Assessing the Affordability of Force Structures
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1 Assessing the Affordability of Force Structures Dr Stuart Taylor Crown copyright 213. Published
2 Overview Context Current force structure costing capability Strengths Limitations Proposed future costing capability MoD research project Emerging ideas
3 Context Extant capability used to support previous Defence Review (Force Structure Cost Model) Requirement to develop tools and techniques to support SDSR 15 Defence policy and capability choices will drive the future force structure requirement Need to be able to determine the affordability of the various options
4 Force Structure Cost Model (FSCM) Requirement to support High Level Operational Analysis (HLOA) studies Force Elements could not be costed using MOD s systems Designed in Fully functional 22. It is a high level tool designed to: Map Pan-DLoD costs to Force Elements Support force structures analysis Represent peace time costs It is not: A budgeting tool A tool which identifies and costs specific details of alternative force structures
5 Major FSCM Inputs Cost Data Equipment Procurement Programme (EPP) Equipment Support Programme (ESP) Defence Infrastructure Organisation (DIO) Personnel costs Ammunition costs Force Structure Data Asset registers Service Management plans UINs Personnel numbers Defence ammo reports FSCM Crown copyright 213. Published
6 Illustrative Cost Profiles Manpower In-service Production Development Manpower In-service Production Development Manpower In-service Production Development
7 FSCM: Highest level EOD Regiment Astute Class Light Infantry Type 23 General Purpose DE&S The Red Arrows DIO Typhoon
8 Uses of the FSCM Provide Pan-DLoD cost profiles for capabilities Provide EACs for Balance of Investment studies Show interdependencies between P9 lines and Force Elements Estimate in-year costs for alternative force structures Supported... SDSR 1 3 Month Exercise Other models Numerous studies Key model within MoD Cost Management Strategy
9 Affordability Current Capability Alternative force structures treated as an input In-year force levels adjusted accordingly In-year costs estimated through simple extrapolation Comparison with different budget scenarios Single in-year cost is insufficient for affordability analysis
10 Affordability - Requirements A fuller understanding of affordability requires cost profiles over time
11 Indicative Cost / Bn Cost / Bn Affordability - Requirements A fuller understanding of affordability requires cost profiles over time SDSR Current Plan Year
12 Indicative Cost / Bn Cost / Bn Affordability - Requirements A fuller understanding of affordability requires cost profiles over time Propose alternative FF22 with new in-year cost Candidate SDSR 15 option Alternative Force Structure Current Plan Year
13 Indicative Cost / Bn Cost / Bn Affordability - Requirements A fuller understanding of affordability requires cost profiles over time Can't apply simple extrapolation for all years Alternative Force Structure Current Plan Year
14 Indicative Cost / Bn Cost / Bn Affordability - Requirements A fuller understanding of affordability requires cost profiles over time Need to extrapolate from current force structure Alternative Force Structure Current Plan Year
15 Indicative Cost / Bn Cost / Bn Affordability - Requirements A fuller understanding of affordability requires cost profiles over time May need to estimate cost of sustaining this force structure Alternative Force Structure Current Plan Year
16 Indicative Cost / Bn Cost / Bn Affordability - Requirements A fuller understanding of affordability requires cost profiles over time Or may need to estimate cost of providing FF22 and FF225 Alternative Force Structure Current Plan Year
17 Affordability - Requirements A fuller understanding of affordability requires cost profiles over time Cost profiles will depend on how the force structure evolves. Abrupt Force Level Change Gradual Force Level change Cost FL Cost FL
18 Affordability - Requirements A fuller understanding of affordability requires cost profiles over time Cost profiles will depend on how the force structure evolves If force levels are increased, then the preceding production costs need to be represented Early prototype model now developed to demonstrate cost profile extrapolation
19 Force Level Force Level Profiles Assume 7 Force Elements with planned force level profiles as below Year FE1 FE2 FE3 FE4 FE5 FE6 FE7
20 Force Level Force Level Profiles Analysis usually produces alternative force structures for specific years Assume 3 changes in Year 13 force levels Year FE1 FE2 FE3 FE4 FE5 FE6 FE7
21 Force Level Profiles Need to generate sensible extrapolation Maintain planned rates of change as far as possible Limits on max rate of Force Level increase Assume new force levels maintained beyond year 13?
22 Force Level Force Level Year FE1 FE2 FE3 FE4 FE5 FE6 FE Year FE1 FE2 FE3 FE4 FE5 FE6 FE7
23 Cost Profiles Development costs Binary function of whether the FE is ever required Manpower & In-service costs Assume these scale linearly with in-year force levels Production costs More Complicated Change in max force level affects production costs in previous years Need to work out cost profile per individual FE Add or subtract in cost in preceding years
24 Cost Force Level Production Costs Need to work out cost profile per individual FE Year
25 Cost Force Level Production Costs Need to work out cost profile per individual FE Standardised cost per FE Year
26 Cost Cost Estimated Cost Profiles 6 Planned Cost Profile 6 New Cost Profile FE7 FE6 FE5 FE4 FE3 FE2 FE FE7 FE6 FE5 FE4 FE3 FE2 FE1 Planned Year Year
27 Summary Dstl have an established capability to: Cost Force Elements Support Force Structural BOI Provide indicative costs of alternative force structures Required enhancements for support to SDSR 215 and beyond have been identified Prototype cost profiling model developed Work in progress Further development and V&V required
28 Questions?
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