Controlling Software Projects: Development Is Only Job One: Chicago SPIN Nov 12 2009
Dan will be speaking at the Chicago SPIN on November 12, 2009 on the topic of controlling software projects. Estimation, planning, control, metrics, and maintenance for a total ownership cost view will 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:
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Joint Confidence Level Solution By Galorath
Congratulations to Galorath’s Chris Hutchings and Denton Tarbet and MCR’s Steve Book for their approach to NASA’s joint probability challenge. Chris worked all weekend and had it nailed by Monday. Then he saw the papers from the prior week’s NASA 2009 cost symposium on Monday. Steve Book had independently come up with the same approach.
So while perhaps Denton and Chris can’t claim to be first to publish it, they can claim to be creators of what appears to be one of the winning approaches to joint confidence level.
Hats off to all three, and to the others who presented approaches to joint probability at the NASA Cost Symposium.  There were a number of other excellent solutions presented at the NASA symposium.Â
And other risk gurus at Galorath and elsewhere are studying even more effective solutions.
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.
Wall Street Journal Article Points Out Monte Carlo Inadequacies
This article could have been written by Galorath’s Evin Stump who warns of Monte Carlo’s inadequacy in capturing highly improbable events.Â
Note…. I am not saying Monte Carlo is of no value… on the contrary… I believe Monte Carlo analysis is extremely useful. But is is not so good at capturing the risk of the highly improbable.
The WSJ article on risk and Monte Carlo Analysis Inadequacies pointed out:
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.
Black Swans: The Impact of the Highly Improbable
Before the exploration of Australia by Europeans, people thought all swans were white. This assumption seemed completely confirmed by empirical evidence. Then in Australia, an outlier… black swans. This inconsequential event illustrates the limitation of learning by experience and assuming we know and understand uncertainty. Galorath’s Evin Stump and his work in Xippr (Experience Informed Project Risk Reduction; pronounced “zipper”), has been preaching about Black Swans for some time and convinced me to read Nassim Nicholas Taleb’s book “The Black Swan: The Impact of the Highly Improbable.” A Black Swan is:
1. An outlier, because lies outside the realm of regular expectations, because history cannot convincingly point to the possibility
2. Has an extreme impact if it occurs
Traditional risk analysis, such as Monte Carlo Analysis is excellent at predicting probability in terms of uncertainty, except for one thing…. it completely misses Black Swans. So we continue to invest our money with money managers who predict regular growth… with statistical worst cases not so bad… but then Black Swan occurs…. a highly improbable event,  banking crisis or whatever, and wipes out a significant portion of the nation’s wealth. The impact of Black Swans was not included in the financial analysis.  Or airplanes crash into the World Trade Towers. And the world changes forever.
Now we need to know when to deal with Black Swans and when they are just paranoia. For an average project there may not be any real Black Swans. But for the most difficult projects, for example projects with low Technology Readiness Levels or with severe political implications,  a Black Swan can be a significant driver.
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.
Guidelines and Metrics for Assessing Space System Cost Estimates
I recently saw a presentation by Bernie Fox of Rand regarding guidelines and metrics for assessing space system cost estimates. Very interesting presentation (if you are interested in space systems)
The paper includes:
- Â Average costs and ranges for space vehicles, subsystems, and components for crosschecks.. Powerful Read more
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.
NPD 1000.5 NASA Cost-Risk Directive
Just about hot off the presses (January 2009) is NASA’s cost risk directive.
The directive defines many things with potentially the most interesting being the requirement for joint cost / schedule probability.
Wikipedia has a nice section on joint probability.
Section h is included below… This is causing much stir in the cost communities. Feel free to submit your comments on this topic.
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.
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.
“Far Out” Estimating the Costs Of Satellites Far Into The Future
I had the opportunity to brief part of the space community on the latest release of the SEER Far Out model for cost estimating.  Far Out estimates the costs of satellite systems far out into the future. Why would anyone want such an estimate, you may ask. Estimates of systems in the future made today can change planning and approaches for future generations of technology.
This capability is of interest to:
- Military space asset planners
- Government agencies
- Commercial satellite producers
- Advanced concept designers
I have been excited about this project ever since its research began several years ago. It needed to deal with technology readiness levels (TRL), that is how available is the technology being used for systems developed in the future.
Technology readiness levels are interesting since, when they are low, estimates are extremely difficult and will, by nature, have a large range. For example, if you asked Thomas Edison in 1876  how much and how long it would take to develop the light bulb, he likely would have had no clue  before the basic carbon filament was invented. This was a TRL 1 problem.  He had no good way to know how long it would take him to get the most basic technology to a level that would be adequate for a product.
In 1979, once the carbon filament was developed to TRL 4, Mr. Edison would have had a much easier time providing development and production estimates. NASA’s technology readiness level scale follows:
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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.
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.
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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.
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.
Project Prediction Infographic
