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Original Post Date: Wednesday, September 25, 2013 The “Systems Folder” cost object which is found at the start of every TruePlanning Project is most often confused with the “Folder” icon. These two however should not be confused. The “Folder” icon does not have an input sheet at all. It is not a cost object and contains no cost estimating logic or relationships.  It is provided as a collection point so that cost objects can be grouped in ways for clarity like to separate out phases of the acquisition lifecycle or to divide costs between subcontractors, etc.  Whereas, the “System Folder” contains all ...
Original Post Date: Wednesday, September 25, 2013 We may all agree that risk analysis is a necessary, vital part of any valid/defensible cost estimate.  We may not agree as much on the best approach to take to quantify risk in an estimate.  All estimates contain risk.  In the words of a wise cost estimator I know, “That’s why they’re called estimates, and not exactimates!”  We must quantify and manage levels of risk.  Why?  One vital part of a successful program is the ability to build a budget based on reliable cost projections.  Reliability increases when we can analyze inherent risk, ...
Original Post Date: Wednesday, September 25, 2013 In Government contracting all contracts are made up of a network of suppliers. The Prime contractor who won the overall bid usually has a supply chain of vendors from whom they receive their products and services. In addition they have Subcontractors who provide services under a contracted agreement of work. These vendors and subcontractors most likely have their own network of suppliers which allows for a cost-effective supply chain that extends across America and to other nations. Vendors sell identical or similar products to different customers as part of their regular operations. These ...
Original Post Date: Wednesday, September 25, 2013 Introduction/Problem Statement A current client has expressed interest in the default values on the simple vs. the detailed input sheet. More specifically the question arose because this particular customer as well as others had a misconception about the simple vs. the detailed input sheet default values. Most users did not realize that if they were only inputting values on the simple input sheet that the detailed input sheet default values were still be used in the calculation for their cost estimate. So the question became how much are each of these default value inputs ...
Original Post Date: Wednesday, September 25, 2013 These days bidding can be a game, and contractor leadership is constantly making decisions on whether to take on risk in order to stay competitive or to bid conservatively for the safety of not overrunning.  You may complete a cost model for a program, and spend time analyzing the uncertainties behind each input and in the end find that your estimate lands at the 30% confidence level.  After some strategic analysis, the bid leadership team decides, we would like to bid at the 80% Confidence level, “please present your estimate to support that total”.  ...
Original Post Date: Wednesday, September 25, 2013 “On 29 July 2003, the Acting Under Secretary of Defense (Acquisition, Technology and Logistics) signed a policy memorandum entitled “Policy for Unique Identification (UID) of Tangible Items – New Equipment, Major Modifications, and Reprocurements of Equipment and Spares”. This Policy made UID a mandatory DoD requirement on all new equipment and materiel delivered pursuant to solicitations issued on or after January 1, 2004. USD(AT&L) issued verbal guidance that tangible assets manufactured by DoD’s organic depots were to be considered “new” items which fall under UID marking policy, beginning 1 January, 2005. An item is considered “significant”, and will be uniquely ...
Original Post Date: Wednesday, September 25, 2013 I’ve recently had a number of users ask, “How do I model life cycle costs for a missile that just sits on a shelf?”  I had never actually tried to model this, but of course I know it’s possible.  So I turned to some of my fellow PRICE experts, and found that of course this is not the first time anyone has ever tried to model this kind of thing… Many ordnance weapons such as mortar shells, torpedoes, bombs, missiles and various projectiles are stockpiled until they are actually needed. These weapons ...
Original Post Date: Tuesday, September 24, 201 Risk Analysis Methodology Overview – Method of Moments In this second of three articles on risk analysis, we will discuss Method of Moments.  Method of Moments (MoM) is an alternative to Monte Carlo simulation.  Along with the methodology, we will present some pros and cons of using MoM over Monte Carlo.  What is a moment? Before we discuss the methodology behind MoM, we first need to talk about moments.  Caution:  for all the master statisticians out there, this article is meant to boil down complex topics in an easy to understand manner.  There are obviously ...
Original Post Date: Friday, October 5, 2012 I am currently involved in co-authoring a white paper on the “Role of Value Engineering in Affordability Analysis.” For the purposes of this discussion I define affordability as that characteristic of a product or service that responds to the buyer’s price, performance, and availability needs simultaneously. The writing of this white paper has been an interesting exercise for me because my fellow co-authors come from different backgrounds and thus have very different points of view. The majority of my colleagues are “card carrying” Systems Engineers. As such, they have a perspective that ...
Original Post Date: Friday, September 7, 2012 So, what goes on out here in the corn fields, anyway?  Did you know Dayton, Ohio is home to the Air Force Materiel Command?  Air Force Materiel Command (AFMC), headquartered at Wright-Patterson AFB, Ohio, “develops, acquires and sustains the aerospace power needed to defend the United States and its interests for today and tomorrow. This is accomplished through management, research, acquisition, development, testing and maintenance of existing and future weapons systems and their components” (afmc.af.mil).   In response to future budget uncertainty and a challenge by Congress to operate more efficiently, AFMC recently ...