Targeting Affordability and Controlling Cost Growth through Should-Cost Analysis Abstract In 2010 and 2011, The Honorable Ashton B. Carter; Under Secretary of Defense for Acquisition, Technology and Logistics, released several affordability-focused memoranda addressed to the acquisition professionals of the Department of Defense. The primary thrust of the memoranda was the current need for greater efficiency and productivity in defense spending. Secretary Carter provided guidance organized into five initiatives:
- Target Affordability and Control Cost Growth
- Incentivize Productivity and Innovation in Industry
- Promote Real Competition
- Improve Tradecraft in Services Acquisition
- Reduce Non-Productive Processes and Bureaucracy
The first initiative mandates the use of Should-Cost Analysis and Will-Cost Analysis to establish affordability targets and control cost growth. To survive and thrive in this environment, systems engineering must lead their organizations to embody a cost management culture. This paper will discuss a step-by-step should-cost analysis and affordability management process. It will demonstrate the value of integrating agile cost estimating models into the process. Actual case studies of programs that succeeded and failed with should-cost analyses will be presented.