• Predictive Analytics for Improved Cost Management



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In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the seventh of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability. Affordability is an abstract term that most people think they understand but have difficulty articulating. The United States Department of Defense defines affordability as the degree to which the life-cycle cost of an acquisition program is in consonance with the long-range investment and force structure plans of the Department of Defense or individual DoD Components. However, the Department of Defense acquisition regulations require program ...
In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the fifth of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability. Estimates based more on engineering judgment than statistical data lack credibility. This comparison is especially true when proposing design alternatives to meet a customer’s unique program requirements. Companies that can’t demonstrate a rigorous affordability management process score low with their proposals because their bids presented without statistical data to back their estimates appear over-optimistic and risky, or too expensive. This situation ultimately has a ...
In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the fifth of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability. So what are my competitors most likely to bid? Competition Ghosting (sometimes called competitive analysis), can be an important capability when preparing for opportunity qualification or the bid & proposal development. Estimating what you believe your competition might do is extremely useful intelligence for your own Price-to-Win process. Ghosting empowers the user with an objective assessment of the competitor’s offering.  This is done for two ...
In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the fourth of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability. Effective management of a system or program starts with a budget in the front end and execution control and evaluation in the back end. Effective cost control can be achieved if the organization has a dynamic and flexible cost estimation capability which sets a baseline in the budgeting process and updates the costs / estimate-to-complete quickly and with minimum effort. Effective cost control is ...
In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the third of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability. Budgeting is a critical first step in developing an effective cost management plan. The ability to integrate your specific budget tools with a predictive cost estimation engine, whose output can be tailored to your organization’s cost activity center structure, is a very powerful capability. The requirements to achieve this level of budget management consist of the following: Accessing historical budget ...
In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the second of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability. For estimators and engineers, the PRICE Cost Analytic Framework® improves cost estimating speed and accuracy, with built-in flexibility to evaluate multiple alternatives quickly. The integrated set of data, tools, and processes enables organizations to successfully estimate and analyze the effort, schedule, and cost of projects.  Specific estimation applications include Independent Cost Estimation (ICE), should-costing, vendor/supplier assessments, cost-benefit trade studies, proposal baselining… and more. PRICE® ...
In our previous blog, we defined PCA and PRICE’s unique approach via TruePlanning.  This blog is the first of seven to describe by specific impacts on key business processes and functional areas that benefit from this capability.   PRICE® Cost Analytics (“PCA”) provides the tools and a systematic approach to enhance the effectiveness of Total Cost Management (“TCM”) through the application of cost management principles, proven methodologies and the latest predictive technology in support of the management process and its decision-making. PCA and TCM both start with a simple concept based on the time-tested Deming or Shewhard cycle. In essence, TCM and ...
  On this website, you will find multiple blogs as well as other links to descriptions of v2016’s new features and capabilities, often in the context of Predictive Cost Analytics and specifically our process-instance of PRICE® Cost Analytics or “PCA”… But what exactly is that, you might ask? PCA is a proven predictive analytics approach focused on cost management (Cost Estimation, Cost Budgeting, and Cost Control) that delivers the answers you need, when you need them.  As cost, profitability and affordability are a critical part of your decision criteria, PRICE® Cost Analytics will make you more confident in your decisions. PRICE® Cost ...
Your license has been updated to include TruePlanning 2016’s new IT Services catalog.  This capability is a significant upgrade to v14.2’s IT Infrastructure catalog.  In the past with the latter, representative of typical logistical equipment build-up philosophies, estimates were focused primarily on operations of existing/deployed IT enterprises.  Now, with IT Services, you can estimate IT deliverables as services, delivered with in-house and/or contracted resources.  This catalog was specifically designed to better align with the way organizations currently estimate and budget for IT services.  There are now 8x2 = 16 specific types of estimating capabilities, supporting both New Projects and ...
