Resource Margins and Reserves – Part 2, Demand

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In Part 1 of this blog we introduced the concepts of resource margins and reserves during development and operations.

In this part of the blog we address the demand side of the resource balance equation by going into more detail concerning the terms associated with resource margins and reserves for mass and consumables.

In Part 3 of this blog we will address the supply side of the resource balance equation by going into more detail concerning the terms associated with resource margins and reserves for resource production.

Resource Demand margins and reserves2

Figure 1: Mass and resource consumption margins and reserves

The terms and values depicted in Figure 1 are derived from NASA’s Expanded Guidance for NASA Systems Engineering, Volume 2 and AIAA S-120-2006, Mass Control for Space Systems.  Although AIAA S-120-2006 is specific to the control of mass, the same terminology has been applied to other system resources that will be consumed during a mission.

Note: In the following discussion the phrase “Resource Demand” is used to represent the amount of a resource that is needed for consumption.  “Resource Supply” is the amount of a resource that is available for consumption.  Resource Supply has two components: the “resource store” and “resource production” which will be addressed in the next blog.

  1. Base Value”, also known as Current Best Estimate (CBE), is computed from the most recent design concepts.  For mass, this is the bottoms-up estimate of component mass, as determined by the subsystem leads and is typically captured and tracked in the Master Equipment List (MEL). For consumable resources, this value is also a bottoms-up estimate as determined by the subsystem leads and is typically tracked in a master [resource] demand/supply balance spreadsheet or model.  The Base Value should include nominal plus expected peak or surge estimates. Experience has shown that the Base Value will grow as the design matures, depending on the maturity of the technologies and whether this complex task is being done for the first time (low TRL) in a specific but only partially understood operational environment.  Note that this Base Value growth could be substantial.
  1. Growth Allowance Margin”, also known as “Contingency Margin”, is a margin that accounts for the expected growth of a resource demand and represents the predicted growth. The Growth Allowance Margin is added to the Base Value (mass, power, etc.) and is computed for each subsystem based on an assessment of the design maturity, fabrication status of the item, and an estimate of the in-scope design changes that may occur.  The size of this margin decreases as the design matures. Guidelines for assigning and managing %Growth Allowance Margin need to be defined in the program’s Systems Engineering Management Plan (SEMP) or separate Margin Management Plan (MMP) for each project phase, and is typically established in Phase A as defined in XX.
  1. Predicted Value” is the sum of the Basic Value and Growth Allowance Margin. The Predicted Value is an estimate of the final Resource Demand value based on the current requirements and design.
  2. An additional “Development Margin” is a margin to account for the unexpected growth in a Resource Demand over the project lifecycle. The Development Margin is in addition to the Predicted Value to address change that cannot be predicted.  At the subsystem level, this is similar to the Management Reserve defined for the overall system (see below.)   The Development Margin can be computed and applied as a separate margin or included within the Growth Allowance Margin. Again, the size of this margin decreases as the design matures. Guidelines for assigning and managing %Development Margin need to be defined in the program’s SEMP or MMP for each project phase, and is typically established in Phase A.
  1. Resource Demand Requirement”.  The Resource Demand Requirement on the system of interest includes the Predicted Value plus the Development Margin. The Resource Demand Requirement is a not to exceed value (nominal plus peak/surge) and, once defined, is intended to remain constant until there is a change to the requirements. The Resource Demand Requirement is a constraint on the system of interest and drives design decisions. For consumable resources, Resource Demand Requirement is typically tracked in a master [resource] demand/supply balance spreadsheet or model.

Resource Demand Requirement = Predicted Value + Development Margin

 A template for a Resource Demand Requirement is as follows:

 The [System of Interest] shall limit [resource] [usage/consumption] to less than or equal to [Resource Demand Requirement value].

  1. Management Reserve: Besides the Resource Demand Requirement, management will frequently add a “Management Reserve” (as defined previously) controlled by the project manager and lead systems engineer.

Note: As the design matures, project changes stabilize, and uncertainties are resolved, Management Reserve can be “released”.  These releases are normally planned to occur at the major life cycle “gate” reviews (SRR, PDR, CDR) as defined in the project SEMP. Similarly, the need for a Growth Allowance Margin and Development Margin are reduced as the design matures and the Resource Demand Maximum Limit value matures and stabilizes. The released reserves can then be absorbed by the defined margins, if needed, to meet the resource requirements.

  1. Resource Demand Maximum Limit: Normally, the overall design will be constrained with a maximum, not-to-exceed demand value of mass or a consumable resource (power, fuel, oxygen, air, food). This “Resource Demand Maximum Limit” is imposed on a system due to contractual, performance, control, transport, or other requirements. For example, if you are planning to use a launch vehicle that can lift 70 metric tons to low Earth orbit, 70 metric tons would be a hard “Resource Demand Maximum Limit” for mass – a value that cannot be exceeded.  If you have mass that you need to get to orbit that exceeds this limit, you may need an additional launch vehicle which would drive costs considerably!   Consumable demand is constrained by what is available or can be produced.  So the Resource Demand Maximum Limit for a consumable will be dependent on the production Resource Production Minimum Limit plus the Resource Store. (See the next blog for an explanation of these terms.)

The Resource Demand Requirement (with margins) and Management Reserve, values are constrained in that their sum cannot exceed the Resource Demand Maximum Limit.

 Management Reserve = Resource Demand Maximum Limit – Resource Demand Requirement

Applying mass and consumable resource margins and reserves to your project during development

Growth and Development Margins are defined and managed at the system level by whomever has the responsibility for resource management as defined in the SEMP or MMP. These resource margins are added to the resource Base Value and then allocated to the subsystems in the form of an allocated Resource Demand Requirement. The team responsible for the system of interest is responsible for managing development within this allocated requirement.  This activity is often very dynamic in the early stages of system design, with the actual Resource Demand Maximum Limit values maturing as the design matures.  The numbers will begin to stabilize as the parts are procured and integrated.  If the Growth and Development Margins are exceeded, the system of interest team will have to work with the systems engineer to change their Resource Demand Requirement.

If there is not enough Management Reserve and the Resource Demand Maximum Limit cannot be increased, then a way to decrease Resource Demand Requirement value or a way to increase Resource Supply Minimum (see part 3 of the blog) will have to be found.  If this cannot be done, the program will have to rethink their concepts, change the mission scope/objectives, or delay the program until it can meet the Resource Demand Requirement.

When development is complete and the system is ready for delivery, the Base Value plus any absorbed Growth Allowance Margin, Development Margin, and any released Management Reserve can now be considered to be the Nominal Resource Demand during operations. This value will be determined during system verification and system validation activities.

The Resource Maximum Limit minus the Nominal Resource Demand represents the Increased Resource Demand discussed previously in Part 1 providing an Operational Capability beyond the Nominal Resource Demand.

 In Part 3 of this blog we address the supply side of the resource balance equation by going into more detail concerning the terms associated with resource margins and reserves for resource production.

Comments to this blog are welcome.

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