Before our webinar on labor rates, let’s have a short refresher on TruePlanning®. TruePlanning® is an estimating framework, that is a part of the PRICE Cost Analytics™ suite of applications. We create a product breakdown structure in TruePlanning® to represent the scope of the effort being modeled. We do this by adding cost objects to represent the “deliverable” requirements and “below the line” requirements. In the example below, we can see that the prime mission product consists of two hardware components and some software. We are also capturing integration, SE/PM and data requirements.
Now, within each one of these cost objects shown above on the left, there is a series of activities (center column). Think of an activity as a step that needs to be accomplished in order to get the deliverable into the hands of the customer. In this example above for a hardware component, the activities walk through typical development and production steps that could be expected in most acquisition environments.
If you were to expand any one of these activities, you would then see a series of resources. Resources are things that require hours or dollars to accomplish an activity. Above in the right column, I’ve expanded one activity (Development Manufacturing) just to show an example. Each activity has one or more resources assigned. The resources with a silhouette icon represent people. People require hours to perform a task. Resources with a box icon represent material or other direct cost. These resources require dollars to perform a task.
How do we determine how many hours or material dollars are required for each resource? We define the technical, programmatic and schedule aspects on the input sheet(s) for the cost object. See the hardware component simple estimate example below. Inputs are provided here at the hardware component level and flow down into the algorithms at the activity and resource levels. For human resources, the result is a requirement of labor hours by resource by activity by month.
When we discuss labor rates and their impact on an estimate, the above information will serve as a good reminder of how the cost models generate labor requirements in hours. The upcoming webinar on May 13th at 11am EST will continue from this point and provide more information on how those hours are turned into dollars. Whether we use TruePlanning® to get an answer in hours, months, FTEs, dollars, or any other metric, having a clear understanding of how our inputs and our labor rates flow through the calculations will give us more confidence in the results.