If you’ve taken my Software Training class, you’ve heard me use the analogy of “taking someone else’s spreadsheet and adding your own logic” to distinguish between modifications, adapted code and glue code.  But let’s take a step back to make sure we’re all in agreement {if not, blame me not the product!} #1.) To be clear, COTS is shrink-wrapped, ready-to-go with near-zero modification to core functionality.  Generally, we really prefer to see COTS modification no more than 10%. #2.) If this latter core functionality needs modification, then we recommend using the SW Component object with Adapted code, as well as Reused ...
Part 1 & 2 described 2016’s updates in the Hardware and Software catalogs So what else new has TruePlanning 2016 got in store for its estimating models?  A significantly enhanced approach to estimating Information Technology equipment and Services! Our new approach to IT estimation is to treat deliverables as services which can either be delivered with in house resources or contracted (or some combination of the two).  The list is actually quite an enhancement to our acquisition-only approach-- Software and COTS Related Services –      Application Development Services –      Application Services –      Database Services Equipment Related Services –      End User Services –      ...
Part 1 described 2016’s updates in the Hardware catalog’s for Unmanned Space as well as Additive manufacturing (i.e., 3D Printing). So what is else is forthcoming in TruePlanning v2016, specifically the Software catalog? We’ve done some significant things actually--  Extended sizing with a RICEFW Calculator-- This existing option enhances the “Function Points from RICE” sizing calculator option with the addition of Forms and Workflows. The former counts the forms developed to meet agencies requirements not matched by standard forms in the ERP.  The latter counts the automated business processes that integrate tasks across business units, applications and ...
In our December blog, we described the upcoming Hardware catalog’s new Equipment Type calculator, enhanced significantly with new Unmanned Space manufacturing complexities, both for Earth-Orbiting and Planetary missions.  {We also emailed all customers with a link for updating this calculator in v14.2} So what is else is forthcoming in TruePlanning v2016, specifically the Hardware catalog?  Plenty! We’ve added an Additive Manufacturing Calculator--   The calculator derives a value for Manufacturing Complexity for Structure value (based on core equations from the Hardware Component model) using inputs such as Part Weight, Part Dimensions, Material Type, Manufacturer, 3D Printer, etc. -- The user can also specify post-processing ...
Adoption of our Space Missions Catalog has been strong this year.  But many of you have asked if and when the TruePlanning for Hardware Catalog could be enhanced for unmanned space applications, both earth-orbiting & planetary missions.  You asked, we are very soon delivering! For 2016, we will soon roll out an extensive listing of MCPLXSs and MCPLXEs, likely implemented in the Equipment Type input.  This new table of manufacturing complexities was developed specifically for use with the TruePlanning for Hardware catalog.  A combination of three sources of data were utilized:          I.            The PRICE Knowledge Network (KN),       II.            ...
For all you legacy PRICE-H users, your requests were heard loud & clear regarding estimation of multiple production lots, to include the option of specifying gaps between lot runs. The new Multi-Lot solution is controlled at the system-level via a Production Learning Gap Loss Factor  input.  It’s set at the top-folder object, under the Detailed Estimate input #62.  This input serves as a linear multiplier to adjust or eliminate the setback (gap) between lots of a multiple lot production run. This control hence allows you to account for more or less "loss of learning" during the gap.  Setback can be ...
We presented the results of an independent study last month at NASA’s annual Cost Symposium.  For those of you unable to attend, we thought it only fair to publish the highlights.  As background, the TruePlanning for Space Missions Catalog (“TPSM”) has been well-received since its official launch at last year’s Symposium by our Chief Scientist.  Since then, we’ve done Space-related webinars and multiple blogs, all available on this website.  However, what was impressed upon us by a longtime NASA customer, at the recent ICEEA annual conference, was that our users would highly benefit from a validation study that they could ...
