IT Budget Planning

Agile software development practices are predicated on the following tenets as introduced in 2001 in the Agile Manifesto [1]

•  Individuals and interactions over processes and tools
•  Working software over comprehensive documentation
•  Customer collaboration over contract negotiation
•  Responding to change over following a plan

Agile development processes rely on experienced, highly skilled people communicating with clients and each other to deliver software that provides the clients with the most value for the money they spend.  This requires both developers and consumers of software to accept the reality that things will change over the course of the project and that the software that is eventually delivered may not be the same as that was envisioned when the project was first kicked off.

At any given time, the agile software development team is only working on the feature that the customer currently feels is the most valuable.  Estimation is performed by the team (including developers, BAs, QAs and customer representatives) and is only focused on the feature that is currently on deck.  At the end of an iteration, the customer has an opportunity to review the implementation to date and can reprioritize remaining features based on changes in their requirements, market or expectations.  So estimating beyond the current feature doesn’t really make agile sense.

Unfortunately, the fact that estimation doesn’t make sense for the agile team does not mean it doesn’t make sense for the business.  The business needs to see the forest not just the trees.  Customers need an idea when their software will be delivered, businesses need to prep the market for new products and features, businesses need to be able to optimize resource allocations across many projects, etc.   This of course begs the question of how to perform an estimate for software when you really don’t know exactly what software you’re going to build.  As an industry, we’ve been pretty unsuccessful estimating software projects even when we think we have a handle on the end product – how can we be successful with so much uncertainty.

First we accept uncertainty and commit to incorporating uncertainty into our estimates.  Once we’ve made that commitment we are then free to pursue one of many top level estimating techniques to help us get our head around a likely range of values for cost and schedule based on what we currently know about the software project.  Parametric techniques are particularly suitable for this task especially for an organization that has some historical data from previous agile projects.  Parametric estimating models like TruePlanning for Software provide a repeatable framework through which an organization can study their past performances on similar projects (similar number of features, similar market, similar customer, etc) and use what they learn to perform estimates on the project at hand.   The amount and nature of the similarities should guide the amount of uncertainty in the estimate.  Organizational history can be used to map Story Points or User Stories to a size measurement such as source lines of code, function points or user points.  Analysis of performance on past projects can inform decisions about productivity and other project drivers.  This information can be used to drive the parametric algorithms to develop estimates for cost, effort and schedule.

Since we have already acknowledged that we didn’t get the question right, it’s unreasonable to assume that the answer will be ‘the right answer’.  What we do come away with is a range for cost, effort and schedule which will give decision makers realistic data to work with. If we have properly studied our history and thoughtfully assessed uncertainty, we can present these ranges with a quantifiable degree of certainty. 

What process does your organization employ to plan around agile induced uncertainties?

[1] Agile Alliance, “Agile Software Development Manifesto”, Feb 2001, available at www.agilemanifesto.org (retrieved January 2010)

The following is a collection of some of the more common installation issues.  If you have additional questions, concerns, or issues with any upgrade or installation, please call our Technical Support line anytime at:  1-800-43-PRICE.

Default Password Override

TP’s default password may not be strong enough based on your security policy.  Please review your specific requirements for passwords and follow the directions below to change the default:  When you get to the screen, uncheck the “Use Default Password” and enter a valid password based upon your specific security settings.  Then click next and continue the installation process.

Existing TruePlanning Installations

If TruePlanning 2008 SR2 is currently installed, it is recommended that users export their projects, then uninstall TruePlanning, making sure to backup their database when prompted to do so during the uninstall. The uninstall of TruePlanning can be initiated from the Control Panel.  Also, please select the option to uninstall MSDE when prompted during the uninstall.  Once this is complete, install the new version of TruePlanning, making sure to manually import the projects which were exported from the older release once the installation is complete.  Upgrades from TruePlanning 2009 and above do not require TruePlanning  to be uninstalled as the TruePlanning 2010 installation will automatically upgrade the projects in the database; however, it is recommended that users still export their projects manually and before the upgrade to be safe. 

Administrative Rights

The user installing TruePlanning requires administrator rights on the machine.  On Vista it is advisable to launch the installation of TruePlanning by navigating the “Setup.exe” file on the TruePlanning CD and initiating the installation using the “Run as Administrator” option. This option is available from the right click menu in Windows Explorer (My Computer). 

