Simplifying Facility Investments
The U.S. Army National Guard, with support from industry, has developed an innovative business case approach that simplifies the facility investment decision-making process by focusing not as much on readiness centers, but on achieving mission readiness.
By E. Sherrell Crow, PMP, Jeff Freemyer, CCEA, PMP, M.SAME, and Jack Dempsey P.E., M.SAME
The 35,000-ft² Cabot Readiness Center in Cabot, Ark., opened in 2011. PHOTO COURTESY ARKANSAS NATIONAL GUARD
In today's budgetary environment, the ability to obtain funding is directly related to making a simple, compelling business case. Tying facility investments to mission outcome is a new paradigm for managing risk and demonstrating value.
The U.S. Army National Guard (ARNG), supported by Jacobs, recently submitted to the Senate Armed Services Committee a Readiness Center Transformation Master Plan. The plan articulates an innovative approach that changes the narrative from investing in readiness centers to investing in mission readiness.
Traditional facility metrics developed over the last 25 years to evaluate facility portfolio planning, programming and prioritization are shifting to a risk-based, mission-oriented approach. The National Guard Bureau drew on this shift in response to a Congressional directive to develop a capital investment strategy for modernizing the 70-million-ft² portfolio of ARNG readiness centers across the nation.
ARNG compiled common, structured datasets from 50 states, three territories and the District of Columbia to develop a risk-based, mission-oriented analysis. The dataset included the traditional facility metrics of facility condition index (FCI), space requirements (C score) and functional score (F score) for approximately 2,000 readiness centers. The challenge with the traditional array of metrics is they focus on facility-centric criteria, which does not always accurately reflect operational needs. In the end, the traditional approach is biased by a facility lifecycle management perspective that does not best support risk-based, mission-oriented decision-making, thus sub-optimizing limited resources.
The new simplified business case approach links facility investments to mission effectiveness by evaluating resource decision-making in terms of operational readiness, time and cost.
ARNG’s analysis considered an array of investment strategies projecting requirements 15 years into the future. Each of these time-dependent investment strategies had different portfolio investment levels (military construction and sustainment, restoration and modernization priorities) and different end-state portfolio results (FCI, C, F and Mission Dependency Index (MDI) scores). This led to different operational readiness outcomes. The investment strategies also included degradation models to evaluate the complex interdependencies between funding sources to forecast budgetary requirements.
The result was a series of investment strategies for balancing mission readiness, operational risks, time, resources and facility performance. Based on this analysis, principle investment scenarios were defined along an Operational Readiness Efficiency Frontier. Each investment scenario reports an achievable operational readiness goal over a 15-year investment period. The efficiency frontier forecasts the cumulative program cost for the targeted Operational Readiness Index (ORI).
Cumulative performance results shown over a 15-year capital investment program. Each scenario represents what level of operational readiness could be expected for each funding strategy. IMAGE COURTESY JACOBS
The primary connection to mission was made through the MDI. ARNG conducted MDI interviews with each of the states and territories on their current portfolio and recommended course of action for their end-state footprint. Understanding the interdependency between relocateability and interruptability provided a defensible approach to ensuring that investment strategy tradeoffs supported the concept of operations being used. Further, the MDI accounted for the range of concepts of operations in each state while demonstrating alignment to ARNG’s federal mission objectives. As an example, locations that scored lower on the MDI scale in the current portfolio were those often targeted for divestiture by the end-state.
For the ARNG business case analysis, the mission dependency was combined with the traditional facility stewardship metrics to develop an ORI to form the capital investment strategy. Stewardship metrics compiled FCI, C and F score inputs. The ORI provides a key evaluation method to objectively measure specific contributions that each capital project makes to the entire portfolio score. This represents a return on mission, based on the capital investment.
Investment scenarios were developed considering the interdependency between military construction and sustainment, restoration and modernization funding levels. Degradation models were used to project deferred maintenance penalty costs, which made forecasts more realistic. For instance, if a proper level of sustainment, restoration and modernization was invested in the portfolio, the traditional facility metrics would remain constant over time. By underfunding, a facility is subject to increasing degradation and likely will need a larger military construction requirement.
The four scenarios considered were: Current Funding, Baseline, Affordable Readiness and Get to Green. The Current Funding scenario demonstrates a negative outcome in the ORI if current funding levels are maintained. The Baseline scenario also shows a reduction in mission readiness based on a targeted capital budget spending cap. Affordable Readiness targets a two-part strategy, where the program enhances sustainment, restoration and modernization funding to slow facility deterioration and increases military construction funding to achieve greater mission readiness. The fourth scenario, Get to Green, is a targeted investment to complete the entire capital program within a 15-year period.
This business case methodology has provided ARNG with a holistic approach to a simple benefit-to-cost analysis. Benefits are reported in terms of an increase to the portfolio’s ORI, which is directly affected by combined military construction and sustainment, restoration and modernization investments. While the traditional underlying metrics form the basis of facility performance, the ORI evaluates the return on mission that is achieved through targeted facility investments. Scenario evaluation is simplified.
EFFECTING POSITIVE CHANGE
Establishing a decision framework around the Operational Readiness Efficiency Frontier demonstrates the ability of an investment strategy to effect positive change in direct terms.
The analysis becomes a simple cause and effect. Military construction and sustainment, restoration and modernization levels and priorities are used to define the scope of an investment strategy with an objective outcome reported as a change in the portfolio’s ORI. In this framework, ORI translates as the measure of mission readiness.
This evaluation is critical to determining the balance point between achieving desired operational readiness with what can be afforded. There is always a desire to increase operational readiness, but doing so is limited by the amount and type of investments available to the program. This relationship recognizes the need for decision-makers to be able to understand the minimum investment necessary to sustain targeted operational readiness objectives. In practice, defining the Affordable Readiness scenario becomes a rigorous and iterative process that considers a multitude of stakeholder inputs, operational risks and investment strategies.
IMPROVING MISSION READINESS
The business case analysis methodology has translated complex return on mission, operational risks, funding type interdependencies, and stewardship considerations (quality, quantity, function) into a simple value proposition.
What emerges is a compelling business case that clearly states a direct means to improve ARNG mission readiness through thoughtful, risk-based decision-making. From this, the Affordable Readiness scenario was selected and the final analysis signed by the Secretary of the Army and sent to Congress to advance appropriation decision-making.