Original Post Date: September 30, 2015 I was asked recently to provide insight on where & how some of customer organizations utilize PRICE in instituting a “Center of Excellence” using our software toolsets.  Of course, I’ll keep the names generic as you hopefully learn more from two instances where we are quite proud of their progress incorporating our tools into their workflows and business practices.  Below are two examples. A major military/commercial aerospace company has relied upon PRICE software as its primary estimating toolset for over 25 years.  Its Affordability Analysis group is recognized and utilized as the company’s lead in parametric ...
Original Post Date: September 30, 2015 One of our larger commercial customers asked for the ability to estimate the “learned out” Nth unit.   As always, we are here to hear you and your immediate needs.  Still in beta-test, the following is our pending new solution.  But we’d like to hear from you too here. On the "Metrics" tab, there will be an output called "Cost of Nth Unit".  This new value represents the theoretical cost of the Nth production unit, based on learning curve calculations— unless you override with your own curve values.  You will see this learned-out unit cost at ...
Original Post Date: September 30, 2015 If you’ve ever taken one of my classes, you know how much the Find & Replace function “is my friend.”  Well, it just got a lot more flexible and powerful.  Thanks to your requests (especially by NASA), we’ve added a number of new features and utility functions within the tool.   o Easy Access:   You can now access F&R from any of the input sheets, as well as from the attributes tab and within editing a worksheet set.  Simply right click an item’s Value cell and select the F&R option. o  Multiple F&R:  You can ...
Original Post Date: June 29, 2015 Regarding the special case where a Module _only_ integrates commodity (thru-put) components that themselves have no modification/development requirements, I would like to share a recent “lessons learned” in implementing our MicroCircuits catalog. Typically, for actual module development, TruePlanning calculates hours typically as the sum of the cells, modified by the component pins, modified by the area of the module, modified by the layers of the board.  This special case scenario is clearly a case where development labor at the module level is limited to placing/connecting various active elements on the board, including connecting elements between ...
Original Post Date: April 27, 2015 An Excel-based Pivot Table consolidates and summarizes data, with the flexibility of changing the order of organization – typically for sorting/aggregating subtotals by multiple designated dimensions.  For example, the below shows two different orderings.  The Left output sorts by Activity, then Object then Resource; the Right output sorts by Resource, then Activity then Object— But what about aligning the objects displayed in the same order as originally in the TruePlanning PBS?  In this blog, we will learn how to control and re-arrange output ordering.  As we learned in the first Pivot Table blog, begin by ...
In our last Part I blog, we introduced the capability of estimating key-input drivers based on early-stage metrics that represent requirements.  We even produced a CER based on a data-driven multiple regression, i.e., a linear model predicting Functional Complexity based only on two Key Performance Parameters (KPPs).  So how could you do the same?  Import the spreadsheet (given last time) into TrueFindings.  Note that spreadsheet row names now become the knowledgebase “column” fields.  Now per below, the first tab-function “Distribution Finder” shows descriptive statistics for all or selected criteria— The second tab-function “Dependency Finder” allow us to observe possible simple ...
Predicting cost from requirements is a fundamental goal of parametric estimating.  Many say they do it.  But often, analogies are not based on rigor and do not represent organizational experience/productivity not capture the complexity of project deliveries driven by requirements. TruePlanning allows for calibration of the latter.  TrueFindings allows for aggregation, filtering and analysis of these calibrations.  But then what?  How can this knowledge base of calibrated metrics best be utilized? The answer is aligning knowledge of corresponding requirements that drove the costs that informed the calibrations.  In this way, we predict an appropriate set of model input-drivers based on the organization and ...
The Business Executive Executives typically challenge their managers of Finance, Engineering and Project Management with reducing risk, reducing cost, and increasing efficiency.  With TruePlanning, the latter can effectively and quickly estimate, evaluate, and direct – whether with initial bids, design trades, alternative analyses, or engineering changes.  With a life cycle approach to Program Affordability Management, these managers can readily accelerate value to the customer, integrate processes, and improve the effectiveness of project selection, control, and delivery. Improve overall cost control and program management, by integrating cost estimating tools into life cycle cost management processes. ...
