The Cost of Commonality: Assessing Value in Joint Programs

Abstract

In the 21st century, Major Defense Acquisition Programs (MDAPs) have become increasingly joint efforts. This trend has led to expanding program complexities and interdependencies. The resulting cost, schedule, and performance risks often counterbalance, and potentially outweigh, the efficiencies gained through inter-service program designs. We define these risks as the cost of commonality. Such costs are often unquantified in cost benefit analyses in the defense acquisitions process. In this project, we first review the results of three joint MDAPs to evaluate ex-post indications of programmatic shortfalls resulting from commonality costs. We then propose a unique cost-effectiveness model to assess value in joint programs from a broader portfolio perspective. Finally, we apply our Joint Value Model to the Joint Light Tactical Vehicle program as a case study to validate the concept. The Joint Value Model provides a means for managers to evaluate cost-effectiveness in the portfolio context and compare meaningful differences among program alternatives. We recommend use of this model as a tool for program analysis at all stages of system development. Such costs are often unquantified in cost-benefit analyses in the defense acquisitions process. In this project, we first review the results of three joint MDAPs to evaluate ex-post indications of programmatic shortfalls resulting from commonality costs. We then propose a unique cost-effectiveness model to assess value in joint programs from a broader portfolio perspective. Finally, we apply our Joint Value Model to the Joint Light Tactical Vehicle program as a case study to validate the concept. The Joint Value Model provides a means for managers to evaluate cost-effectiveness in the portfolio context and compare meaningful differences among program alternatives. We recommend use of this model as a tool for program analysis at all stages of system development.