XmlLite

XmlLite is a resource provided by Windows to perform certain XML parsing abilities. It is a prerequisite for installing TruePlanning 2010. If TruePlanning 2010 is installed on a computer that does not have XmlLite, and error will occur when TruePlanning is launched.  The installation will not produce any errors or warnings. This error is Windows XP specific. Vista and Windows 7 contain the XmlLite natively. Normally XmlLite is installed when Internet Explorer 7.0 (or newer) or Windows XP SP3 are installed. Installing either of these resources should resolve the error.  Some customers are not able to install IE 7.0 or Windows XP SP3 and should therefore install XmlLite directly. It is available from Microsoft at: http://support.microsoft.com/kb/915865. It should be noted that TruePlanning 2010 has features that rely on Internet Explorer 7.0 or higher. Some of the Calculators contained in TruePlanning will not function properly without Internet Explorer 7.0 or higher.  Therefore, if possible, upgrading Internet Explorer is the preferred option. 

MSXML6 SP2

There is a known issue installing TruePlanning 2010 on computers that have Windows XP SP3 and MSXML6.0 SP2 installed.  The issue occurs because of an incompatibility between SQL Server 2005 Express and MSXML6.0 SP2. This issue is described by the following Microsoft Knowledge Base article: http://support.microsoft.com/kb/968749. MSXML6.0 SP2 is installed by the Windows XP Service Pack 3. This is not an issue on Vista.  The above MS KB article provides a fix for the issue. It is advisable to execute the fix before attempting to install TruePlanning 2010. It is possible to identify computers that have had MSXML6.0 SP2 installed by examining the “Add/Remove Programs” feature under the Control Panel. If the issue in encountered during the installation of TruePlanning it can be identified by the failure of SQL Server to install. The failure will be identified as pertaining to MSXML6. This can be ascertained after the installation has been exited, by examining the log of the SQL Server installation. The summary of the SQL Server 2005 Express installation can be found at the location defined by the following support page: http://msdn.microsoft.com/en-us/library/ms143702%28SQL.90%29.aspx. If the error has been encountered please contact PRICE System’s Support for help resolving the issue.

In 1961 at the MIT Centennial, John McCarthy opined “if computers of the kind I have advocated become the computers of the future, then computing may someday be organized as a public utility just as the telephone system is a public utility…. the computer utility could become the basis of a new and important industry”  [1].  In 2006, Amazon Web Services was launched providing computing on a utility basis.  Since that time the notion of cloud computing has been emerging and evolving.

Cloud computing is a paradigm that makes the notion of utility computing a reality.  Instead of Information Technology (IT) organizations investing in all of the hardware, software and infrastructure necessary to meet their business needs, cloud computing makes access to hardware, software and infrastructure available through the internet, generally utilizing a pay for use model.  Basically cloud computing allows an organization to adopt a different economic model for meeting IT needs by reducing capital investments and increasing operational investments, a model which is likely to offer cost savings to many organizations.

There is still a great deal of hype around cloud computing, as many vendors have their marketing engines further into the clouds then their technology supports.  Despite this Gartner predicts that by 2012 one in five businesses will not own its own IT assets. [2].  In late 2010 the Office of Management and Budget (OMB) under direction from the White House told federal agencies that starting in 2012 they are expected to consider cloud first “whenever a secure, reliable, cost-effective cloud option exists.” [3]

There are certainly many reasons why an organization would consider moving at least some of their IT functions into the cloud.  In addition to potential cost savings the cloud offers the possibility of increased availability, easier collaboration, lower capital costs, scalability and virtualization.  There are of course concerns as well.  The technology is still relatively immature with no definitive set of standards for interface or compliance with regulations.  Businesses lose hands on control of their IT resources with little recourse if their IT vendor shuts down or goes out of business.  Additionally,  there are security and data privacy concerns.  There is also the fact that not all ventures into the cloud will be cost effective for the business.

This paper introduces the concept of cloud computing and discusses the potential benefits for a business as well as those things which could be barriers to adoption.  It examines the types of applications where cloud computing is an efficient cost effective solution and the types of applications where its use could be problematic or costly.  Several examples of successful cloud implementations are presented and discussed.

For a white paper describing this reearch on cloud computing email info@pricesystems.com with the code word CLOUD in the subject line.  To share your cloud computing experiences comment on this post

I’m not a golfer. But we’ve all heard one say “that’s why I play” after hitting a shot and feeling like it all came together. What “it” is, in terms of mechanics and timing, I’m not really sure. 

