DoD Contractor Estimating Systems Deficiencies Can Withhold 10%
A draft rule for business systems has been posted by the Government allowing the withholding of 10% of payments for each of six systems, with a maximum of 50% withholdings. These systems include contractor business systems including 1) estimating, 2) purchasing, 3) accounting, 4) earned value, 5) property and 6) material management.
In 2009 the congressionally chartered Commission on Wartime Contracting stated in its June 2009 interim report to Congress that:
“Weak control systems increase the risk of unallowable and unreasonable costs on government contracts”
Comments will be accepted until March 16, 2010. Email to dfars@osd.mil with subject DFARS Case 2009-D038.
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.
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Controlling Software Projects: Development Is Only Job One: Chicago SPIN Nov 12 2009
Dan will be speaking at the Chi10 stecago SPIN on November 12, 2009 on the topic of controlling software projects. Estimation, planning, control, metrics, and maintenance fo a total ownership cost view wil be discussed.
The presentation is here: Chicago SPIN November 2009 Galorath Presentation Controlling Software Projects Development Is Only Job 1
PS Dan looks forward to his short visit to Chicago, his home town. And is going to carefully avoid pizza, hot dogs, and Italian beef while he is there.
The flyer follows:
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.
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Dan Speaking at Detroit CAI Seminar
I will be speaking one estimating process yielding project success at the Computer Aid Seminar in Detroit On April 30, 2009.
My message will be that spending time on estimation and planning yields more successful projects and fewer project surprises. And I will go through the 10 step process. Additionally I will introduce Galorath’s estimation maturity model.
I am excited to speak along with Ed Yourdon, Larry Dribin, and CAI’s Bob Longhorn.
It should be a great event. I have participated in these with Larry and Bob in the past, and I am a lifetime fan of Ed.
I believe we will be doing the same genre in Toronto later in the year.
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.
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Estimating United Conference Papers Available On the Web
Follow this link to see some of the estimating united papers. it was a great conference, full of useful information.  Talks encompassing cost estimating (cost estimation), value engineering, product design, software, and more.
And thanks again to all the speakers and attendees as well as the hospitality of the Manchester United Football (soccer) club. And the Galorath staff whose diligent efforts made this a great success. Presentations will be available for all to download for the next few months, then will be available as part of the Galorath corporate library.
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.
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Better Products At better Margins 20 to 40% Cost Price Reduction
I was so impressed with the presentation by one of our speakers at the recent user conference that I bought a copy of his book. In his presentation(and also included on our site, galorath.com) he showed how he saved millions of euros in product costs using target costing, value analysis, and viable cost estimating and SEER.Â
It is wonderful to see forward thinkers applying SEER to save big costs as well as to estimate costs. In his presentation he substantiated savings of 20 to 40% cost price reduction (value improvement) And he does this not be grinding contractors but by working with them to provide substantial cost savings without impinging on their margins.
His book is well worth a read. The abstract follows:
“Many companies experience price pressure as a result of the global marketplace. The advance of technology creates many opportunities adding more innovative new features. Yet these opportunities also seem to drive up costs. How to end the resulting profit squeeze? Many aim for low labor cost countries as a solution.
Our approach is: Use Target Costing and Value Analysis.
Target costing sets allowable costs, derived from the value as perceived by customers, instead of price as a result of cost. Value analysis shows the way where the value of a product is, or where to reduce the cost. One of the key success factors in this approach is Cost Engineering and Cost Estimation. Another is multi disciplinary teamwork between marketers, developers, operations and suppliers.
The structured approach and open communication help achieve astonishing results, typically in the range of 20 to 40% cost price reduction or value improvement.
This book, or better Manual, describes how to apply and implement these methods in an organization, and how to involve suppliers efficiently and effectively via so called Design-in Workshops.”
 It can be purchased for 69 Euros at www.orenda.nl
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.
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Why Do Estimation Webinar With Geoff Hewson and Dan Galorath
I have had a good time developing a webinar with Geoff Hewson of the Software Productivity Center. It should be very informative and hopefully entertaining as well.
