Why We Estimate Schedule & Cost
I stumbled across a working draft of an excellent document on my hard drive, produced, I believe, by a gentleman from Texas Instruments some years ago. I thought this list of why we estimate cost and schedule was excellent and still relevant.
Why We Estimate Schedule & Cost
- To scope proposed tasks
- To explore alternative system concepts
design to cost/budget
- To explore alternative design concepts
- To explore alternative proposals for enhancements and upgrades
- To identify key design elements
- To identify key process parameters
prioritize needs vs wants
- To identify key assumptions
- To identify and quantify uncertainties
- To identify tasks and their relationships
- To assess schedule feasibility
- To identify, allocate and schedule resources
- To assess an organization’s ability to perform within targeted costs
- To evaluate the consequences of internal and external constraints
- To establish achievable objectives
- To establish a basis for quality service
- To establish commitments
- To bound the risk against customer needs
- To balance levels of risk against customer needs
- To provide a basis of successful risk management
build vs buy analysis
- To prepare successful proposals
- To evaluate proposals from competing bidders
- To establish baselines for project tracking
enhance/reuse vs redesign analysis
- To predict life-cycle costs
- To predict returns on investments
- To provide information for establishing business and investment strategies
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
Cost of Independent Software Verification & Validation (IV&V)
It has long been that IV&V (Independent Verification & Validation) was purchased by the pound, in other words spend what you want. That is beginning to change. Galorath’s Bob Hunt briefed a method for performing a cost estimate and return based on defects and estimating the optimal spend with ROI considerations for IV&V on critical software. Bob rightly claims this approach needs refinement but it is a great start. Here are the basics:
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
NASA Study on Cost Schedule Growth
Very interesting paper covering cost schedule growth at NASA.
http://www.lpi.usra.edu/pss/presentations/200806/15freaner.pdf
This describes what really happens and why cost schedules grow. The paper points out that the technical baseline initially estimated often ends up being significantly different when it is actually built.
The paper also points out how to factor cost growth into the cost / schedule estimate.
Of course SEER can compute cost schedule growth in every project and SEER’s xippr can estimate the probability of overrun.
This paper does a wonderful job of illustrating why such growth happens and what the factors should be.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
100+ Rules for Large Program Managers
100+ rules for project managers: http://www.altisinc.com/resources/rules/
While this list uses NASA terminology and claims to be for NASA, most items are relevant to most projects. A few are reproduced here:
Program Planning, Budgeting, and Estimating
Rule #72: Today one must push the state of the art, be within budget, take risks, not fail, and be on time. Strangely, all these are consistent as long as the ground rules such as funding profile and schedule are established up front and maintained.
Rule #73: Most of yesteryear’s projects overran because of poor estimates and not because of mistakes. Getting better estimates will not lower costs but will improve NASA’s business reputation. Actually, there is a high probability that getting better estimates will increase costs and assure a higher profit to industry unless the fee is reduced to reflect lower risk on the part of industry. A better reputation is necessary in the present environment.
Rule #74: All problems are solvable in time, so make sure you have enough schedule contingency—if you don’t, the next project manager that takes your place will.
Rule #75: The old NASA pushed the limits of technology and science; therefore, it did not worry about requirements creep or overruns. The new NASA has to work as if all projects are fixed price; therefore, requirement creep has become a deadly sin.
Rule #76: Know the resources of your center and, if possible, other centers. Other centers, if they have the resources , are normally happy to help. It is always surprising how much good help one can get by just asking.
Rule #77: Other than budget information prior to the President’s submittal to Congress, there is probably no secret information on a project—so don’t treat anything like it is secret. Everyone does better if they can see the whole picture so don’t hide any of it from anyone.
Rule #78: NASA programs compete for budget funds—they do not compete with each other (i.e., you never attack any other program or NASA work with the idea that you should get their funding). Sell what you have on its own merit.
Rule #79: Next year is always the year with adequate funding and schedule. Next year arrives on the 50th year of your career.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
NASA Application of SEER-SEM
While attending the NASA cost symposium I was referred to an interesting paper on application of SEER-SEM at NASA.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
Project Prediction Infographic