In our own world of parametrics, it’s the feeling of adding value in that golden moment of facilitating decisions and forward momentum. We wear many hats: estimating, consulting, systems engineering...even cost accounting.  Building an AoA, ICE or ROM is where rubber-meets-the-road in regards to configurations and assumptions. 

Not too long ago I was in a discussion with a number of Subject Matter Experts and realized that most of us at the table hadn’t had a chance to hear each other’s perspectives. Enter the consensus-maker! With parameter pick-lists and definitions displayed as talking points, we talked through the scenarios and operational expectations. 

We clearly needed a common frame of reference to get to a real-time resolution. The group built momentum, carrying over past the meeting. My role that day was to facilitate. When it all comes together, bridging between representatives from business operations, program management, systems engineering and field operations, it’s a very good feeling to add value. Maybe not as perfect as a hole-in-one, but I’ll take “it” every time!

1. A round table peer review, where we describe and defend our parametric modeling approach as well as consistency across similar objects/ systems/ alternatives. 
2. Introduction of an independent 3^rd party, not part of the estimating team, who is an experienced modeler. This resource can take the client perspective in reviewing, say, procurement versus cost-of-ownership as well as comparables from similar program experiences.  
3. Take an agile approach where your project leader is the “product owner” who reviews all interim deliverables top-down.  
4. Another option is incorporating a client representative into your pre-release reviews for similar validation testing. 
5. Finally, we pair off internally to verifying each other’s work against the real-time documentation we keep per common templates.  (Available from PRICE Systems, for both hardware and software modeling inputs). They are great visualization tools for internal parameter-tracking, plus external pre/ post model review with customers.

...wear the worst shoes. The cobbler was a master at his craft; he was just too tired to practice it when he got home from the shop.  Sound familiar?

A disciplined approach to understanding (functional) requirements as well as analogous projects (with actuals) is our not-so-secret sauce. Why run the risk of creeping back up our career learning curve? There’s already enough scope creep to keep us busy. Plus, for you management types charged with prospecting, a consistent approach towards estimation is a great way to connect with people who've felt the pain of being the cobbler's kids.

I recently reconnected with a colleague who found himself immersed in an early-stage, large-scale federal software project. Discussion points ranged from parametrics utility to sizing to Earned Value Management. Not leaving my toolset at the shop translated into good conversation with followup request. A bad example is yours truly, a year ago, so immersed in a highly-featured personal project, that he neglected to find agreement on scope and cost with his team. Bad idea! Now my “shoes” (a one-off custom hot-rod) are way behind schedule and way over budget. Keeping on my professional cost estimation consulting hat would have saved on both… bigtime! 

True Planning results have many options, including viewing Costs by Activity. While simple, this view can be quite powerful, especially when exported for re-organization manipulation. 

In a recent exercise, the WBS mapping of common objects, estimated by separate multiple scenarios, presented a non-trivial chore in Excel. “Transposition” features work fine for matrices, as do pivot tables. But how does one map object by activity grids into activity lists, similar to MIL-STD 881a, with singular “roll up” instances of all nonzero object costs? 

The secret is in how True Planning appends each activity output with the [object] tag. Once exported (via “Send to Excel” or “Copy Grid” options), a simple Data-Sort by Activity name will, by default, alphabetically group activities. From there, either then group by phase and/or group by scenario. The latter can be the original organization or an entirely new one. Next, use Excel’s Data-Group option to build subtotaling and roll up controls. This also gives you the ability to hide/view object instances, which are essentially activity subtotals. Finally, at your discretion, shred any scenario-shared costs such as SE/PM or personnel. Of course, build checksums to cross-check. 

Last piece of advice on this: for each step in your approach, document process refinements and save your interim artifacts as templates. The next time you are asked to rework the steps with a new scenario set or organization, your life will be even easier.

In my blog last week on Work Breakdown Structures, we reviewed the subtleties of using the [object] tag to your advantage in creating different sorts and roll up subtotals. As a followup, I’d like to drill down a bit on the initial step of using the “copy grid” exports. Each row number is unique, thus creating an identifying key for the vlookup function in Excel. Since all object X activity instances are allocated 100% to one of the three phases (with very rare exception), these row keys allow you to sort and re-group outputs while maintaining lookup visibility to corresponding grids. In the case of that rare exception, percentage spreads easily solve for allocation of that shared activity cost. 

The real trick to transpose into a WBS "Activity then Object" listing is to use the [object] tags as group delimiters. As long as you keep the row-key associated with the cost outputs, your options are not limited to just one activity list order. You could map to 881A format or to your accounting system. You could map your PBS transposition to 1921 or 1921-1 orders. In the end, cost will still match TruePlanning's output. Grouping by phase or by system won't change the bottom line.

