define characteristics of organization based control © dale r. geiger 20111

Define Characteristics of Define Characteristics of Organization Based ControlOrganization Based Control

© Dale R. Geiger 2011 1

Everyone is Part of a HierarchyEveryone is Part of a Hierarchy


Terminal Learning ObjectiveTerminal Learning Objective

• Task: Define Characteristics of Organization Based Control

• Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors

• Standard: with at least 80% accuracy• Describe the difference between Cost Benefit Analysis and

Cost Managed Organizations• Describe characteristics of Organization Based Control


Single Use

EstimatedFuture Cost

Cost InformedDecision Making

Cost BenefitAnalysis

Cost Benefit Analysis

Contrasting CBAs and CMOsContrasting CBAs and CMOs

Single Use

EstimatedFuture Cost

Cost InformedDecision Making

Cost BenefitAnalysis

Persistent Use

Expected & Actual Cost

Continuous Improvement

Cost Managed Organization


Cost Managed Organization



• Cost Benefit Analysis• Uses a formal, structured process to inject cost

considerations into the decision making process• Improves the cost effectiveness of acquisitions, policy

alternatives, and other major decisions• Is too time consuming and costly itself to be used for

all day-to-day operating decisions• Cost Managed Organizations

• Use cost management and control processes to improve the cost management and control of day-to-day operations


Leadership


Cost Managed

Organization


ACE Expertise


Cost Managed

Organization


Process


Cost Managed

Organization


Measurement


Cost Managed

Organization

CMOs Look for a Return on Investment CMOs Look for a Return on Investment From Cost Management and ControlFrom Cost Management and Control

credibility

cost

beneficialuse

Desired 10 to 1 Ratio

Process and Measurement

Learning CheckLearning Check

• How does the leader’s role in CBA differ from that in a CMO?

• Why is CBA justified in major acquisition decisions?


Different Types of CMOsDifferent Types of CMOs

• Organization Based• Exploits existing accountability relationships embedded

in every organization

• Role Based• Adds new accountability relationships to control costs for

specific purpose

• Output Based• Focuses control on product or service costs

Organization Based ControlOrganization Based Control

Tier 3 Leader

Tier 2 Leader

Tier 3 Leader

Tier 2 Leader

Tier 1 Leader

Tier 3 Leader Tier 3 Leader

Utilizes Each Node in the Chain of Command in AAR Process

AAR

AAR AAR

Organization Based ControlOrganization Based Control

• Strengths• Takes advantage of existing accountability

relationships• Subordinates are accustomed to taking direction and

critique from their superiors

• Greatest challenge• Defining and motivating the Cost Chain of Command

The Power of Decentralization The Power of Decentralization

The power of the AAR can extend throughout any sized organization

Learning CheckLearning Check

• What are the three general categories of Cost Managed Organizations?

• What are the strengths of Organization Based CMOs?


Practical DemonstrationPractical Demonstration3d Armored Cavalry Regiment3d Armored Cavalry Regiment

• The 3d Armored Cavalry Regiment is a unique armored Brigade level unit with a storied history• LTG George Patton was once its regimental commander• As was GEN Dempsey

• Soldiers are the most expensive cost element in a tactical unit

• AMCOS is an Army tool to evaluate cost of military and civilian personnel

• Go to https://www.osmisweb.army.mil/amcos/app/home.aspx and log in with AKO or CAC

https://www.osmisweb.army.mil/amcos/app/home.aspx

Accessing AMCOSAccessing AMCOS


AMCOS Total Cost Data by RankAMCOS Total Cost Data by Rank

© Dale R. Geiger 201120

$K per Year per Soldier E1 E2 E3Military Compensation Avg Cost of Base Pay (Military) 17.6 19.7 21.0Military Compensation Avg Cost of Basic Allowance for Housing (in cash) 8.8 9.6 10.9Military Compensation Avg Cost of Basic Allowance for Subsistence 4.7 4.7 4.7Other Benefits Avg Cost of Other Benefits 2.3 2.5 3.0Permanent Change of Station Costs Avg Permanent Change of Station-annualized () 0.3 0.3 0.4Recruiting Costs Avg Recruiting Cost for MOS () 24.1 24.1 24.2Retired Pay Accrual Avg Cost of Retired Pay Accrual 5.8 6.5 6.9Selective Reenlistment Bonus

Avg Cost of Reenlistment Bonus (A and B Amortized) 0.0 0.0 0.0

Separation Costs Avg Cost of All Separation Incentives 1.6 0.5 0.4Special Pays Avg Cost of Special Pays 1.0 1.0 1.1Training Avg Cost of Training (Total Amortized) 6.3 6.4 6.3 Total MPA (AMCOS) 72.5 75.4 78.9

