Table Of Content

Unclassified SECURITYCLASSIFICATION OF THIS PAGE Form Approved REPORT DOCUMENTATION PAGE OMB No. 0704-0188 1a. REPORTSECURITYCLASSIFICATION 1b. RESTRICTIVE MARKINGS UNCLASSIFIED 2a. SECURITY CLASSIFICATION AUTHORITY 3. DISTRIBUTION/AVAILABILITYOF REPORT Approved for public release; distribution is unlimited DECLASSIFICATION/DOWNGRADING SCHEDULE 2b. 4. PERFORMING ORGANIZATION REPORT NUMBER(S) 5. MONITORING ORGANIZATION REPORT NUMBER(S) 6a. NAME OF PERFORMING ORGANIZATION 6b. OFFICE SYMBOL! 7a. NAME OF MONITORING ORGANIZATION Naval Postgraduate School OR 6c. ADDRESS (City, State, and ZIP Code) 7b. ADDRESS (City, State, and ZIP Code) Monterey, CA 93943-5000 8a. NAME OF FUNDING/SPONSORING 8b. OFFICE SYMBOL 9. PROCUREMENT INSTRUMENT IDENTIFICATION NUMBER ORGANIZATION 3c. ADDRESS (City, State, and ZIP Code) 10. SOURCE OF FUNDING NUMBERS PROGRAM PROJECT TASK WORK UNIT ELEMENT NO. NO. NO. ACCESSION NO 11. TITLE (Including Security Classification) A FORECASTING MODEL FOR PROCUREMENT ADMINISTRATIVE LEAD TIME 12 PERSONALAUTHOR(S) MacKinnon, Douglas J. 13 TYPE OF REPORT 13b. TIME COVERED 14. DATE OF REPORT (Year, Month, Day) 15. Page Count Master's thesis FROM TO 1992, SEPTEMBER 78 16. SUPPLEMENTAL NOTATION The views expressed in this thesis are those of the author and do not reflect the official policy or position of the Department of Defense or the U.S. Government. 17. COSATI CODES 18. SUBJECTTERMS (Continue on reverse ifnecessary and identify by block number) FIELD GROUP SUB-GROUP Procurement, Cost Forecasting, PALT, Procurement Administrative Lead Time 19. ABSTRACT (Continueon reverse ifnecessary and identify by block number) The thesisobjective istodevelopa model toforecastthe costandthelead time in awardinga contract. All available, pertinent contract data was obtained and utilized from the Procurement Department of Naval Air Warfare Center Weapons Division, China Lake, California. The data was limited tothe years 1989through 1991 The actual cost of . lettinga contract has not been recorded, so a prediction model wasfitonlyforthe Procurement Administrative Lead Time (PALT). Cost is believed to be positively correlated with PALT. Explanatorydata available for each contract were: contract amount, contracttype, contract description, and competitive nature. A "complexityscore" was also available, which was determined by procurement personnel. Since many of the same variables used to compute complexitywerealso used to preduct PALT, thosevariables wereverified as possible predictors of cost by building a prediction model for complexity score. The following variables served as good predictors of PALT: contract amount, contract description and contract type. It was also determined that the competitive nature of the contract had little impact on PALT. With thisdata, it is difficult toforecast PALT preciselyfora given contract. However, with the recommended collection of additional data, PALT and the cost of a contract should become predictable with increasing confidence. 20 DISTRIBUTION/AVAILABILITYOFABSTRACT 1a. REPORT SECURITYCLASSIFICATION (Xl UNCLASSIFIED/UNLIMITED fj SAMEASRPT.D DTIC Unclassified 22a. NAME OF RESPONSIBLE INDIVIDUAL 22b. TELEPHONE (Include Area Code) 22c. OFFICE SYMBOL William G. Kemple (408)646-2191 OR/Ke DD Form 1473, JUN 86 Previouseditions are obsolete. JYCLASSIFICATION OJ= THIS PAGE S/N 0102-LF-014-6603 UMIa Approved for public release; distribution is unlimited. A FORECASTING MODEL FOR PROCUREMENT ADMINISTRATIVE LEAD TIME by Douglas J. JVfacKitm011 Lieutenant, United States Navy B.S., United States Naval Academy, 1985 Submitted in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE IN OPERATIONS RESEARCH from the NAVAL POSTGRADUATE SCHOOL September 1992 ABSTRACT The thesis objective is to develop a model to forecast the cost and the lead time in awarding a contract. All available, pertinent contract data was obtained and utilized from the Procurement Department of Naval Air Warfare Center Weapons Division, China Lake, California. The data was limited to the years 1989 through 1991. The actual cost of letting a contract has not been recorded, so a prediction model was fit only for the Procurement Administrative Lead Time (PALT). Cost is believed to be positively correlated with PALT. Explanatory data available for each contract were: contract A amount, contract type, contract description, and competitive nature. "complexity score" was also available, which was determined by procurement personnel. Since many of the same variables used to compute complexity were also used to predict PALT, those variables were verified as possible predictors of cost by building a prediction model for complexity score. The following variables served as good predictors of PALT: contract amount, contract description and contract type. It was also determined that the competitive nature of the contract had little impact on PALT. With this data, it is difficult to forecast PALT precisely for a given contract. However, with the recommended collection of additional data, PALT and the cost of a contract should become predictable with increasing confidence. in TABLE OF CONTENTS INTRODUCTION I. BACKGROUND A. PROBLEM DESCRIPTION B. SCOPE C. METHODOLOGY H. 9 A. INITIAL ANALYSIS 9 . ASSUMPTIONS B. 14 MODEL TYPE C. 15 m. MODEL DEVELOPMENT 17 A. MODEL TO PREDICT PALT 17 B. COMPLEXITY MODEL 20 ALTERNATIVE MODEL C. 21 IV. ANALYSIS OF RESULTS 22 A. PREDICTED VS. ACTUAL PALT FOR 1989-1990 22 B. 1991 PALT PREDICTED USING 1989-1990 FITTED MODEL ... 22 IV COMPLEXITY MODEL C. 23 CONCLUSIONS V. 25 PALT A. 25 COST B. 25 ADDITIONAL DATA C. 25 RECOMMENDATIONS VI. 26 DATA COLLECTION A. 26 MODEL UPDATES B. 28 APPENDIX A: 1989 DATA 30 APPENDIX B: 1990 DATA 37 APPENDIX C: 1991 DATA 44 APPENDIX D: FLOW DIAGRAM OF THE PROCUREMENT PROCESS ... 50 APPENDK COMPLEXITY POINT STRUCTURE E: 61 LIST OF REFERENCES 69 INITIAL DISTRIBUTION LIST 71 VI