portfolio management

It’s Important to Have a Good Plan

Planning is at the core of being able to execute a project, program, or portfolio of programs. Within defense planning systems, the process that defines and determines the resources needed for these efforts is known by the acronym PPBE.

PPBE stands for Planning, Programming, Budgeting, and Execution. It is the annual process that the Department of Defense (DoD) uses to allocate resources and manage its budget.

The various phases of PPBE are detailed and specific.

During the planning phase, the top leaders and various agencies of the military and civilian portions of the government identify the threats that we need to face. This includes the military strategy of the United States, which originates within the National Command Structure.

The programming phase includes building a five-year plan, called the Programming Objective Memorandum (the POM) that boils down the general objectives of the national military strategy into specifics. There are three layers in this process.

The ‘translation layer’ takes the high-level strategy and turns this input into specific requirements, like the type and quantity of various aircraft and the equipment and fuels they depend on. It also summarizes capabilities that need to be delivered, which cross-references systems that must be interoperable or operate together in order to achieve objectives within a theatre of operations. Force multipliers in joint and combined operations are important considerations in this layer.

The ‘Five-Year Look’ layer, also known as the Future-Years Defense Program, or FYDP, was introduced in the 1960s to cover the entire development cycle of the new system(s), like a ship, aircraft, or armored vehicle. Today, it often doesn’t. It differs from the budget because it is focused on the lifecycle of the investment, not simply the next year.

During the budgeting phase, the Services and Agencies determine how to fund the requirements within current or projected budget constraints. Programs are assessed by their ability to deliver capability and execute the programs on time. Project and program managers must show that the monies allocated to their efforts will achieve the project objectives.

Finally, the execution phase occurs once monies are received through the Congressional appropriations process. DoD evaluates whether projects and programs are meeting their baseline requirements.

The translation from the overall planning into the programming phase in PPBE is of utmost importance. This is borne out by multiple studies, including those noted in the CSIS Root Cause Analysis, this RAND Major Defense Program study, and from the final report of the Commission on PPBE Reform, among others. What these studies show, when taken as a whole, is that 40% of cost overruns are caused by inaccurate cost estimates that are based on optimism bias, oftentimes lacking insight by not incorporating new technologies that will allow for analysis of plan confidence.

Presently, the PPBE process does not capture the confidence level used to set the budget. Policy within some of the Services is to set budget numbers at 55% confidence, but there is no discussion on confidence in the related schedule that drives costs. This condition creates an environment where arbitrary adjustments are made when it is clear that there will be cost and schedule overruns against an optimistic baseline. For example, while some range is provided by setting threshold and objective cost, schedule and performance baselines, absent risk-informed data, these are usually adjusted by adding 10% for cost and six months for schedule, ignoring what estimating models are predicting.

Beginning in 2025, the Department of Defense expanded its focus on PPBE as noted here and here. In furtherance of this initial guidance, Secretary Hegseth issued further guidance on acquisition on November 7^th, 2025, including the guidance on “Transforming the Defense Acquisition System into the Warfighting Acquisition System to Accelerate Fielding of Urgently Needed Capabilities to Our Warriors.”

Within this guidance, as well as in the revised DoD PPBE Reform Implementation Plan issued by the Department in January 2025, clearly states the need to use a data-driven approach in improving the confidence in cost and schedule estimates.

Putting the “P” in Joint Cost and Schedule Estimates

In late 2025, as one means of aligning with the new DoD policies promulgated under acquisition reform, the Assistant Secretary of the Navy for Research, Development and Acquisition (ASN(RDA)) directed all project managers to prioritize program schedule achievement when developing cost estimates. As such, this guidance requires that schedule confidence levels be set at 65% or higher. The process to achieve these confidence levels is known as the Joint Cost and Schedule Confidence Level or JCL.

