• Predictive Analytics for Improved Cost Management



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Original Post Date: Tuesday, August 24, 2010 Over the past several weeks several users have inquired about the best way to estimate costs associated with porting existing software to a new hardware environment. Normally for this situation some of the existing software will require some amount of adaptation to operate on a new server. However, a large portion of the existing software will only require integration into the new environment.   Estimating software costs associated with the above will require the use of several cost objects: - Systems cost object if program management, Quality Assurance, configuration, and    documentation costs are to be included in ...
Original Post Date: Tuesday, January 8, 2013 The preliminary results are in for our electronics complexity study!   For those that are unfamiliar with TruePlanning® lingo, Manufacturing Complexity for Electronics is our scale for measuring the differences in technology, producibility (component make-up, packaging density, test and reliability requirements, etc.) and yield of the electronics being estimated.  As the complexity number gets bigger, it means the electronics are more complex, and more costly (per unit weight) to develop and manufacture.   At first glance, the general trend from lowest complexity to highest complexity seems about right.  The lower complexity items are found on ...
Original Post Date: Tuesday, December 18, 2012 One of the biggest challenges estimators face is defending their estimates.  You may trust in your estimate, but how do you get others on board who might be unfamiliar with parametric estimating?  Showing comparisons of your project to similar completed projects is one of the best methods of defending your choice of inputs and your final results.  It’s also a method that nearly everyone understands.  Unfortunately, relevant, high quality data to compare with isn’t always available. There are 2 important trends related to this problem.  First, high quality data is being protected more so than ...
Original Post Date: Monday, October 8, 2012 The answer:  ~ 10.226.  At least that’s the value on our complexity scale we found via calibration after modeling it in TruePlanning(R).   Check out this Teardown of the new iPhone 5 , which breaks it down into a bill of materials, each with an estimated cost.  A colleague had the cool idea to model the iPhone 5 with TruePlanning, using information we could find on the internet.  This was a really thought-provoking exercise to help me as I’m updating our electronics complexity guidance, because the electronics in the iPhone 5 are state-of-the-art. Around ...
Original Post Date: Tuesday, October 2, 2012 We’re building a tool that quickly and easily allows you to map costs in your TruePlanning(R) projects to any custom Work Breakdown Structure (WBS), including templates for the MIL-STD-881C.  By mapping TruePlanning costs to fit your point of view, you can make use of your organization’s existing research, and ensure that your cost estimates are complete, realistic, and can be easily compared to other projects apples-to-apples.  This is great for AoAs and analyzing where and why costs differ between various solutions (not to mention 881C mapping is a required deliverable for major ...
Original Post Date: Thursday, August 23, 2012 We’ve bought access to IHS Haystack, which links us to huge amounts of data on government parts and logistics, including electronics running the gamut of technologies, functions, and types of equipment.  The tool combines data from more than 70 military and commercial databases, and includes detailed data on costs, procurement histories, and a wide range of technical characteristics – perfect for building and validating CERs. This data will be very useful for our TP 2013 Electronics Update.  All of this data can be built into a knowledge base and made available to TruePlanning users.  With this ...
Original Post Date: Tuesday, July 3, 2012  Introduction Cost estimate models are developed for many reasons: bids and proposals, should cost analysis, or measuring the state of a project already underway. Frequently many estimates are created using the same sources of data in an organization. By creating a custom integration solution based on the TruePlanning COM API repeated model creation can be automated. This can save considerable time, significantly increase the quality of the estimates by removing hand typed data errors, and speed up the time it takes to produce and gain value from cost estimate models. By example, this blog ...
Original Post Date: Tuesday, July 3, 2012  Introduction A cost estimation model needs to be fed data, and it is only as good as data used to create it. Frequently the data needed to ‘feed’ the cost model comes from a variety of sources including engineers, subject matter experts or other individuals not directly building the cost model. Just asking these experts to stick their finger in the air and take a guess isn’t always the best approach. Using the COM enabled Data Input Form Excel solution that comes with TruePlanning can help users obtain the data needed to complete ...
