Slides 12 1 define characteristics of organization based co

Terminal Learning Objective• Task: Define Characteristics of Organization Based Control • Condition: You are training to become an ACE with access to ICAM course handouts, readings, an

Define Characteristics of

Organization Based Control

Everyone is Part of a Hierarchy

Terminal 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

Cost Managed Organization

Cost Benefit

Analysis

Cost Managed Organization

Contrasting CBAs and CMOs

Contrasting CBAs and CMOs

• 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 operations

day-to-Contrasting CBAs and CMOs

Leadership

Cost Benefit Analysis

Cost Managed Organization

Contrasting CBAs and CMOs

ACE Expertise

Cost Benefit Analysis

Cost Managed Organization

Contrasting CBAs and CMOs

Process

Cost Benefit Analysis

Cost Managed Organization

Contrasting CBAs and CMOs

Measurement

Cost Benefit Analysis

Cost Managed Organization

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

credibility

cost beneficial use

Desired 10 to 1 Ratio

Process and Measurement

Learning 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 CMOs

Organization Based Control

Tier 3 Leader

Tier 2 Leader

Tier 3 Leader

Tier 2 Leader Tier 1 Leader

Utilizes Each Node in the Chain of Command in AAR Process

AAR

Organization Based Control

The Power of Decentralization

The power of the AAR can extend throughout any sized organization

Practical Demonstration 3d 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

log in with AKO or CAC

Accessing AMCOS

© Dale R Geiger 2011 19

AMCOS Total Cost Data by Rank

© Dale R Geiger 2011

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  $K per Year per Soldier E1 E2 E3

Military Compensation Avg Cost of Base Pay (Military) 17.6 19.7 21.0

Military Compensation Avg Cost of Basic Allowance for Housing (in cash) 8.8 9.6 10.9

Military Compensation Avg Cost of Basic Allowance for Subsistence 4.7 4.7 4.7

Other Benefits Avg Cost of Other Benefits 2.3 2.5 3.0

Permanent Change of

Station Costs Avg Permanent Change of Station-annualized () 0.3 0.3 0.4

Recruiting Costs Avg Recruiting Cost for MOS () 24.1 24.1 24.2

Retired Pay Accrual Avg Cost of Retired Pay Accrual 5.8 6.5 6.9

Selective 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 0.4

Special Pays Avg Cost of Special Pays 1.0 1.0 1.1

Training 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 E3 Medical Support Costs Avg Cost of Medical Support Cost 6.7 6.8 6.5 Morale, Welfare and

Recreation Costs Avg Cost of Morale, Welfare and Recreation 0.3 0.3 0.3 Recruiting Costs Avg Recruiting Cost for MOS (Amortized) 6.3 6.4 6.4 Training 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 E3 New GI Bill Costs Avg Cost of GI Bill 30.9 30.9 30.9 Training 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 Cost

© Dale R Geiger 2011 21

The Composite Standard Rate is Preferred

© Dale R Geiger 2011

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  $K per Year per Soldier E1 E2 E3

Military Compensation Avg Cost of Base Pay (Military) 17.6 19.7 21.0

Military Compensation Avg Cost of Basic Allowance for Housing (in cash) 8.8 9.6 10.9

Military Compensation Avg Cost of Basic Allowance for Subsistence 4.7 4.7 4.7

Other Benefits Avg Cost of Other Benefits 2.3 2.5 3.0

Permanent Change of

Station Costs Avg Permanent Change of Station-annualized () 0.3 0.3 0.4

Recruiting Costs Avg Recruiting Cost for MOS () 24.1 24.1 24.2

Retired Pay Accrual Avg Cost of Retired Pay Accrual 5.8 6.5 6.9

Selective 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 0.4

Special Pays Avg Cost of Special Pays 1.0 1.0 1.1

Training 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 E3 Medical Support Costs Avg Cost of Medical Support Cost 6.7 6.8 6.5 Morale, Welfare and

Recreation Costs Avg Cost of Morale, Welfare and Recreation 0.3 0.3 0.3 Recruiting Costs Avg Recruiting Cost for MOS (Amortized) 6.3 6.4 6.4 Training 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 E3 New GI Bill Costs Avg Cost of GI Bill 30.9 30.9 30.9 Training 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 Rate

© Dale R Geiger 2011 23

Individual Exercise in Costing Soldiers of

the 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 CW 5 CW 4 CW 3 CW 2 WO 1 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 Note 3d 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:

Non 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 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?

Teacher’s Note 3d ACR Non Deployable Cost

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

3d 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

7 Feb Review of 3d ACR

Non 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 Review

Commander’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

Battle Map of Ardennes Forest

Leadership Driven Management

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

• Directed that preliminary meetings

occur in the Squadrons

• Interacted with medical and legal

staff on post to enlist their support

3d ACR Rear Detachment

Results of LTC Perry Initiative:

March to May Target Areas

Results of LTC Perry Initiative:

March to May Target Areas

Opportunities for Improvement

Systemic Improvements

Unforeseen Benefits of Creativity

Unforeseen

Benefits of

Accountability

3d ACR Rear Detachment