$K per Year per Soldier E1 E2 E3Medical Support Costs Avg Cost of Medical Support Cost 6.7 6.8 6.5Morale, Welfare and Recreation Costs Avg Cost of Morale, Welfare and Recreation 0.3 0.3 0.3Recruiting Costs Avg Recruiting Cost for MOS (Amortized) 6.3 6.4 6.4Training Avg Cost of Training (Total Amortized) 9.7 9.9 9.8 Total OMA (AMCOS) 23.0 23.3 22.9

$K per Year per Soldier E1 E2 E3New GI Bill Costs Avg Cost of GI Bill 30.9 30.9 30.9Training Avg Cost of Training (Total Amortized) 3.5 3.6 4.3 Total Other (AMCOS) 34.4 34.4 35.1

MPA

other

OMA

Total CostTotal Cost


The Composite Standard Rate is PreferredThe Composite Standard Rate is Preferred

© Dale R. Geiger 201122

$K per Year per Soldier E1 E2 E3Military Compensation Avg Cost of Base Pay (Military) 17.6 19.7 21.0Military Compensation Avg Cost of Basic Allowance for Housing (in cash) 8.8 9.6 10.9Military Compensation Avg Cost of Basic Allowance for Subsistence 4.7 4.7 4.7Other Benefits Avg Cost of Other Benefits 2.3 2.5 3.0Permanent Change of Station Costs Avg Permanent Change of Station-annualized () 0.3 0.3 0.4Recruiting Costs Avg Recruiting Cost for MOS () 24.1 24.1 24.2Retired Pay Accrual Avg Cost of Retired Pay Accrual 5.8 6.5 6.9Selective Reenlistment Bonus

Avg Cost of Reenlistment Bonus (A and B Amortized) 0.0 0.0 0.0

Separation Costs Avg Cost of All Separation Incentives 1.6 0.5 0.4Special Pays Avg Cost of Special Pays 1.0 1.0 1.1Training Avg Cost of Training (Total Amortized) 6.3 6.4 6.3 Total MPA (AMCOS) 72.5 75.4 78.9

$K per Year per Soldier E1 E2 E3Medical Support Costs Avg Cost of Medical Support Cost 6.7 6.8 6.5Morale, Welfare and Recreation Costs Avg Cost of Morale, Welfare and Recreation 0.3 0.3 0.3Recruiting Costs Avg Recruiting Cost for MOS (Amortized) 6.3 6.4 6.4Training Avg Cost of Training (Total Amortized) 9.7 9.9 9.8 Total OMA (AMCOS) 23.0 23.3 22.9

$K per Year per Soldier E1 E2 E3New GI Bill Costs Avg Cost of GI Bill 30.9 30.9 30.9Training Avg Cost of Training (Total Amortized) 3.5 3.6 4.3 Total Other (AMCOS) 34.4 34.4 35.1

Composite Standard

Rates

other

OMA

42.1, 44.9, 48.5

Composite Standard RateComposite Standard Rate


Individual Exercise in Costing Soldiers of Individual Exercise in Costing Soldiers of the 3d Armored Cavalry Regimentthe 3d Armored Cavalry Regiment

• The 3d ACR air assets were re-flagged as part of a new Combat Aviation Brigade when the unit deployed

• A significant sized rear detachment remained at Fort Hood, Texas

• Use AMCOS to determine the annual cost of the deployed unit and the rear detachment at the composite standard rate

O6 O5 O4 O3 O2 O1

CW5

CW4

CW3

CW2

WO1

E9 E8 E7 E6 E5 E4 E3 E2 E1 total

Rear Detachment 0 2 0 15 4 4 0 3 0 1 1 2 13 53 70 121 176 133 30 19 647

Deployed to Iraq 1 7 23 57 112 16 1 3 0 13 14 4 26 121 245 430 769 624 57 21 2544

Total 3d ACR 1 9 23 72 116 20 1 6 0 14 15 6 39 174 315 551 945 757 87 40 3191

Teacher’s NoteTeacher’s Note3d Armored Cavalry Regiment3d Armored Cavalry Regiment

• The 3d Armored Cavalry Regiment is a Heavy Brigade Combat Team deployed to Iraq (as of spring 2011)

• The Rear Detachment remained at Fort Hood, Texas

*At composite standard rate

Tactical Unit Cost Management & Control: Tactical Unit Cost Management & Control:

Non Deployable SoldiersNon Deployable Soldiers• Throughout the Army many Soldiers are unable to deploy• Operational effects can be

• Under strength units deploying• Units deploying with filler personnel• Increased deployments for some personnel• Reduced dwell to BOG (boots on the ground) time

• Cost effects involve military pay for limited military work• $68 Billion milpay budget in FY11 controlled at Army level• Commands, Armies, Corps, Divisions, Brigades, etc see no cost

or even budget• This means that Soldiers are free goods to their units• FY11 milpay cost for non deployable soldiers is in $10 billion

range

3d ACR Non Deployable Cost3d ACR Non Deployable Cost

• Soldiers are not deployable for a number of reasons• They still draw full salaries• The following are the 3d ACR non deployable soldiers

by category as of January 2011• How much do these soldiers cost the Army per year

by category at the average composite standard rate for the rear detachment?