Original Post Date: Tuesday, July 3, 2012 Introduction @RISK and Crystal Ball are two Excel based applications that allow users to perform uncertainty, sensitivity or risk analysis on data contained in Excel spreadsheets. The analysis can be performed using various techniques including Monte Carlo and Latin Hypercube.  Many TruePlanning users are interested in performing this type of analysis on the models they create in TruePlanning or may even have requirements to perform this type of analysis on their estimates.   In response to this desire, PRICE Systems L.L.C. has created two Excel based solutions that allow users to easily leverage the ...
Original Post Date: Tuesday, June 19, 2012 In my last blog, I talked about the major research study on electronics being undertaken by the PRICE cost research team this year.  So far, we have visited modern electronics facilities, interviewed electronics experts, and visited customer sites to discuss their electronics estimating challenges. Among other things, we want to revisit and improve our “Manufacturing Complexity for Electronics” calculator.  This calculator guides users through a process of describing the electronic components being modeled, in a way that helps them quantify the complexity.  The first steps involve describing the equipment type, and technologies used.  ...
Original Post Date: Monday, April 16, 2012 This year, the PRICE cost research team is kicking off a major research study on electronics.  The field of electronics changes very rapidly, and we want to ensure our estimation methods are well suited for the latest technology.  While we constantly collect data and update relationships, this study will go above and beyond the norm.  We'll visit modern electronics facilities, interview experts, visit customers to discuss their electronics estimating challenges, and start a major data collection and analysis effort.  In the end, we plan to add many new electronic classifications, reexamine our ...
Original Post Date: Thursday, April 5, 2012  Introduction The previous blog covered getting started with the TruePlanning API using VBA. Now it is time to tackle collections. Collections in the TruePlanning API are simply objects that hold a list of objects where all the objects are of the same type.  For example, the Project object contains a collection of the Cost Objects that belong to the project.  In order to use the TruePlanning API, mastering collections is essential, but “mastering” is a bit strong a word given that they are easy to use. By the end of this blog TruePlanning API ...
Original Post Date: Monday, April 2, 2012 In my previous blog, I introduced the relationship between three “breakdown structures” commonly used in project management, and how cost estimates are linked to them and aid in their usefulness.  In this blog, I’ll dig further into these relationships, and explain their impact on my Total Ownership Cost (TOC) solution in TruePlanning.   Let’s use an example of an aircraft being built for the Army.  In this hypothetical example, the prime contractor is Boeing, and they have different departments working on various parts of the aircraft.  Department 10 is responsible for the wings and ...
Original Post Date: Thursday, March 29, 2012 Introduction The new TruePlanning COM Application Programming Interface (API) found in the 2012SR1 release of TruePlanning provides a powerful mechanism for leveraging the power of TruePlanning within custom solutions. Through the COM API TruePlanning projects can be created, updated, calculated and saved allowing for near limitless potential for integration with TruePlanning.  That said it is an “API” which means some programming will need to be done. This discussion is focused on how to get started using the TruePlanning COM API. Development Environments The TruePlanning COM API is written in C++, but is available to any programming ...
Original Post Date: Monday, March 26, 2012 In my research on project management and cost estimation, I often come across three different “breakdown structures” which are useful in dissecting a project from various points of view.  The work breakdown structure (WBS) is oriented around project deliverables; it breaks a system down into subsystems, components, tasks and work packages.  The organization breakdown structure (OBS) shows the structure of the organizations involved in the project, including how these organizations break down into sites, divisions, teams, etc.  Finally, the cost breakdown structure (CBS) examines a project in terms of useful cost categories, ...
Original Post Date: Thursday, August 11, 2011 A Bell 430 Helicopter's rear blade spins 1884 times per minute; how many times for the main blade?  Submit your estimate in the comments section!
Original Post Date: Wednesday, July 20, 2011 How many golf balls would it take to circle the Earth at the equator?  Submit your estimate in the comments section!