One note: If you need activity subtotals immediately, True Planning’s Activity by Cost Object output works just fine. It’s a grid that is available for export to Excel, Word or XML. My process above solves for the often-demanded request of listing (and numbering, indenting, subtotaling) linearly. In the near future, look for PRICE Systems to utilize the COM layer feature of TP 2010 SR1 to give you yet another option in mapping PBS to WBS format. 

As is often the case, there is a difference between definition and connotation. The intended meaning of consumerism at these events was the phenomena of the consumer goods infiltrating and influencing government IT policy.  The IPad was all too visible in the audience as were the comments from CIO staff about their user base wanting to integrate IPad-like products into the work domain.

Like it or not we are all consumers; and consumers are getting more tech savvy.  As the adoption of these products or services increase in our daily lives, the question becomes unavoidable – Why can’t I use these for work? It was clear that for the CIOs attending these conferences this question was top of mind.  While most of the U.S. government is attempting to identify, inventory, consolidate and remove redundancies of IT infrastructure in response to Mr. Kundra’s IT modernization plan, CIOs are also feeling pressure (and criticism) from users about their ability to support seemingly everyday applications.

I’m sure there are many reasons why these aren’t supported; my intention is not to address them here.  Instead I’d like to posit an opinion.  There are  tools supporting new paradigms in how we communicate, at work and home, which are becoming the norm.  They are no longer ‘toys’ for the younger crowd.  For those waiting for this social media fad to pass, I’d suggest another look.  Recent events in the Middle East are real illustrations of their significant impact.  The U.S. State Department is beginning to use a nation’s access to internet and social media as a barometer for civil liberties.  Yet, there is still much resistance in adoption or more fundamentally understanding and embracing these venues. 

I’m encountering resistance and sometimes denial of these forces on a daily basis.  I don’t think you need to have 500 Facebook friends or Tweet until thumbs bleed.  Nor do I think being a LinkedIn Pro replaces human interaction.  It is important though to recognize the shift in communication.  Take just a few minutes to understand the different tools.   You’ll find it’s not unlike a conversation you may have in a coffee room or a hallway if you still have a coffee room or a hallway.  Many don’t.  For those who are time, money or resource constrained, you can access industry experts, thought leaders and practical advice on your own time at no cost.  There are plenty of free introductory videos or articles on line.  You can decide which mediums work best for you. 

At PRICE, we are raising discussions, sharing product capabilities and answering questions about cost estimation models through our social media.  Because people have different preferences for certain outlets or certain restrictions at work, we repeat similar material across our social media networks.  You can check us out on Facebook, LinkedIn, Twitter or follow our blog.

PRICE Systems is currently developing a COM interface for TruePlanning. I know, I know…  What’s COM you say? COM stands for (Component Object Model) and it's a programmable interface which exposes the TruePlanning estimating brains for integration and analysis!  I know it sounds boring but it’s really cool because it allows anyone, including our users, to build “apps” for TruePlanning similar to the way “apps” are built for the iPhone.  Let me give you some examples of some apps that you can build:  Excel solution, sensitivity analysis,  project comparison, risk simulation, total cost of ownership (TOC) solution, calibrate multiple inputs, optimize maintenance concepts and more.  The apps can be developed using a host of tools including VBA which comes with Microsoft Office.  Expect some apps to be built by PRICE but anyone can do it.  If you have an idea for a creative TruePlanning “app” let us know about it because that will help us build the right COM interface for you.

In the February 2011 issue of National Defense, I was struck by the article “Uncertain Path Ahead for Military Truck Fleet”[1]. This article centered on the best strategies for modernization of the aging fleet of Humvees. The recapitalization of 150,000 Army and 25,000 Marine Corps Humvees is creating a “fix or buy new” dilemna for decision makers. According to the article, GAO analyst Michael J. Sullivan should include a “cost-benefit analysis that would minimize the collective acquisition and support costs of the various truck programs, and reduce the risk of overlap or duplication.

The TruePlanning model is an excellent framework to conduct the vigorous cost-benefit analysis called for by GAO.  Having recently completed in-depth AoA’s on two high profile programs, outstanding results were obtained and used by decision makers at the highest levels.

