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1Massachusetts Institute of Technology - Prof. de Weck

Prof. Olivier de Weck

16.84216.842

Fundamentals of Systems EngineeringFundamentals of Systems Engineering

Integrated LifecycleIntegrated Lifecycle ManagementManagement

and Modelingand Modeling

4 December 20094 December 2009

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VV--ModelModel Dec 4, 2009Dec 4, 2009

Systems Engineering

Overview

Stakeholder

Analysis

Requirements

Definition

System Architecture

Concept Generation

Tradespace Exploration

Concept Selection

Design Definition

Multidisciplinary Optimization

System Integration

Interface Management

Verification and

Validation

Commissioning

Operations

Lifecycle

Management

Cost and Schedule

Management

HumanFactors System

Safety

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TodayTodays Topicss Topics

Lifecycle Management

First part: Conceive and Design

Second part: Implement and Operate

Lifecycle Modeling and Process

What to model across lifecycle?

Value Modeling and Optimization framework

Summary and last Announcements

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1

Beginningof Lifecycle

- Mission- Requirements- Constraints Customer

StakeholderUser

ArchitectDesignerSystem Engineer

ConceiveDesign

Implement

process information

turninformation

to matter

SRR

PDR CDR

iterate

iterate

The EnvironmentThe Environment: technological, economic, political, social, nature

The EnterpriseThe Enterprise

The SystemThe System

creativity

architecting

trade studies

modeling simulation

experiments

design techniques

optimization (MDO)

virtual

real

Manufacturingassembly

integration

choose

create

Lifecycle ManagementLifecycle Management

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End ofLifecycle

1

The SystemThe Systemreal

AR

virtual

CustomerStakeholderUser EOL

testdeploy

service

monitor

OperateUpgrade

Liquidate

degrade

ArchitectDesigner

SystemEngineer

accept

control

usage

testing

validation

verification

The EnterpriseThe Enterprise

monitor

control

usage

The EnvironmentThe Environment: technological, economic, political, social, nature

System ID

behavior

prediction

Lifecycle Management (cont.)Lifecycle Management (cont.)

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Lifecycle ModelingLifecycle Modeling

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ISO/IE 15288 Lifecycle ProcessesISO/IE 15288 Lifecycle Processes

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What should we model?

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Optimal Lifecycle DesignOptimal Lifecycle Design

Traditionally, design has focused on performance

e.g. for aircraft design

optimal = minimum weight

Increasingly, cost becomes important

85% of total lifecycle cost is locked in by the end ofpreliminary design.

But minimum weight minimum cost maximum value

What is an appropriate value metric?

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Design ExampleDesign Example We need to design a particular portion of the wing

Traditional approach: balance the aero & structural requirements,minimize weight

We should consider cost: what about an option that is very cheap tomanufacture but performance is worse?

aerodynamics?

How do we trade performance and cost?

How much performance are we willing to give up for $100 saved?

What is the impact of the low-cost design on price and demand ofthis aircraft?

What is the impact of this design decision on the other aircraft Ibuild?

What about market uncertainty?

structural dynamics?

manufacturing cost?

aircraft demand?

aircraft price?tooling?

environmental impact?

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Cost

Module

Value metricPerformanceModule

AerodynamicsStructures

WeightsMission

Stability & Control

Revenue

Module

Market factorsFleet parameters

Competition

Value Optimization FrameworkValue Optimization Framework

ManufacturingToolingDesign

Operation

Optimal

design

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ChallengesChallenges

Cost and revenue are difficult to model often models are based on empirical data how to predict for new designs

Uncertainty of market Long program length Time value of money

Valuing flexibility Performance/financial groups even more uncoupled

than engineering disciplines

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Cost ModelCost Model

Need to model the lifecyclecost of the system.Life cycle :

Design - Manufacture -Operation - DisposalLifecycle cost :

Total cost of program overlife cycle

85% of Total LCC is locked

in by the end of preliminarydesign.