Original Post Date: Tuesday, June 21, 2011  What percent of active U.S. military personnel are from the Marine Corps?  Submit your estimate in the comments section!
Wednesday, June 8, 2011  What is the fuel capacity (in gallons or liters) of a Boeing 737 jet?  Submit your estimate in the comments section!
Original Post Date: Tuesday, April 19, 2011 Happy Easter!  What is the weight of the world's largest jellybean?  Submit your answer in the comments section!
Original Post Date: Tuesday, April 12, 2011 What is the aircraft speed record, in mph or km/h, for an unmanned jet airplane?  Submit your estimate in the comments section!
Original Post Date: Tuesday, April 5, 2011 In mph or km/h, what is the average cruising speed of a Boeing 737 jet?  Submit your estimate in the comments section!
Original Post Date: Tuesday, March 29, 2011  How many windows are there in the U.S. Pentagon?  Submit your estimate in the comments section!
Original Post Date: Tuesday, March 22, 2011 On average, how many times does a jogger's heel strike the ground per mile?  Submit your estimate in the comments section!
Original Post Date: Wednesday, March 16, 2011 Happy St. Patricks Day!  The average American eats 4.4 lbs (2.0 kg) of baked beans annually;  what is it for Ireland?
Original Post Date: Tuesday, March 8, 2011 How many passengers does the world's largest jetliner, the Airbus A380, hold?  Submit your estimate in the comments section!
Original Post Date: Monday, February 28, 2011 What follows is PRICE's interpretation of the DOD-HDBK-343, which addresses design, construction and testing requirements for a type of space equipment. Within the document are specified several levels of Class Definitions for space programs, space vehicles and space experiments. The classes are briefly described below. Class A - High Priority, Minimum Risk Class B - Risk with Cost Compromises Economically Re-flyable or Repeatable Minimum Acquisition Cost HDBK-343, originally published in 1986, was reviewed and found to be still valid in 1992.  We can't due ...
Original Post Date: Thursday, January 13, 2011 In pounds, what is the heaviest recorded weight lifted by a man using his beard?  Submit your estimate in the comments section!
Original Post Date: Wednesday, January 12, 2011  TruePlanning 2010 SR1 estimation software is now available as an upgrade for existing PRICE customers. The most significant update to this version of TruePlanning is the capability to use both parametric estimating models as well as analogous data to produce estimates. This capability validates and increases the defensibility of estimates. TruePlanning provides a framework that allows content driven parametric models to be estimated in one system. Most notably, hardware, software, IT and Systems of Systems (SoS). No other commercially available estimating tool can make that claim. However, whereas in previous versions estimates relied on ...
Original Post Date: Tuesday, January 11, 2011 Last week I gave a webinar which detailed the PRICE perspective on Should Cost & Will Cost Management. The responses I have received have been very positive and also informing. For those of you who could not attend you can view the recorded version of that webinar here. Below is a brief summation of that presentation and some key takeaways. The Under Secretary of Defense issued a memo late last year. The thrust of the memo was the current need for greater efficiency and productivity in defense spending. His guidance contained 23 principal actions for improving the ...
Original Post Date: Thursday, January 6, 2011 Today, PRICE Systems, Senior Research Analyst, Bob Koury, will be presenting on Will Cost/Should Cost management. The presentation will focus on two main requirements mandated in the Ash Carter memo (mentioned here several times): Developing Should Cost/Will Cost targets and establishing Affordability as a requirement.  An example will be provided of how parametric estimating models were used to establish “Should Cost” targets and how they can be used by a budget authority (government or Industry) to be an informed consumer of contractor or sub-contractor bids. The demonstration portion of this webinar will focus on ...
Original Post Date: Wednesday, January 5, 2011  What percent of our solar systems' total mass does the sun represent?  Leave your estimate in the comments!
Original Post Date: Tuesday, December 21, 2010 Winter Rule of Thumb:  How many centimeters of snow are the equivalent of 1 centimeter of rain? 
