinsically linked and the objective and threshold values of all program goals should be developed with these relationships in mind. The PM is responsible for managing the trade space between program objectives and thresholds within the bounds of cost, schedule, and performance.”