Cost

Module

Value metricPerformance

Module

Revenue

Module

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Lifecycle CostLifecycle Cost

0

20

40

60

80

100

65%

Co

nceptual

design

Preliminaryd

esign,

sy

stemi

ntegration

Detailedde

sign

Manufacturing

andacquisi

tion

Operation

andsuppo

rt

Disposal

Time

Impac

ton

LCC

(%)

85%

95%

(From Roskam, Figure 2.3)

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NonNon--Recurring CostRecurring Cost

Cost incurred one time only:

Engineering- airframe design/analysis

- configuration control- systems engineering

Tooling

- design of tools and fixtures- fabrication of tools and fixtures

Other

- development support- flight testing

Engineering

Too

ling

Other

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Cost Estimating MethodsCost Estimating Methods

Basic techniques to develop Cost Models:

(1) Detailed bottom-up estimating

- identify and specify lower level elements

- estimated cost of system is of these- time consuming, not appropriate early, accurate

(2) Analogous Estimating- look at similar item/system as a baseline- adjust to account for different size and complexity

- can be applied at different levels

(3) Parametric Estimating

- uses Cost Estimation Relationships (CERs)- needed to find theoretical first unit (TFU) cost

C S (C S)C t B kd St t (CBS)

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Cost Breakdown Structure (CBS)Cost Breakdown Structure (CBS)

Organizational Table that collects costs, covers:

- research, development, test and evaluation (RDT&E)- production, including learning curve effects- launch and deployment- operations- end-of-life (EOL) disposal

SpaceMission

Architecture

ProgramLevel Costs

SpaceSegment

LaunchSegment

GroundSegment

Operationsand Support

Management Systems Eng

Integration

Payload Spacecraft

Software Systems

Launch Vhc Launch Ops

S/C-L/Vintegration

Facilities Equipment

Software etc

Personnel Training

Maintenance Spares

RDT&E

ProductionOperations

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Parametric Cost ModelsParametric Cost Models

Are most appropriate for trade studies:

Advantages: less time consuming than traditional bottom-up estimates more effective in performing cost trades more consistent estimates traceable to specific class of aerospace systems

Major Limitations: applicable only to parametric range of historical data lacking new technology factors, adjust CER to account for new technology composed of different mix of things in element to be costed usually not accurate enough for a proposal bid

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Process for developing CERProcess for developing CERss

Subsystem A

Subsystem B

Subsystem N.

Cost/parametric data

Constant Year Costs

RegressionAnalysis

Preferred Form

(Cost Model Assumption)

Subsystem A

Subsystem B

Subsystem N.

$

Weight - kg

$ bW=

ComputerSoftware

Step 1

Develop DatabaseFile

Step 2

Apply RegressionAnalysis

Step 3

Obtain CERs andError Statistics

Key statistics: R2, Standard Error: RMS,

Adjustment to constantAdjustment to constant--yearyear

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Adjustment to constantAdjustment to constant--yearyear

dollarsdollars

It is critical that cost estimated be based on aconstant-year dollar bases. Reason: INFLATION

Y Y NC R C =

E.g. All costs are adjusted to FY92 (Fiscal Year 1992)

Past Years

Future Years

Use actual inflation numbers

Use forecasted inflation numberse.g. 3.1% yearly inflation in U.S.

( ) ( ) ( )92 93 94

1.040 1.037 1.034 1.115

FY FY FY

R = =12314243123

Convert Oct-1991 costto Oct-1994 costs

( )1N

RATER i= +$ 1M in FY 1980 corresponds to$ 2.948M in FY 2005

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Development Cost ModelDevelopment Cost Model

Cashflow profiles based on beta curve:

Typical development time ~6 years

Learning effects captured span, cost

11 )1()( = tKttc

0

0.01

0.02

0.04

0.05

0.06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53

normalized time

Support

Tool Fab

Tool Design

ME

Engineeringnormalizedcost

(from Markish)

R i C t

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Recurring CostRecurring Cost

Cost incurred per unit:Labor

- fabrication

- assembly- integrationMaterial to manufacture

- raw material- purchased outside

production- purchased equipment

Production support- QA- production tooling support

- engineering support

La

bor

Ma

teria

l

Support

L i CL i C

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Learning CurveLearning Curve

As more units are made, the recurring cost perunit decreases.

This is the learning curve effect.e.g. Fabrication is done more quickly, lessmaterial is wasted.

n

x xYY 0=

Yx= number of hours to produce unitxn = log b/log 2b = learning curve factor (~80-100%)

L i CL i C

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Learning CurveLearning Curve

0.55

0

0.2

0.4

0.6

0.8

1

0 10 20 30 40 50

Unit number

C

ostofun

it

b=0.9

Typical LC slopes: Fab 90%, Assembly 75%, Material 98%

Every time

productiondoubles,

cost is

reduced by

a factor of0.9

Ai l R l t d O ti C tAi l R l t d O ti C t

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CASH AIRPLANE RELATED

OPERATING COSTS:Crew

Fuel

Maintenance

LandingGround Handling

GPE Depreciation

GPE Maintenance

Control & Communications

Airplane Related Operating CostsAirplane Related Operating Costs

CAROC is only 60% - ownership costs are significant!