Business Executives are impacted directly by the organizational use of True Planning in establishing budgets, winning projects and managing programs.  The ultimate value-adds are improving bid success ratio, bidding more competitively, and improving project win rates with insights for more competitive bidding.  The Executive will see overall improvement in organizational ability to win new business as well as renewal/expansion of customer funding.  Use of True Planning and PRICE tools/services translates into developing winning proposals with the right balance of capability versus price, compliant with prospective customer requirements as well as compatible with organizational costs. Improve bid/no-bid ...
The Business Executive attains greater opportunities for more profitable engagements, empowered by effectively leveraging agile, data-driven, credible estimating solutions.  The implementation of TruePlanning immediately affords a more strategic view of life cycle cost estimation to improve the organization’s efficiency— from better planning and better priority setting, through cost estimation of the entire program life cycle.  With improved cost estimating accuracy and insight according to actual experience, the Executive improves customer trust, improve confidence in innovation, and ultimately improve both top-line as well as bottom-line growth. Make well-informed decisions, about programs and projects across the total lifecycle, ...
Original Post Date: Friday, January 9, 2015 Do you generate cost growth S curves? S-curves and Percentile tables are generated by the Risk tools which can reflect mass growth and growth as modeled in other input uncertainties. Per our discussion, note that NASA typically requires mass growth to reflect Optimistic = CBE, Most Likely = CBE + Contingency and Pessimistic = Most Likely +30%. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
How can I convert space-related PES files to TruePlanning? If you all are still using PRICE-H and not yet using TruePlanning, there are now tools available to fast-forward your file conversions. You have two options:  convert your models to the True-Hardware catalog or to the new Space Catalog. In the latter case, you can also choose to estimate System Level resources per below-- Different NASA Centers and contractors are opting for either approach, depending on their existing methodologies.  If you want to leverage our data-driven CERs for the above categories, then use the Space Catalog. If you do your own “post processing” then either ...
Original Post Date: Wednesday, June 23, 2010 Parametric modeling is excellent for all aspects of early-concept cost estimation, including go/no-go decisions downstream. So, in the spirit of bringing a transparency to (ethical) financial engineering… why not apply our craft to pricing “real-options”? The latter are essentially strategic opportunities for engaging resources (cost/schedule) into projects, ventures, investments, or even abandonments. The opportunity choice has value itself!  Unlike static project Net Present Value (often, but not exclusively, approximated with Discounted Cash Flow) assuming pre-defined decisions, real-options reflect the merit of flexibility. If an R&D or proof-of-concept presents viability/ marketability learning, the option has positive value, above ...
Original Post Date: Friday, June 25, 2010  Like titanium and other exotic metal-materials, “composites” (by definition, combinations of materials) offer significant weight-savings and reduced part counts, but at a price of high production cost. Sound contrarian to our parametric cost estimating view?   Not really. Complexity of manufacture is quite higher. Likewise process index and structural tooling values grow. Plus, design lead times drive developmental cycles. That said, understand that composites represent more than a material type. They can involve a highly labor-intensive approach to preparing, braiding/ winding, molding, bonding and modular assemblage. Yes, some aspects of braiding and molding lend themselves to automation—which then drives tooling ...
Original Post Date: Thursday, October 7, 2010 Ahhhh, the 80s… a challenging (but often confusing) time in an evolving computing world.  Working in 1985 as a software estimator as well as SQA engineer in a quality assurance department that “audited” real-time projects using new concepts like OOD & OOP… well, you get the picture.  It was a great time to get immersed into great work.  And the good news:  that company’s process as well as its developers were bullish on a young estimation/ quality types asking plenty of questions… as long as they were of the Yes-No variety.  And ...