Original Post Date: Wednesday, December 8, 2010 With the New Year approaching we thought we would try something different on the blog. Every week will ask a question with a quantitative answer. Your job is simply to give the best estimate you can (you're on the honor system, no googling allowed). You can be above or below, winner is whoever is closest. Each week we will post the previous week's answer and the winner along with a new question. Good luck! Q: Of the top 1000 most popular U.S. baby boy names in 2007, what position did Elvis rank?  Leave your answer and your name in ...
Original Post Date: Wednesday, December 1, 2010  PRICE Chief Scientist, Arlene Minkiewicz, co-authored this article which looks at some of the challenges faced by the Department of Defense in attempting to inject SOA initiatives in acquisition processes. The article appears in the Nov/Dec 2010 edition of CrossTalk, The Journal of Defense Software Engineering Turn to page 32 of the online flip book to read the entire article. Read Article.  
Original Post Date: Wednesday, November 17, 2010 Unfortunately this is a true story. I decided to have a couple of gold fish in a nice glass bowl, having done my sums I estimated the cost should be: Bowl £20.00 Gravel £5.00 Two gold fish £8.00 Food £4.00 Making a total of £37.00, ok I can afford this, off I go to the pet shop. The pet shop advised “fish don’t like bowls”, plus “it’s cruel to keep them in one”, but as a child I often won fish at the ...
Original Post Date: Wednesday, November 17, 2010 Recently a cost research project on missiles was completed. The research resulted in performance based equations for air-to-ground and surface-to-air missiles were developed. The performance based equations can be used for early concept estimation  on missile development and production costs. The question though is “What is the process for developing this type of estimating relationship?” This will be the first of a series of BLOGs on this topic.  The first task is to define what is a “Performance Based Equation?” Bruce Fad covered this definition in a previous “Data Driven BLOG” so please review his post for the details. The second step ...
Original Post Date: Tuesday, November 2, 2010  After some recent meetings with clients I am sensing some confusion on how to estimate software reuse. I think part of the problem is in the definition of reuse, so let's start with a definition and then address the estimating issue. Software reuse is defined as “the use of existing software, or software knowledge, to build new software.” This definition came from Wikipedia. From a estimating software costs perspective the above definition is part of the problem. The definition should read: "Use of existing software with no changes for operation in the new software program.”  If the existing software is going to be changed, ...
Original Post Date: Thursday, September 23, 2010 You need 3 things for your software estimates to be successful. And I will add a fourth one in after I talk about the first 3. 1. You need qualified and experienced people to generate the estimates. They have to know how to estimate and they have to understand what the problem is that the project is going to solve…..at least well enough to estimate it. This can be one person or many depending on the difficulty of the business area. The harder it is, the better having more brains look at the problem. But not to the point ...
Original Post Date: Wednesday, October 6, 2010 Over the past several weeks several users have inquired about the best way to model legacy software that is being modified when estimating software costs. The software component within the TruePlanning Software model has an input parameter call “adapted Code Size.” This input parameter accounts for existing or legacy software that will be modified or changed to meet a new requirement. Tied with the size input parameter is Percent Design/Code/Test adapted. Although the model will calculate a percentage for each input, I would recommend that user’s analyze the calculate values and override the calculation where required. The percentage ...
Original Post Date: Wednesday, October 6, 2010 The key cost driver when estimating software costs is the size of the product. The problem is that there is no perfect technique available to measure and quantify the size of software. The two major techniques in use today are Source Lines of Code and Function Points.  Today we will talk about Source Lines or Code or SLOC. Source Lines of Code measures logical lines of code. It takes some of the uncertainty out of physical line of code measures by counting only complete statements (which can cross over more than on physical line). SLOC excludes comments and blank ...
Original Post Date: Wednesday, September 29, 2010 Earlier this month Under Secretary of Defense, Asthon Carter, spoke at the 2010 Annual Air and Space Conference. His speech touched on some of the 5 categories that he and Defense Secretary Robert Gates laid out in order to identify low value activities and reapportion approximately $100 billion dollars within the Defense Budget to higher value capabilities needed to support US Forces. The first of those categories he described has to do with "targeting affordability".  In the context of a specific Navy program he explained this concept in a simple practical manner:  "The way to do that is ...
