Design To Cost Metrics Can Help Increase Project Value While Reducing Cost
An interesting paper By Quentin Redman and George Stratton in the Fall 2008 SCEA Journal discussed implementation of Design To Cost. Quentin covered some of this at the 2008 SEER Users Conference in his paper.
They Define Design to Cost as:
Design To Cost (DTC): DTC is engineering oriented and attempts to solve the mystery “Given the budget and performance reuirements what do I design and build”
They contrast this with Cost As An Independent Variable (CAIV): CAIV is architectural in nature and answers the question “given a fixed budget how much performance can I get when I need it with the maximum acceptable risk”
They discuss how at Raytheon they lend CAIV and DTC under the heading affordability.
They also identify their core design to cost metric: DTC = CurrentCostEstimate / DTCTarget
I have the highest respect for organization that use estimates as part of the project management process. This is a key part of project management.
SEER Year 1 Savings Over 1.5 Million Euros At Philips Medical
It is exciting to see how Philips medical quantified their first year savings by the application of SEER to reduce costs and ensure a fair price from their outsource partners.
- SEER To Drive Cost Effective Design:
“One of SEER-MFG’s strengths is its ability to influence design decisions, pointing the way to the simplest and most cost-effective solution”. This became evident to Pruijsen’s team during one of the pilot projects when they used SEER-MFG to calculate the cost of the parts for a new patient table. “We discovered that SEER-MFG is an interesting application because if you have a solution in mind it allows you to check on the cost and see alternative technologies,” he said. “A mechanical designer might not consider certain technologies because they are out of his experience. But if you can quickly calculate different scenarios, you can determine their cost impact and the amount of investment needed in areas like tooling. - SEER for Fair Pricing (Should Cost) In Outsource Situations: “They eventually settled on a final price of 350 Euros-about one-third of the original quotation.
“Without SEER-MFG, we might have been satisfied just reducing the price 10 percent to 900 Euros through negotiation. In the end the tolerances for this particular part were found to be much higher than necessary; the lower specifications allowed the supplier to significantly reduce his price. Of great impact and as a reflection back to our engineers is, that with SEER-MFG you directly can show the cost impact of the tolerances, technology and materials they choose, and then discuss what is good enough. This really drives costs down during the design stages.”
- SEER Viable Parts Estimates In Minutes:
“After we showed Galorath a drawing of a random part, 15 minutes later we had an estimate on the tooling cost. Four days later we got a quotation on the tool. The SEER estimate was within 2% of the quote.”
The full Philips case study may be found here. Note SEER-MFG was formerly called SEER-DFM. It provides insight on how to design parts and systems for the most cost effective manufacturing.
Estimating Frequently Asked Questions
This is the beginning of a growing list of FAQs.
-
What is the difference between and estimate and accounting?
An estimate has uncertainty and is qualified by a set of assumptions. A well formed estimate is a range.
Feel free to submit your questions (or answers)
Function Point Simple Introduction
I keep meaning to post Galorath’s Ton Dekker concise introduction to Function Points. Ton is an expert in IFPUG Function points as well as COSMIC Function Points and a host of other functional sizing measures. I always appreciate Ton’s simple and clear approaches.
Optimizing IT or Engineering In Tough Economic Times Through SEER
When economic times get tough one of the most difficult things for management is to determine the impact of slowed or killed projects, the impacts on maintenance, and further methods of achieving time to market with fewer resources.
Sterling Commerce in a presentation called “What’s Real Answers For Tough Time” pointed out some of the challenges and issues in the new consolidated banking, finance and other industries. The legacy is difficult including:
- Fragmented, Incompatible, Fragmented, Siloed Systems For the Pre-Acquisition Assets, and cost prohibitive to replace systems
- Difficult To Process new customers due to disparate systems
- Incompatible / Incomplete Business Processes so no one knows the status of customers
The article also pointed out that some organizations will just not spend any money while others will make the decisions and spend the money to have them emerge stronger. That article’s subtitle was “A Crystal Ball Wont Provide the Answers Your Need” While I agree with the challenges listed by Sterling, I believe that a sort of Crystal Ball… SEER can identify the effects of decisions on business.