Register by clicking
Date and time: Tuesday, March 10, 2009 8:30 am
Pacific Daylight Time (GMT -07:00, San Francisco)
Description: Software estimation, planning and control can be keystones to successful projects. Companies that estimate strategically are able to zero in their projects so they deliver to business targets. Despite this many treat estimation as a black art or worse – a guess.
Dan Galorath and Geoff Hewson will explain the key concepts that drive successful software estimation in support of planning and managing successful software development and maintenance projects:
1. Decisions and deliverables needed to design estimation procedures tuned to your organization.
2. Guidance in setting up the infrastructure you need to realize the most benefit from your new estimation capabilities.
3. Establishing a “negotiating culture” to allow you to deal effectively with the results of your estimates and focus projects on business success.
SEER for Software concepts will support the discussion.
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.
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Peaceful Coexistence of Agile Development and CMMI
In the SEI paper “CMMI or Agile: Why Not Embrace Both“ a truce between Agile and CMMI is called for. The abstract of the document follows: “Agile development methods and CMMI (Capability Maturity Model® Integration) best practices are often perceived to be at odds with each other. This report clarifies why the discord need not exist and proposes that CMMI and Agile champions work toward deriving benefit from using both and exploit synergies that have the potential to dramatically improve business performance.”
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.
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Risk / Uncertainty In SEER and Project Management
The question was asked “what probability should I estimate at” The answer follows: Risk is really uncertainty. So the question becomes how much uncertainty can or should I allow in my project plans. There are many approaches to this, depending on circumstances including:
What are the consequences of an overrun: Many large military type programs in the US budget at a 70% or 80% probability. These kinds of programs are generally large and not well defined at the early planning stages. They use the higher probability so they don’t have to go back for more budget or schedule as the program progresses. These programs will generally manage to a 50% probability, using the overage as a buffer for program growth.
Is The Project Fixed Price: Many programs that must bid on programs at fixed price will initially estimate at a probability like 80% so that they are covered if the project becomes more complicated than their initial looks. Of course competitive issues may cause them to bid lower.
Is this an in house Project: Many projects will plan at a 50% (most likely) probability. This allows them to have a tough but achievable plan and if the project runs into difficulty they can adjust.
I recommend managing to the 50% probability… Tough but achievable schedule and effort.
Some projects Estimate at the 20% Probability: This is a lower cost / schedule plan that can win a contract. Unfortunately these projects usually overrun. But they have taken calculated risks.
I once heard of a program that was thrilled that the 1% probability met with their hopes for the program. So they had a plan with a 99% probability of failure.
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.
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GAO Cost Estimating and Assessment Guide Released
Congratulations to the GAO team for releasing the “Cost Estimating and Assessment guide: Best Practices for developing and Managing Capital Program Costs”. This has been a work in progress for several years and represents a nearly superhuman effort on the part of the GAO team. Galorath is proud that is was able to assist in the guidebook development as well.
The guidebook may be downloaded here. And the press release from GAO follows:
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.
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Estimating the 10 Hidden Costs of Packaged Software Implementation
Galorath is sponsoring a webinar covering estimation of packaged software implementation. This is a topic that I am excited about. I see organizations constantly assuming they can buy software and install it for free. And that they can tailor packaged software in an instant. The truth is implementing, deploying, tailoring packaged software is expensive.  Most often worthwhile, but not the no-brainer people think.  For example I recently spoke with an organization that took a YEAR to implement a CRM system. Their CEO tells horror stories and how they did not have the concept for the difficulty both in deployment and in dealing with change.
Date and Time
January 27, 2009
8:30 am, Pacific Standard Time (GMT -08:00, San Francisco)
11:30 am, Eastern Standardt Time (GMT -05:00, New York)
10:00 pm, New Delhi, India (Standard time zone: UTC/GMT +5:30 hours)
12:30 am, Tokyo, Japan (Standard time zone: UTC/GMT +9 hours)
4:30 pm, London, England (UTC/GMT)
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To register for the online event
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This event requires registration with a corporate email address.
1. Go to https://galorath.webex.com/galorath/onstage/g.php?t=a&d=925898160
2. Click “Register”.
3. On the registration form, enter your information and then click “Submit”.
Once the host approves your enrollment, you will receive a confirmation email message with instructions on how to join the event.
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.