Original Post Date: Wednesday, September 29, 2010 Recently I came across the word “off-label”.  It is the term used by the medical community when a drug is used to treat a condition for which it has not been approved by the Food and Drug Administration.   We sometimes use TruePlanning for “off-label” purposes. A good example would be using the TruePlanning Calibration tool to answer such questions as, what is the maximum number of source lines of code (SLOC) I can get and remain within my budget?  I call this TruePlanning Optimization. Here is an example answering the SLOC question. First begin ...
Original Post Date: Thursday, August 26, 2010 I  recently moved and thought about the need to do a new household budget. This got me to thinking of the budgeting capability in TruePlanning. First, you can use TruePlanning to determine a budget. The time phased output, either monthly or annually, is ideal for establishing a budget and budget profile for your project.  TruePlanning also splits the time phased costs into development, production, and operating and support categories. Be cautious, however, in using the Phase report. The System cost object costs are assigned by schedule duration, which may not necessarily reflect the actual project cost flow. A better choice may ...
Original Post Date: Tuesday, July 6, 2010  Those words describe the triangular probability distribution used by FRISK in performing risk analysis in TruePlanning. FRISK requires two major assumptions on the part of the user. The first is that the combination or convolution of a number of triangular distributions results in a log normal distribution. The second is that there is correlation between cost objects.  The triangular distribution is completely defined by three simple inputs: an optimistic value, a pessimistic value, and a most likely value. By eliciting information from engineers, I have found that they are much more willing to commit to a range ...
Original Post Date: Wednesday, June 23, 2010 I have been working with several clients on data collection and repository creation this spring. One common theme that comes up is what data to collect and how to use it to make intelligent decisions about projects. And that’s the impetus for my little limerick above.  The goal of data collection is wisdom. In the estimation world wisdom means knowing when it’s safe to bet your shirt on this new project you want to initiate. If you keep that perspective in mind it becomes much easier to identify what information you need to make wise decisions and ...
Original Post Date: Thursday, June 10, 2010 This week I was thinking how useful the Export Import feature in TruePlanning can be. First, the Excel Import spreadsheet gives you an easy and convenient way to gather your data. In addition, it gives you an easy and convenient way to check and validate the data. When observing the data in a column format, it is so easy to spot and correct anomalies. Second, the Excel Import spreadsheet gives you an easy and convenient way to build your Product Breakdown Structure. No more inserting one cost object at a time. The Excel Import feature does it all ...
Original Post Date: Tuesday, June 8, 2010  Now that we know the background on the original concept of TRL's (Technology Readiness Levels - reference Arlene Minkiewicz's earlier blog post), we now want to address estimating costs associated with different TRL levels. It is important to realize that a model cannot estimate TRL costs by simply changing an input parameter. Rather the only way to estimate costs associated with different TRL levels is to model the scenario. For example, if you are estimating costs for TRL level 2 phase the input parameters would be very different than if estimating costs for TRL level ...
Original Post Date: Friday, April 30, 2010 I have been frequently asked to do crosschecks on other people’s software cost estimates which are potentially done in a variety of tools from spreadsheets to SLIM. One of the common operator errors I see from other users is not understanding what activities and resources are included in the outputs of the particular tool that they are estimating with. This is akin to deciding between two cars and not knowing if both come with the same sets of features (stereo, AC, heated seats).   With software estimation tools you need to know what work is getting estimated ...
Original Post Date: Friday, April 2, 2010  The newest version of TruePlanning has been released and distributed to customers. The new features were designed to make it easier to estimate entire systems, not just individual components or sub-systems. TruePlanning is an excellent solution in this regards. Systems that require you to estimate software costs, hardware costs, and the integration of multiple pieces of each can all be done in one framework. There are  specific features in this release, like input inheritance, that allow you to make changes at the top Project level which then flow throughout the entire system.  This saves an ...