Conducting an AoA using the TruePlanning framework and models would introduce the type of rigorous analytics needed to support the DoD’s vehicle strategy while satisfying the GAO call for cost-benefit analysis. Within the model, each alternative could be structured for both its acquisition and lifecycle profile. This would contain Humvee recapitalization profiles for armored, unarmored and even vehicles that have surpassed their economic useful life. In addition, other alternatives such as JLTV, MRAP, next generation Marine Corps personnel carriers and new production Humvees could be modeled as well. Cost-benefits can also be modeled via TruePlanning’s specialized benefit objects.

In sum, complete force-structuring analysis can be accomplished within the TruePlanning framework. Coupled with optimization tools such as ModelCenter, decision-makers have an analytical way of removing uncertainty for modernizing an aging truck fleet balanced with economic realities.  If you are interested in how force-structuring can be accomplished within TruePlanning, I would be happy to share with you a paper a presented at DoDCAS last year on the subject. Just a post a comment with your request.

My June blog entry suggested the use of parametrics in real-options valuation. This month, I’d like to offer the generalized use of our type of modeling in valuing tangible assets. 

Typically, fundamental analysis evaluates the intrinsic value of securities. I won’t attempt to compete with Warren Buffet here. But it is certainly the case that a company, or portfolio of securities reflecting many companies, is based in part on the market value of its product assets and their potential for future earnings, as well as other objective and subjective considerations.

In parametric estimation, we take a top-down approach to developing models of estimating ultimate acquisition and ownership costs. In the case of the former, I’d argue that we can readily… and uniquely… estimate operating costs for companies developing and selling, say, technology-based products.  Marketing can determine pricing, based on their competitive landscape analyses and market-demand for unmet needs. 

We are in an excellent position to complete the forecasting of earnings (and hence, discounted cash flow) using our parametric methods to evaluate a product-system’s should/will costs. Anyone who does detailed bottoms-up budgeting for “go to market” expense, as well as production delivery, would find value in our modeling.  

And again, once estimated costs are subtracted from revenue forecasts, the netted estimate of earnings and cash flows will allow for traditional market value assessment of this asset or entity. For example, your organization needs to compare economic potentials of emerging new software products. There are no balance sheets. There are no income statements. Yet. 

Now your sales and marketing function has a good independent sense of revenue opportunity. So it’s left to you to estimate the costs of developing and delivering. Independent parametric estimation is the answer. No idea on sizing, either SLOC or function points? No problem. 

Data-driven True Planning has years of data modeling that allow you to run application-specific calculators. In addition, you can take advantage of calibrating actual data from similar projects. Likewise, this process of valuing assets holds true for IT infrastructure products as well. Cloud computing, SAAS and ERP are all further examples of where new IT/software products are emerging… and need estimating as well as financing via valuation.

I think parametric estimating has significant value commercially in the estimation of value of future product assets, and consequently their companies and associated securities.  What do you think?

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 parametric models which are based on industry benchmarks, now users can also incorporate their own data for analysis. Customers can import organizational data to TruePlanning, run regression analysis on that data, and further validate their estimates. So now estimates can be backed by internal organizational data as well as external benchmark data, which is a powerful way to defend an estimate.

To view complete details of this new feature as well as other enhancements visit our New Release Info page. 

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 presenation 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 efficiency of the department organized into five initiatives: (1) Target Affordability and Control Cost Growth; (2) Incentivize Productivity and Innovation in Industry; (3) Promote Real Competition; (4) Improve Tradecraft in Services Acquisition; and (5) Reduce Non-Productive Processes and Bureaucracy.

One of the principals outlined in the first initiative is the idea of driving productivity growth through Will Cost / Should Cost management. In my view, Should Cost is "the realm of the possible" and Will Cost is "the domain of the probable". Simply put Will Cost is a forecast of a program’s cost …” based upon reasonable extrapolations from historical experience.”[1] Whereas, Should Cost is an analysis of what the program ought to cost given concerted efforts in economy and efficiency by the contractor. “A should cost analysis results in an, …” Approximation of a contract-price, developed by the customer’s accounting, engineering, procurement, and other costing staff.” [2]

Should Cost analysis for DoD was first applied by the US Air Force in the early 1960s. Over time this practice matured to where in 1972 it was declared “A Multimillion-Dollar Savings” in an article written by Major David N. Burt in the Air University Review (September-October 1972). Major Burt describes the evolution of the practice commencing in a thorough discussion of a “new” alternative approach. He goes on to describe a five phase approach spanning one to four or more months consisting of a very large team which includes actual on-site (contractor) investigation of contractor practices and operations. There are issues associated with both of these concepts.
 
