Fundamentals of Business Management DAU M3.pdf - BCF 110...

DAU
BCF 110 Fundamentals of Business
Financial Management (Module Three)

1
Contents
Module 3 - Introduction to Planning ............................................................................................................ 5
Lesson 3.1 - Module Overview .................................................................................................................. 5
Introduction to the "PPBE Planning Phase" Module ............................................................................ 5
Module Objectives ................................................................................................................................ 5
Module Outline ..................................................................................................................................... 5
PPBE Overview ...................................................................................................................................... 6
PPBE Overview, cont. ............................................................................................................................ 6
Objectives of PPBE ................................................................................................................................ 7
Module Overview .................................................................................................................................. 7
Lesson 3.2 - Planning Process ................................................................................................................... 8
Lesson Objectives .................................................................................................................................. 8
Planning Phase Overview ...................................................................................................................... 8
Strategic Documents ......................................................................................................................... 8
Flowchart .......................................................................................................................................... 9
Planning Phase Primary Inputs ............................................................................................................. 9
Primary Inputs ....................................................................................................................................... 9
Example - Role/Impact of Planning on Service PPBE Process ............................................................. 12
Primary Output ................................................................................................................................... 12
Planning Phase Fiscal Guidance .......................................................................................................... 12
How Strategic Document Impacts the Fiscal Guidance ...................................................................... 13
Planning Phase: Timing ....................................................................................................................... 13
Principal Players: Planning Phase ........................................................................................................ 15
Lesson Summary ................................................................................................................................. 15
Lesson 3.3 - Module Summary ................................................................................................................ 16
Module Summary ................................................................................................................................ 16
Module 4 - Introduction to Programming .................................................................................................. 17
Lesson 4.1 - Module Overview ................................................................................................................ 17
Introduction to the "PPBE Programming Phase" Module .................................................................. 17
Module Objectives .............................................................................................................................. 17
Module Outline ................................................................................................................................... 17
Module Overview ................................................................................................................................ 18
Module Overview, cont ....................................................................................................................... 18

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Lesson 4.2 - Cost Estimate ...................................................................................................................... 19
Lesson Objectives ................................................................................................................................ 19
Lesson Introduction ............................................................................................................................ 19
Introduction to Cost Analysis Terms ................................................................................................... 19
Life-Cycle Cost (LCC) ............................................................................................................................ 20
LCC Categories & Appropriations ........................................................................................................ 21
LCC Distribution by Cost Categories .................................................................................................... 22
Cost Analysis Requirements Description (CARD) ................................................................................ 22
CARD Development ............................................................................................................................. 23
Life Cycle Cost Estimate (LCCE) ........................................................................................................... 24
Coordinating and Preparing a Life Cycle Cost Estimate (LCCE) ........................................................... 24
Key Participants of LCCE ...................................................................................................................... 26
Best Practices for Cost Estimating ...................................................................................................... 26
Component Cost Estimate (CCE) ......................................................................................................... 27
Program Office Estimate (POE) ........................................................................................................... 27
Independent Cost Estimate (ICE) ........................................................................................................ 27
Should Cost and Will Cost ................................................................................................................... 28
Should Cost and Will Cost, cont. ......................................................................................................... 28
Reward Cost-effectiveness and Efficiency .......................................................................................... 29
Better Buying Power 2.0 Will Cost/Should Cost ................................................................................. 30
Better Buying Power 3.0 ..................................................................................................................... 30
Better Buying Power 3.0, cont. ........................................................................................................... 31
Better Buying Power 3.0, cont. ........................................................................................................... 32
Should Cost Management Motivation ................................................................................................ 32
Will Cost vs. Should Cost ..................................................................................................................... 32
Where to Look for Opportunities ........................................................................................................ 33
Where to Look for Opportunities, cont. ............................................................................................. 34
Where to Look for Opportunities, cont. ............................................................................................. 34
Total Ownership Cost (TOC) ................................................................................................................ 34
TOC Elements ...................................................................................................................................... 35
Reducing Total Ownership Cost (R-TOC) ............................................................................................. 36
Additional LCC Resources .................................................................................................................... 36
Lesson Summary ................................................................................................................................. 37

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Lesson 4.3 - Affordability ........................................................................................................................ 37
Lesson Objectives ................................................................................................................................ 37
Lesson Introduction ............................................................................................................................ 37
Affordability Definition ....................................................................................................................... 37
Background on Affordability ............................................................................................................... 38
DoD Acquisition Policy ........................................................................................................................ 38
Affordability Analysis .......................................................................................................................... 39
Affordability and the DoD 5000.02 ..................................................................................................... 39
Introduction to Cost As an Independent Variable (CAIV) ................................................................... 39
Overview of CAIV ................................................................................................................................ 40
Lesson Summary ................................................................................................................................. 40
Lesson 4.4 - Programmatic Guidance ..................................................................................................... 41
Lesson Objectives ................................................................................................................................ 41
Understand How Programming Guidance is Developed .................................................................... 41
Understand How Programming Guidance is Developed, Cont. .......................................................... 41
Linking National Strategy to Operational Level .................................................................................. 42
Guidance Influenced by Political Climate and Current Threat ............................................................ 43
Cost Estimates are Complete, Accurate, Defensible and Affordable ................................................. 44
Budget Controls TOA ........................................................................................................................... 45
How the Financial Manager Supports the PM and Manages TOA ...................................................... 46
How Program Requirements Are Prioritzed Against the Component Planning Guidance ................. 46
Lesson Summary ................................................................................................................................. 48
Lesson 4.5 - Programming Process ......................................................................................................... 49
Lesson Objectives ................................................................................................................................ 49
Programming Phase Overview ............................................................................................................ 49
Programming Phase Inputs ................................................................................................................. 50
FYDP Purpose & Content .................................................................................................................... 51
FYDP Three Major Dimensions ........................................................................................................... 52
Major Force Program (MFP) ............................................................................................................... 52
Program Elements ...............................................................................................................................