Project Planning & Estimation

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galorath — Tue, 06 Jan 2009 01:38:08 +0000

Design To Cost Metrics Can Help Increase Project Value While Reducing Cost

galorath — Tue, 06 Jan 2009 00:01:48 +0000

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 Can Help Corporations Seeking Bailout

galorath — Mon, 05 Jan 2009 23:08:19 +0000

Looking at items like the recent case study at Philips and the huge cost savings being achieved at so many SEER customers begs the question “how can SEER help companies seeking bailouts” Since SEER can reduce costs by a third or more is many situations, going through existing products and those in the pipeline with SEER can identify major labor and material savings. SEER can also show the costs, schedules, risks of getting disparate IT systems working together, and even the cost of change.

SEER Year 1 Savings Over 1.5 Million Euros At Philips Medical

galorath — Mon, 05 Jan 2009 23:01:27 +0000

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.

The Business Value of IT In Tough Times

galorath — Mon, 05 Jan 2009 22:32:41 +0000

I was looking at the Harvard Business Reviews book on the business value of IT today. It was published in the ’90s but it is still timely today. The HBR book discusses how IT specialists promise that technology will serve as a catalyst for change. But that promise usually goes unfulfilled. It discusses how IT managers put the emphasis on hardware and software and generally have difficulty in actually don’t emphasize how people actually share information.

The human centered approach is needed to determine how people work and how to build flexibility and DISORDER into information systems so the diverse user base can use information as they need to rather than how an IT person might dictate it.

Changing an IT system won’t change an organizations information sharing culture.

This sends me back to a conversation I had with the head of one of the country’s largest IT operations. He asked me how to estimate the cost of change… not hardware and software but getting people to change and the learning curve therein. We have pondered this issue. Of course our SEER Estimate By Comparison can estimate the cost of change by using relative analysis.

There is also the possibility to apply traditional learning curve (cost improvement curve) analysis to the problem. Additional study is needed for this approach to identify the slope of the learning curve. But quantifying the difficulty of the initial use by a user (effectively t1 in learning curve terminology) and the rate of improvement (improvement can be learning the application, complaining, etc.)

The Cost Vs Benefit of Additional Bandwidth

galorath — Tue, 23 Dec 2008 21:54:40 +0000

You can never be too thin, too rich, or have too much bandwidth. As I think back over the years, from my original 30 character per second modem, to the big jump to 1200, then 2400 (240 Characters per Second) BAUD modems (SEER for Software was originally developed by a disbursed team using 2400 BAUD modems) to megabits of bandwidth.

We learned some years ago that speed was not the only consideration, but reliability was key as well. Once we had a DSL line that went down. 3 day turnaround to fix. Then a T1 vendor (high reliability 1.5megabits) who got in a fight with the phone company and got our line along with all their customers shut down.

We are making the big jump, once again in El Segundo, going from a t1 to a bonded t1 (3megabits)

And how will that impact productivity? Experience tells us there will be a few miserable days when the change brings the company to its knees (we have people scattered about the free world.) Our staff offered to run SEER-IT and estimate the project but I really didn’t want to know… we are going to go ahead and we know it will be ugly. Then, after the misery we expect to be servicing our remote employees twice as fast as we do now. Of course none of them will be happy since the average bandwidth in homes is still higher than 3megabits.

Then the payback… Over the first few months changes in productivity of developers will not makeup for the lost time during transition.

Following those few months we could reduce each remote developer’s wait time by 10 or more minutes per day. That doesn’t seem like much but in addition to the lowering of physical wait times, the psychological relief will likely provide double the benefit. Using SEER I find the additional benefit of up to 3% (via the turnaround time) by improving the interactivity and user experience of our developers not having to wait so long. Well worth the cost.

I did not include the rest of the staff in the assumed productivity calculation since those getting email, downloading an occasional file, etc. will likely not result in any real savings.

I find it very interesting to be able to determine the ROI using SEER estimating software in such a fashion rather than the traditional guesses or informal analysis.

PS: Current economic conditions have made some really good deals on bandwidth available. I wish we could have gotten FIOS or cable in our building. We would have used the less expensive bandwidth with a t1 as our safety net. But we can’t buy that way in our office building.

PS2: We also looked at using a remote server via a vendor with mega-bandwidth but it was nearly impossible to get any information from the vendor. Still if the vendor had been responsive that approach would have provided MUCH access than the bonded t1’s.

Estimating Frequently Asked Questions

galorath — Tue, 23 Dec 2008 02:02:09 +0000

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

galorath — Sat, 20 Dec 2008 01:18:45 +0000

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

galorath — Wed, 17 Dec 2008 00:03:23 +0000

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.

These points brought back memories of a prior banking consolidation of long ago when we received a call from our bank claiming we had drained all our cash and credit line and we were overdrawn. Turned out to be a “minor” software problem. And this happened twice. We still bank with them, but we thought seriously about changing at that time.

SEER For Management Decision Support

In order to make the proper IT decisions management needs that “Crystal Ball’.. the ability to forecast what will happen based on different decisions. A few of the many questions that can be answered include:

Using SEER for software estimation to estimate the business value of a project portfolio and each project’s contribution to business value.
Which projects should be killed due to lower chances of success
Determine the impact on maintenance projects of limiting staff… Understaffing will cause the software to degrade over time and will likely cause it to not be as responsive to changes in user requirements
What if we freeze Requirements TO Get A Project Done
Evaluate the potential to ease schedule of projects underway to benefit from potential productivity improvements
How have other in the industry performed under such circumstances
Determine of outsourcing is a viable option from both a cost and reliability viewpoint
What is the cost / benefit of heterogeneous development organizations (current ownership along with acquired organizations IT)
Identify the costs of continued maintenance of an existing system versus a new system
Find if Software as a Service outsourcing can reduce costs while providing the business value needed
Determine the potential decreases in reliability from extending the life of existing hardware versus normal hardware replacement cycles.

A Few Examples

Determine the impact on maintenance projects of limiting staff… Understaffing will cause the software to degrade over time and will likely cause it to not be as responsive to changes in user requirements

Which projects should be killed due to lower chances of success

Evaluate the potential to ease schedule of projects underway to benefit from potential productivity improvements

Much more detail on SEER and its ability to make viable management decisions is available. Click here for the home page or choose “Sales Questions“

Estimating In Times of Deflation

galorath — Tue, 16 Dec 2008 22:43:36 +0000

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

Project Planning & Estimation

Search Blog & Galorath.com Web Site

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Design To Cost Metrics Can Help Increase Project Value While Reducing Cost

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