A JCL goes far beyond a simple Schedule Risk Analysis (SRA). The purpose of the former is to combine cost, schedule and risk to determine the mathematical probability that a project’s cost will be equal or less than the targeted cost, and the schedule will be equal to or less than the targeted finish date. The latter, while a valuable process in tightening schedule confidence, treats the schedule as an independent variable without recognizing the obvious linkage of cost and schedule.

The old adage, “time is money” applies. A project could have an SRA confidence level of 80%, but even with a similar confidence limit for cost calculated independently will yield a lower confidence when the risk factors of both of these elements are combined.

The Navy is not alone in this integrating cost and schedule confidence levels. NASA has a long history of applying JCL at the 70% confidence level to ensure that their projects are executable. For example, the guidance includes:

• Setting the Agency Commitment Baseline (ABC) at the 70% joint confidence level.
• Making JCL mandatory for all projects with a life-cycle cost of greater than $250M.
• While budgeting to the 70^th percentile, NASA allows flexibility to budgeting to lower confidence levels relying on the “portfolio effect” to manage risk across multiple missions.
• Any JCL confidence levels set below 70% must be fully documented.

The Government Accountability Office (GAO) provides the overarching methodology used by many federal agencies as best practice when validating their JCL results. Among these are:

• The 12-Step Estimating Process, which defines the standard for developing reliable cost and schedule estimates.
• Criteria for Reliability, which evaluates estimates based on the characteristics of comprehensive, well-documented, accurate, and credible.
• Proper Integration of cost and schedule.

JCL is not a One-Trick Pony: PPM and Execution

During the early stages of planning, establishing a confidence level instills discipline and improves the processed in POM and baseline establishment. Even when there are only high-level schedules or an integrated master plan (IMP), it is still possible to do the work to establish the interrelationships of the high-level planning timelines and the associated estimated costs. Eventually, though, as the process proceeds, our projects will be definitized and produce our critical path method (CPM) integrated master schedules.

This is the constant: things will change.

In the past, the JCL process was not fully embraced for two good reasons: first, the JCL process relied on manual efforts that required a great deal of time and effort; the second factor was that JCL, though a government process, was siloed and provided through a limited number of consulting companies.

In the first case, because technology was limited in dealing with what used to be called “Big Data,” which is not so big anymore, there was some art applied to taking the Integrated Master Schedule (IMS) and summarizing it. This reduced not only the amount of data utilized, it also undermined the validity of the process, given its opaqueness. It also took weeks to conduct. Improvements were defeated by the exclusiveness of a few selected companies to utilize their “expertise” in summarizing schedules.

In 2023, SNA Software LLC (SNA), which produces its PPM Power Platform, and Intaver Institute (Intaver), which is the manufacturer of RiskyProject, teamed to automate the JCL process for NASA. The keys to automating this process are as follows:

1. The capability found in SNA’s COTS data transformer applications that transform third-party files into a non-proprietary open data format and reflect that openness in linked-open data tables. This includes data from Microsoft Project, Deltek Open Plan Professional, and Oracle P6, as well as cost applications that provide the time-phased project baseline. As with all solutions today with multiple means of visualization, curated and validated data is the first essential key.
2. Rapid set-up to ensure that cost and schedule data are properly aligned and integrated in the IMP or IMS. After initial set-up the process is optimized to be iterative with the IMS process collecting changes are they occur.
3. Robust COTS analytical functionality within a risk analysis solution that reflects deep knowledge in JCL leveraging the latest software technologies. This includes the ability to apply uncertainties, risk drivers, and other factors to the schedule.
4. A COTS modular open-systems low-code/no-code power platform that integrates JCL data with other PPM indicators to inform all aspects of projects and portfolios with risk.

The end result is an automated JCL process that, once initially set up, can be run as many times as necessary into and through the execution phase of the PPBE. The following advantages are realized:

1. The automated JCL is executed against the entire network schedule, and the outputs are in calculating the scatter plots to determine whether the project is executable. This plotting can then be further analyzed using a combination of linear regression and 3D plots.
2. Any level of confidence can be selected for the cost and schedule ranges.
3. The process provides independent estimates at complete beyond focused earned value performance since it is an integrated probability matrix.
4. The timeline from inputs, after initial setup, is run in hours in lieu of direct labor over several weeks.
5. Standardization of unified risk language. The JCL merges “silos” into an integrated metric and look, allowing different organizational entities to communicate program health in a standardized format.