Estimating In Times of Deflation
The world is certainly in economic turmoil. As was pointed out to me last week by a CEO of a public company “When estimating future costs (then year dollars) it is important to understand the costs or cost savings of deflation” SEER allows for inflation or deflation and will issue deflation tables as (if) the forecasts come available. Consumer information is already available showing significant drops. Almost certainly, for 2009 inflation will not be the issue.
The Wall Street Journal announced today that:
“The Federal Reserve slashed its target interest rate to a range just above zero and promised to march ahead with unconventional measures to combat a recession that has deepened in the past few weeks.
The Fed said it would keep its target interest rate — an overnight bank lending rate called the federal funds rate –? between zero and a quarter percentage point after having moved it to 1% in October. The cut was more than many economists expected and marked the latest signal by the Fed and its chairman, Ben Bernanke, that the central bank was prepared to take aggressive steps to revive the economy and financial markets.
“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Fed said in a statement. It added that it expected interest rates to remain low “for some time” and that it was studying other measures, such as purchasing U.S. Treasury securities, to lift the economy.
In the latest example of the deepening recession, the Commerce Department reported that new homebuilding dropped 19% in November alone, to a seasonally adjusted annual rate of 625,000 units, a record monthly low.”
http://online.wsj.com/article/SB122945283457211111.html?mod=djemTAR
How Galorath Made Use Case Points Viable For Accurate Estimating
Use case points provide a measure of size based on Use Cases, a natural artifact of the software process. The original concept was developed by Objectory AB (now part of IBM Rational Software.) There have been many detractors of use case points including Rational Software itself and USC. The Galorath team approached Use Case estimating with a number of approaches. Lee Fischman, who led the project came up with the concept of Normalized Use Cases (NUCs), a new metric based on Use Case Points He also had Galorath’s Dr. Tarbet set off to create better results from Use Case Points. Use Case Points are based on:
- Based on the number of actors and transaction for each case.
- Categorization into simple, medium and difficult.
- Linear combination of weighted counts
When Dr. Tarbet finished his analysis he obtained an Adjusted Correlation Coefficient (R2 ) = 0.984802, showing an exceptional value to the enhanced Use Case Point method.
Counting XML Source Lines of Code
A customer recently asked how to count XML for their software sizing activity. Turned out the question was more detailed than just the syntax. They really wanted to know IF they should count XML and, if using lines of code, if they should adjust the XML lines. They pointed out that many of their projects include up to 25% XML lines.
The bottom line is that XML while it has no procedural statements (it is a data declaration language) can require significant effort in software development and should be counted. SEER users can use the code generation knowledge base in a component for XML… Also, due to syntax and if not using the code generation kbase , it is appropriate to adjust the XLM lines…. For Galorath research an XML line is about .29 SLOC.
Counting XML
XML is interesting to count since an XML document generally doesn’t actually do anything… that is, XML does not include procedural code. XML is pure declarations wrapped in tags. There is an if statement that can change the value of an element, not program logic. XML Separates Data from HTML. With XML, data can be stored in separate XML files so you can concentrate on using HTML for layout and display and ensure changes in the underlying data will not require any changes to the HTML.
The following are the generic logical source line counting rules:
Costs & Benefits of Software Quality
Rick Spiewak from The MITRE Corporation and Karen McRitchie, Galorath VP of development published a paper in the Crosstalk journal showing how increasing quality using basic quality principals during software development can reduce costs while also reducing defects. The abstract follows:
“Software can be considered a product whose production is fundamentally similar to other products. Improving the quality of software can be approached using the same basic principles espoused by quality pioneers such as W. Edwards Deming, Philip B. Crosby and Harold F. Dodge. These principles can form a practical framework for ensuring that appropriate requirements are set for software development projects. By connecting established software engineering practices to the objective of defect prevention, we can apply the principles of quality management to software development. Using modeling techniques, it is possible to predict the potential cost savings and defect reduction expected”.
Estimating Web Effort / Schedule
Reading an article for IEEE on Web effort estimation reminded me of how SEER estimates web page development projects using either traditional line of code inputs, functional inputs, or web pages. Of course any implementation methods can be handled, anything from HTML to java to C# to a content management system.
Of course reuse, security and other people, process and technology items are factored into the estimate.
Some people don’t believe it is necessary to estimate web developments. I shutter to think that all this effort is expended without an estimate or plan.