3d ACRMajor Med

Retire-ment

Cadre Minor Med

PCS Legal TDY Child Care

Other Total

Soldiers 198 64 47 53 8 64 8 21 36 499

Teacher’s NoteTeacher’s Note3d ACR Non Deployable Cost3d ACR Non Deployable Cost

3d ACRMajor Med

Retire-ment

Cadre Minor Med

PCS Legal TDY Child Care

Other Total

Soldiers 198 64 47 53 8 64 8 21 36 499

$M 13.2 4.3 3.1 3.5 0.5 4.3 0.5 1.4 2.4 33.3

3d ACR Non Deployables3d ACR Non Deployables

• Non deployable soldier levels are considered a major issue throughout Forces Command

• Consider the III Corps level of non deployable troops:

• The 3d ACR Rear Detachment CO, LTC Perry reviewed non deployables weekly

• Rear Detachment Squadron COs and numerous Rear Detachment staff attend

Major Med

Retirement Cadre Minor

Med PCS Legal TDY Child Care Other Total

III Corps 781 718 550 355 350 259 116 72 119 3320

III Corps 24% 22% 17% 11% 11% 8% 3% 2% 4% 100%

7 Feb Review of 3d ACR 7 Feb Review of 3d ACR Non DeployableNon Deployable

• Meeting went 90 minutes• Much time was spent reviewing a handful of cases• LTC Perry learned that

• Medical appointment issues caused delay• Getting signatures added unnecessary delay

• Time allowed only two of the Squadron COs to speak

• The review (report?) follows

3d ACR Feb 7, 2011 Non-deployables Review3d ACR Feb 7, 2011 Non-deployables Review


21 pages

over400

names

Commander’s 7 Feb Review CritiqueCommander’s 7 Feb Review Critique

• LTC Perry was unsatisfied with the results of the non deployable review process

• He recognized that the subordinates were not attacking the problem

• Instead they were complying with a reporting requirement

• The pages and pages of detail were data, not information

• He likened the situation as one of trying to fight the Battle of the Bulge with the following very detailed map

Battle Map of Ardennes ForestBattle Map of Ardennes Forest

Leadership Driven ManagementLeadership Driven Management

• LTC Perry changed the format of the review process to that of an AAR

• Established his Commander’s Intent Established his Commander’s Intent as: “look for and resolve systemic issues”• Targeted medical profiles over one year and legal

chapters over 60 days to be attacked• Directed that preliminary meetings

occur in the Squadrons • Interacted with medical and legal

staff on post to enlist their support


3d ACR Rear Detachment3d ACR Rear Detachment

1-3 Tiger Squadron

3-3Thunder Squadron

LTC Perry

2-3 Sabre Squadron

43rdEngineer

HQ TroopRemington

AAR

AAR AAR AAR AARAAR

Results of LTC Perry Initiative: Results of LTC Perry Initiative: March to May Target AreasMarch to May Target Areas

Mar 7 May 6 Δ

Medical > 365

Legal > 60 Total Medical

> 365Legal > 60 Total Delta

Tiger 1 20 21 1 4 5 16

Sabre 15 10 25 0 4 4 21

Thunder 6 12 18 0 6 6 12

Remington 10 0 10 0 3 3 7

Muleskinner 2 1 3 1 3 4 (1)

Bullwhip 5 0 5 0 0 0 5

3d ACR 39 43 82 2 20 22 60

Two months

Results of LTC Perry Initiative: Results of LTC Perry Initiative: March to May Target AreasMarch to May Target Areas

Mar 7 May 6 Δ

Medical > 365

Legal > 60 Total Medical

> 365Legal > 60 Total Delta

Tiger 1 20 21 1 4 5 16

Sabre 15 10 25 0 4 4 21

Thunder 6 12 18 0 6 6 12

Remington 10 0 10 0 3 3 7

Muleskinner 2 1 3 1 3 4 (1)

Bullwhip 5 0 5 0 0 0 5

3d ACR 39 43 82 2 20 22 60

$4M Annualized at Composite Standard Rate

Two months

Opportunities for ImprovementOpportunities for Improvement

Systemic Improvements

Unforeseen Benefits of Creativity

Unforeseen Benefits of

Accountability

3d ACR Rear Detachment3d ACR Rear Detachment

1-3 Tiger Squadron

3-3Thunder Squadron

LTC Perry

2-3 Sabre Squadron

43rdEngineer

HQ TroopRemington

Missions? Support the Field Support the Families Prepare ARFORGEN

define characteristics of organization based control © dale r. geiger 20111

Documents

cost of military

cost considerations

benefitsavg cost

expensive cost element

control dale

cmoscontrasting cbas

amcos total cost data

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