Putting the “P” in Portfolio Management

With the establishment of Portfolio Acquisition Executives (PAEs) within the DoD/Services, JCL becomes a necessary capability across project management. These organizations, responsible for portfolio outcomes, have authority over cost, schedule, and performance (read technical performance) trade-offs to prioritize time-to-field and mission outcomes.

In support of this new model, JCL delivers the ability for decision-makers to apply the following:

• Dynamic Resource Allocation. Provides a statistical basis for moving funds between program. For example, if a high-priority program has a JCL-85 (indicating it is likely over-resourced), the PAE may choose to reallocate budget to apply to risk on a program operating with a lower JCL confidence score.
• PPBE alignment of budgets with actual risk profiles of capability portfolios.
• Risk-based Portfolio Balancing. Managing the portfolio effects will allow management to ensure that aggregated risk doesn’t exceed the organization’s tolerance. For example, one portfolio should not have all high-risk, low-confidence programs under one management.
• Aggregated Confidence. Allows managers to calculate the probability of the entire portfolio succeeding within total budget, which is more efficient than selecting an arbitrary confidence level for all programs.
• Cross-Program Dependency Management. Modern defense portfolios involve “systems of systems,” where a program output is another program’s input. For example, during the early planning process assuming that there is an Integrated Master Plan (IMP), the delay in one program might trigger a high-risk failure risk in an entire aircraft or ship portfolio.
• Strategic Decision Support. The JCL provides a useful capability in determining divestment triggers, such as when mitigation efforts are unsuccessful and quantitative evidence exists that suggests program cancellation.

Mission Threads and Capability Assessments

Strategic Mission Support includes rolling up further up the chain to strategic decision support that includes mission threads and capabilities assessments.

A mission thread is a sequence of end-to-end activities required to achieve an objective. When assessing an operational theatre’s objectives, the JCL rolls up concurrency risk across systems within the threads.

The roll-up of concurrency risk allows for a realistic determination of synchronized fielding. For example, if a mission thread requires three separate programs (a satellite, a ground station, and an aircraft package) to be operational by 2030, but the JCL for the satellite shows a 50% probability of a two-year delay, the entire mission thread is invalidated.

In addition, timelines are stress-tested. The JCL allows planners to see where optimistic schedules in one component create a high probability of failure for joint capabilities.

Capabilities-based assessments (CBA), identifies gaps in current capabilities. The JCL contributes by providing a reality check on proposed solutions. The handling of risk in these cases can determine whether the capabilities gap will persist, or the effects of technical or funding volatility. Where material gaps exist, strategies to handle gaps by pivoting to training or doctrine updates to bridge the gap in the interim.

Conclusions and Observations

Risk-informed decision-making is essential when dealing with large systems, since single-point estimates and siloed information streams have proven to be ineffective and inefficient. Furthermore, for systems acquisition, the locus of information begins with the project plan and then, in detail, reflected in the schedule. When properly created, this is the binding virtual time-phased system that links systems engineering performance, resource allocation and management, and produces the project structure to deliver realistic cost performance and measurement.

By combining and integrating PPM, systems engineering, and Integrated Project Management (IPM) data flows, the JCL provides the basis to inform each level of the acquisition ecosystem. From the project level through program management, portfolio decision-making and finally feeding into our strategic acquisition analysis.

At the highest level of mission and capabilities assessments, this model provides a complete picture of the acquisition system’s delivery to the warfighter. Being aware of the risks and establishing the common threads across and through the acquisition ecosystem delivers economy of force to the warfighter.

For more information on how software is delivering commercial-off-the-shelf (COTS) technology to specialized national security acquisition requirements using the JCL, visit https://sna-software.com and https://intaver.com.