Management of Interdependencies in Defence Capability Portfolio

The aim of this study is the development of methods and tools for analysis and management of interdependencies in the Defence capability portfolio. Capability development in Defence aims to develop and maintain the most operationally effective and cost-efficient mix of capabilities required to achieve Government's strategic objectives (Defence Capability Development Handbook, 2012). The fiscal and other resource constraints mean that wise choices have to be made regarding capital and resource investments. In a traditional project management, success of an individual project is usually assessed against its own unique set of goals. However, in the large Defence enterprise, multiple projects are underway at the same time, which have many direct and indirect interdependencies. Therefore, effective definition, development, and implementation of the Defence capability projects are practically impossible without taking into account all project interdependencies and portfolio approach to defence capability development is desirable. In this paper, we start by reviewing international best practices in the application of Project Portfolio Management (PPM) in the Defence context, including multi-criteria decision analysis and portfolio optimisation techniques. PPM could provide a better way for achieving an effective and balanced Defence Capability Portfolio. Analogous to Program Management, referring to managing a set of projects, Portfolio Management refers to managing a set of related programs within an organisation. Defence Capability Portfolio includes all of the capability-related projects and programs within the Defence enterprise, including planned and ongoing capability development projects from the various domains including air, maritime and land. Portfolio Management does not represent one particular method; it is rather a general approach within which many alternative methods exist. Development of a consistent framework for the interdependencies is required as various Defence stakeholders have very different and often conflicting views on the nature and type of project interdependencies. Following the summary of best practices, we present our work on identifying and categorising project interdependencies in the Defence Capability Portfolio. We use the international best practices to identify a set of canonical project interdependencies which are most relevant to Defence capability development. We find that interdependencies between the Defence capability projects fall into one of the four following major categories: benefit interdependency, resource interdependency, operational interdependency and risk interdependency. Collectively, the above categories cover the spectrum of capability, cost and schedule interdependencies in Defence capability development. We apply network analysis techniques to identify important project clusters and also to visualise project interdependencies. The projects are represented as network nodes and interdependencies are modelled as links. In the last two decades many empirical and analytical methods, techniques and tools have been developed to aid network analysis. These tools have provided numerous measures and algorithms that have proved to be very useful in studying network properties and behaviour, both static and dynamic. We utilise a sample set of techniques to analyse a sample network of projects. We also present a prototype interactive tool for automated project rescheduling in the Defence Capability Plan (DCP) which takes into account critical interdependencies between project delivery milestones. The DCP rescheduling problem is formulated as an iterative sequence of Mixed Integer Linear Programs (MILP) which is used to determine a feasible schedule that satisfies all budget constraints whilst satisfying the interdependency constraints.