Original Post Date: Monday, December 6, 2010  In his August blog-entry here, Zach Jasnoff outlined typical client perspectives for the different types of analyses that TruePlanning can accommodate. Working on a large project, we’ve experienced situations that, realistically, can happen where the initial intent and model structuring later have the boundaries of model appropriateness stretched. An Analysis of Alternatives (AoA), for example, is meant to measure deltas between baseline and its alternatives. If common costs “wash” then they can be excluded… which becomes an issue when treated as a Rough Order Magnitude for customer budgeting.  Likewise, if a ROM or Independent Cost Estimate ...
Original Post Date: Thursday, August 12, 2010 The late Norm Crosby’s “Quality is Free” taught us that an investment into quality is more than offset by prevention of defects based upon understanding of requirements. Only with the latter can lack of conformance (and subsequent costs) be captured and hence quality quantified. So how then is Parametrics relevant?  Parametric estimating is more than cost modeling. Our craft represents an initial consulting function into the accuracy and completeness of program planning concepts. Our customers trust us to know when to ask and when to supplement. Yes, we are mathematical and financial modelers too. But I’d suggest that “Parametrics is ...
Am I correct in understanding that in order to determine Payload PM, SE, MA [e.g., WBS 5.1, 5.2, 5.3], Payload I&T/GSE [e.g., WBS 5.5, 5.6], Spacecraft PM, SE, MA [e.g., WBS 6.1, 6.2, 6.3], and Spacecraft I&T/GSE [e.g., WBS 6.6] costs, each user must export TP results into an Excel spreadsheet, then apply their own factor to obtain the aforementioned WBS costs because TP lumps all of those costs into 1 PM bucket, 1 SE bucket, 1 MA bucket and 1 I&T bucket? And we have to do this every time we make a change to determine those costs? Gosh ...
From the presentation, it looked like the TP risk area included the capability for percent inputs around the point inputs rather than having to enter value? Yes, we’ve added Percent (as well as offset) to the FRISK input method to set pessimistic and optimistic values off the point values.  In the 1st example below I’ve used +20% and -10% respectively, around the Weight of Structure’s point’s value.  Per the 2nd example below, we can do likewise in our Monte Carlo companion applications, where our new custom logic satisfies NASA’s typical approach for mass growth-risk with Optimistic=CBE {i.e., your point value}, ...
Does any of the Space catalogs (objects) cover the launch vehicle and stage 1 & 2 engines?  Do the defaults cover manned space? Not, not soon at least.  HOWEVER, we and multiple NASA Centers have used the True-Hardware/Software catalogs for many years to estimate launch vehicles and manned vehicles.  Currently the Space Missions Catalog objects (i.e., estimating models) support robotic and unmanned missions.  But again, in the TruePlanning catalogs (HW, SW, Systems, etc), there has always been an Operating Specification choice for manned space per below— To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
Will other recent programs be added (to basis/analysis/CERs)? Yes, typically within one year of launch. We don’t often need to make changes to the component estimates but we test them as new data comes in. The support functions get minor tweaks each time we add another data point. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
Do you plan to add MAVEN any time soon? Just learned that yes, Maven will be added to the basis & analysis in the near future. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
In your webinar presentation-- Slide 21: NASA WBS mapping for the WBS 4.0 – this slide seems to indicate that this WBS is estimated by TP Slide 35: Space Systems Object – this slide seems to indicate that this WBS is estimated by TP Slide 48: Mapping Rules.. – this slide seems to indicate that this WBS is estimated by TP, but Notes column this very slide are contradicting this – by saying typically passed-thru what would be right approach; shall we have a pass-thru number for this WBS (4.0) or shall we assume that the TP estimate includes this WBS? Good catch!  ...
If you look at slide 68 of the presentation (Reference Mission Set Used in the Chicago Development Cost Model), it says that the data sets includes “actual costs for completed projects and projected costs for projects in development and near-term mission candidates”. Does this mean that historical actuals were used and there was no normalization of the data?  Does the actual costs include contractor fee and any subcontractor burdens or were those stripped out?  If contractor fees or burdens were removed, how do we go about adding that to the model estimate?  Is there an input parameter for that ...