CAROC

60%40%

Capital

Costs

CAPITAL COSTS:

FinancingInsurance

Depreciation

V l M t iVal e Metric

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Value MetricValue Metric

Need to provide aquantitative metric thatincorporates cost,

performance andrevenue information.

In optimization, need tobe especially carefullyabout what metric wechoose...

Cost

Module

Value metricPerformance

Module

Revenue

Module

Val e MetricsValue Metrics

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Value MetricsValue Metrics

performance

weightspeed

Traditional Metrics

cost

revenueprofit

quietness

emissions

commonality

...The definition of value will vary depending on your systemand your role as a stakeholder, but we must define a

quantifiable metric.

Augmented Metrics

Net Present Value (NPV)Net Present Value (NPV)

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Measure of present value of various cash flows in differentperiods in the future

Cash flow in any given period discounted by the value of a

dollar today at that point in the future Time is money A dollar tomorrow is worth less today since if properly

invested, a dollar today would be worth more tomorrow Rate at which future cash flows are discounted is

determined by the discount rate or hurdle rate Discount rate is equal to the amount of interest the

investor could earn in a single time period (usually ayear) if s/he were to invest in a safer investment

Discounted Cash Flow (DCF)Discounted Cash Flow (DCF)

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Discounted Cash Flow (DCF)Discounted Cash Flow (DCF)

Forecast the cash flows, C0, C1, ..., CTof the projectover its economic life

Treat investments as negative cash flow

Determine the appropriate opportunity cost of capital(i.e. determine the discount rate r)

Use opportunity cost of capital to discount the future

cash flow of the project Sum the discounted cash flows to get the net present

value (NPV)

NPV= C0 +C1

1+ r+

C2

1+ r( )2

+K+CT

1+ r( )T

DCF exampleDCF example

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DCF exampleDCF example

Period Discount Factor Cash Flow Present Value

0 1 -150,000 -150,000

1 0.935 -100,000 -93,500

2 0.873 +300000 +261,000

Discount rate = 7% NPV = $18,400


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31 Massachusetts Institute of Technology - Prof. de Weck and Prof. WillcoxEngineering Systems Division and Dept. of Aeronautics and Astronautics


0 (1 )

Tt

tt

CNPV

r==

+

-1500

-1000

-500

0

500

1000

1500

1 3 5 7 911

13

15

17

19

21

23

25

27

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Cashflow

DCF (r=12%)

Program Time, t[yrs]

Cas

hflow,

Pt[$

]

Return on Investment (ROI)Return on Investment (ROI)

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32 Massachusetts Institute of Technology - Prof. de Weck and Prof. WillcoxEngineering Systems Division and Dept. of Aeronautics and Astronautics

Return on Investment (ROI)Return on Investment (ROI)

Return of an action divided by the cost of thataction

Need to decide whether to use actual ordiscounted cashflows

revenue cost

cost

ROI

=

Traditional Design OptimizationTraditional Design Optimization

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Traditional Design OptimizationTraditional Design Optimization

Objective function:usually minimumweight

Design vector:attributes of design,e.g. planform

geometry Performance model:

contains several

engineeringdisciplines

PerformanceModel

Optimizer

Designvectorx

Objectivefunction J(x)

Coupled MDO FrameworkCoupled MDO Framework

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Coupled MDO FrameworkCoupled MDO Framework

PerformanceModel

Cost

Revenue

Optimizer

Valuation

Market

,

Price,Demand

Cost

Designvectorx

Objectivefunction J(x)

Objective function: valuemetric, e.g. NPV

Simulation model:

performance and financialStochastic element

SS

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SummarySummary

Lifecycle Management Operations phase is often the longest and most expensive

Design for maintainability, upgrades, evolution Lifecycle Modeling

Cost = Non-recurring + Recurring, Fixed + Variable

Revenue, Value Others e.g. energy consumption, carbon footprint

Take 16.888 Multidisciplinary System Design

Optimization in Spring 2010 if you want more ! Online final exam will be posted this weekend by Dec 6,

2009 at the latest 4 days to respond (open book)

Friday, Dec 11 social event (LEGO Mind Storms)

Thank you!Thank you!

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Thank you!Thank you!

Happy Holidays !

TA: Maj. Jeremy Agte could not have done it without you !

MIT OpenCourseWare

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http://ocw.mit.edu

16.842Fundamentals of Systems Engineering

Fall 2009

For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.
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