Related Resources: Design for Manufacturing

Design to Cost Concept and Application

Engineering Applications and Design
Design for Manufacturing and Assembly

Design to Cost Concept and Application
Noel Paul Horn
Lieutenant, United States Navy
M.S., Naval Postgraduate School,
and
Peter Vincent Dabbieri, Jr.
Lieutenant, United States Navy
M.S., Naval Postgraduate School,
270 Pages
December 1974

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Open: Design to Cost Concept and Application

Abstract

Design- to-Cost has been instituted as one of several reforms to Department of Defense procurement practices. This thesis presents historical needs for such reforms.
Design- to-Cost is described and placed in context with other policy revisions. Impacts of recent changes and resultant controversies are explored. Sample cases display the actual implementation of Design- to-Cost . Problem areas are enumerated and remedial actions proposed.

TOC

I. INTRODUCTION 15
A. PURPOSE OF PAPER 15
B. DEFINITIONS OF DESIGN-TO-COST 18
C. REQUIREMENT FOR IMPLEMENTATION OF DESIGN-TO- COST 19
H. HISTORY OF EVENTS LEADING TO THE REQUIREMENT FOR DESIGN-TO-COST 20
A. McNAMARA PHILOSOPHY 20
B. COST GROWTH 2 2
1. Improved Capability 22
2. Inadequate Cost Estimating Ability 23
3. Requirement? Changes 24
C. EFFECTS OF RECENT TRENDS IN WEAPONS
PROCUREMENT 2 5
1. Fewer Weapon Systems Acquired 25
2. Increased Weapons Complexity 26
3. Reduced Training 26
4. Excessive Optimism 26
5. Loss of Public Confidence 27
6. Excessive Management Restrictions 27
III. INTRODUCTION OF DESIGN -TO -COST TO THE DEPARTMENT OF DEFENSE 2 8
A. DOD DIRECTIVE 5000.1 28
B. JOINT DESIGN-TO-COST GUIDE 32
C. SECNAV INSTRUCTION 50 00.1 36
D. PHILOSOPHY CHANGE 37
E. COMMERCIAL APPLICATION -- 41
F. GOALS 4 5
1. Performance Goals 45
2. Cost Goals 46
G. TRADEOFFS 50
H. REACTIONS TO IMPOSITION OF DESIGN-TO-COST 53
I. PROBLEMS AND CRITICISMS 55
1. Problems Related to Finance 55
2. Problems Related to Source Selection 56
3. Problems Related to Requirements 57
4. Problems Related to Project Management 59
5. Problems Related to Emphasis Level of Life Cycle Cost 60
IV. CASE STUDIES 62
A. AIR FORCE CLOSE AIR SUPPORT AIRCRAFT (A-10) 63
1. Background 63
2. Design- to-Cost Contract Features 65
3. Design Tradeoffs 68
B. ARMY ADVANCED ATTACK HELICOPTER 71
C. UTILITY TACTICAL TRANSPORT AIRCRAFT SYSTEM 7 5
D. SAM-D MISSILE 79
E. SUBSONIC CRUISE ARMED DECOY 8 3
F. LIGHTWEIGHT FIGHTER S7
1. General Dynamics YF-16 88
2. Northrop YF-17 91
3. Air Combat Fighter 93
G. NAVY LIGHTWEIGHT FIGHTER 94
H. NWC PROJECTS 97
1. Advanced Long Range Air- to-Air Missile System 97
2. Improved Weapons Delivery System 98
3. Improved Sparrow 98
4. High Speed Anti-Radiation Missile 99
V . CONCLUS IONS 101
A. PURPOSE OF DESIGN-TO-COST 101
B. UNANSWERED QUESTIONS 102
1. Program Credibility 103
2. Inconsistent Accounting Definitions 103
3. Emphasis Upon Unit Production Costs 104
4. Disregard of Operation and Support Costs 104
5. Degree of Standardization 104
6. Unusual Cases 105
7. Quantity of R § D Spending 106
8. Data Shortages 106
9. Rigidity of Goals 107
10. Planning Problems 107
11. Management Reserves 108
12. Cost Uncertainties ]08
13. Technical Uncertainties 109
14. Problems of Enforcement and Incentives 109
15. Contractor Optimism 109
16. Source Selection Procedures 110
17. Technical Transfusion 110
18. Parallel Development Costs 110
19. Maintaining Creativity 111
20. Project Manager Status and Motivation 111
21 Retrofits 111
22. Delays in Change Review 112
23. Contractual Changes 112
24. Determination of Essential Requirements 112
25. Program Review and Control 112
26. Contractor Flexibility 113
27. When Cost Goals should be Applied 113
28. Operation Usage Definition 113
29. Elimination of Detailed Specifications 113
30. Uses of Saved Funds 114
31. Prototype Tooling 114
32. Escalation Factors 114
VI . RECOMMENDAT IONS 116
A. RECOMMENDED ACTIONS 116
1. Enforced Use of Performance Specification 116
2. Standardized Design- to-Cost Approach 117
3. Common Data Bases Universally Available 118
4. Avoid Retrofits 118
5. Professional Project Manager 119
6. Supply Cost Feedback to Engineers 120
7. Hold Project Managers Accountable for Operation and Support Costs 120
8. Multi-Year Funding 121
9. Use of Standard Parts When Available 121
10. Critical Examination of Requirements 121
11. Multiple Contractor Proposals 122
12. Contractor Warranties 122
13. Contractor Maintenance 123
14. Specify Contractual Change Procedures 123
15. Allow Services to Keep Part of Cost Savings- -124
16. Increased Emphasis Upon Competition 124
B. SUMMARY OF RECOMMENDATIONS 124
LIST OF REFERENCES 126
INITIAL DISTRIBUTION LIST 133

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