It is not evident how WBS 10.0 which is not just integration of all systems together but also the integration with launch vehicle as well as other related launch operations is calculated without knowing the complexities of the mission.  Also, environmental I&T associated with observatory integration is in WBS 10.0. WBS 10 covers all S/C and System-level I&T that is not specific to an individual instrument or S/C subsystem. It includes Assembly & Integration, System Test, and Ground Support Equipment. Costs for the prototype/EM hardware used in flight system testbeds are covered within each applicable component estimate (represented by the ...
Why is there no assembly level object at the s/c top level.  All the subsystems within the s/c bus need to be assembled because all the s/c bus subsystems are very much intertwined together. So there has to be an assembly object at the top of the bus? Assembly I&T is performed by the Space Subsystem object.  Adding an additional Assembly object at the top of multiple subsystem-assembly pairings produces very high redundant costs.  However, the estimator can certainly perform organizational calibration and use worksheet set multipliers to adjust outputs at this top level if an overall assembly is added. ...
What about software? I never heard it mentioned. How does the space catalog address software? Actually, we did discuss software briefly.  Since flight software is included with each electronic item, some portion of an independently estimated software cost should be removed from the result.  The separate TruePlanning for Software catalog can be used to estimate development and COTS new/modified/reused/deleted code, sized via multiple approaches:  SLOC, function point, use cases as well as via a Functional Sizing calculator. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
What kinds of software costs would you say are not included in the calibrated cost to the particular space component? Flight software costs are included with each electronic component.  Ground software costs are included with MOS.  Ground data handling costs beyond the typical level used by most robotic space missions may not be adequately covered with the MOS factors. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
Some space components had an asterisk (modeled outside of PRICE TruePlanning)?  What does that mean? There are some components that are not found on the Component Type drop down but rather are modeled with CERs outside of True H (Space Parachute for example).  These CERs are available via custom cost objects, per below, rather than the Space Component cost object. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
Is there an EM and prototype calculator, or do you treat every type or prototoype (breadboard, brassboard, mass model, etc) as a full prototype? Fractional prototype quantities are acceptable.  Regarding a calculator-- good idea.  We will investigate feasibility. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
Can you mix catalog objects from different catalogs into the same assembly? (ex. a microcircuit with a space component) The Space Catalog was designed to use only the components in that Catalog and some activities are different to other Catalogs.  When using a Space System cost object, a Space Sub-assembly and a Space Assembly, do not mix regular System, Assembly and Hardware Cost Objects in the same Space System.  If Regular System, Assembly and Hardware items are included as component of a Space System, the results will be different to using only Space Catalog components.  A Project may contain separate Space ...
On one of your slides you mention using Assembly at the subsystem level for HW to HW integration (I can see this for Payloads as those are usually stand alone),  however, for spacecrafts a lot of subsystems aren't integrated as a stand alone, are you overstating possible costs by doing at each subsystem vs. a spacecraft level assembly which would encompass the integration of all the subsystems at the spacecraft level? A bus (or payload) can have just one subsystem-assembly pairing, with all components listed below, rather than multiple subsystems (or instruments) each with multiple separate pairings.  In general, note that the ...
You mentioned using production qty vs. prototype, even with the Space Mission Objects, however typically Spacecrafts are very low qty and my experience from heavy PRICE H use is that the production qty uses a much steeper slope. Is it now more realistic with the industry data in the space objects that production qty is good to use now? Yes, that is our recommendation.  We have seen production first units higher in cost than prototypes.  We recommend using the latter for engineering models and test units. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.
Do you have capability to do CONOPS which drive the design? Good idea!  As demonstrated, we allow the user to model complexity (or any other input) as a function of requirements, specifications, etc which could include a CONOPS value as well.  Also, another companion application is our linkage to the design-trade tools ModelCenter and i-Sight. To watch the "Best Practices using the TruePlanning Space Missions" Webinar, click here.