First, a Will Cost estimate is a business as usual view which contains all of the characteristics of both good and bad production and management practices. Estimates based on Will Cost have the effect of perpetuating previous inefficiencies by providing a flawed benchmark. Secondly, a Should Cost analysis as described by Major Burt is both time consuming and costly to implement. Furthermore, Secretary Carter, in his November 3, 2010 memorandum to Military Departments and Directors of Defense Agencies declared his desire …”to establish “Should Cost” targets as management tools for all ACAT I programs… and to establish by January 1, 2011 …”’Should Cost’ estimates for ACAT II and III programs… for component MS decisions.”

Clearly Secretary Carter is serious in regards to achieving productivity growth and soon. However, given the timelines, the cost of a traditional “Should Cost” analysis, and the problems associated with a “Will Cost” approach,  how can the Military Departments and Defense Agencies meet the “beyond objectives” outlined in the November 3rd memorandum?

One solution may be utilizing a parametric approach. A parametric estimating approach will reduce the time and resources required while also providing an external benchmark of industry standards for similar systems. Given the pace with which agencies are expected to move its probably an approach many should consider.

Bob Koury
Senior Research Analyst, PRICE Systems

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 a process for using a parametric estimating model to produce the reasonable affordability targets.

To sign up for the webinar go here: https://www2gotomeeting.com/register/142598427

In last month’s blog I wrote about Ash Carter’s (Under Secretary of Defense for Acquisition, Technology & Logistics) Memorandum for Acquisition Professionals, Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending (14 September 2010).

I concluded the TruePlanning unified framework and comprehensive cost models, is a tool very well suited to provide the types of analysis outlined in the memorandum. In terms of Should Cost and Independent Cost Estimates (ICE), TruePlanning estimation software provides the industry standard capability to conduct Should Cost and calibration (actual program history) for ICE. Most interestingly and to the point of the Carter memo, TruePlanning has the capability of breaking the “self fulfilling” prophesy of business-as-usual.

On November 3^rd, Ash Carter issued a follow up memorandum outlining specific actions to implement the September 14^th Guidance. For this month’s post, I wanted to point out some specific comments about Milestone A and B actions and specifically how TruePlanning can help.

At Milestone A the memorandum specifics establishment of an “affordability target to be treated by the Program Manager (PM) like a Key Performance Parameter (KPP)…This analysis should show results of capability excursions around expected design performance points to highlight elements that can be used to establish cost and schedule trade pace.

At Milestone B, the memorandum requires ”a system engineering tradeoff analysis showing how cost varies as the major design parameters and time to complete are traded off against each other.” Thus, Integration between parametric cost models and performance models is needed to allow full exploration and optimization of the trade space, treating cost as another design parameter

Did you know that TruePlanning through its integration with Phoenix ModelCenter is a powerful tool to provide exactly this type of analysis? ModelCenter contains a native plug-in to interface with TruePlanning directly. Through the ModelCenter interface, analysis can easily perform Design of Experiments (DOE), Carpet Plot Analysis (trading performance KPP’s against cost) and Optimization Analysis.  If you are interested in seeing some examples, especially system engineering trade off analysis, please get in contact with me and I will send you a few presentations.

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 (ICE) of acquisition costs is extended to Program Lifecycle Costs, significant gap analysis is in someone’s future. TruePlanning can handle these tasks. But obviously it’s always best to establish use of an estimate and its underlying model, beyond initial application. TruePlanning has enormous flexibility. We analysts endeavor to do the same.  Clients, particularly those new to parametric cost estimation, just need coaching and synchronization up-front sometimes. They may think they have “the estimate” when it only covers certain configurations, activities, phases or cost-categories. Expanding a model is simple enough; creating and defending changes can be tough for the customer internally. 

I’m continuing to realize that when in doubt, make it clear what an estimate & model is meant for, and what it’s not.

John Swaren
Solutions Consultant, PRICE Systems

Yesterday I had the pleasure of speaking at the New England SCEA Chapter December luncheon  [link to Flyer .pdf].  The attendees were a great mix of experienced, seasoned cost estimators and young, new talent, eager to learn techniques to apply on the job. 

My topic was the program management value of combining estimating Rules of Thumb with more rigorous cost estimating models and databases [link to presentation .pdf].  Rule of Thumb estimating is used every day by program managers to help guide their projects.  Oversight authorities rarely have the resources to perform detailed program estimates, so they rely on simple Rule of Thumb-like models to ensure estimates are within the budget tolerance.  I stressed the importance of using external and internal benchmarks to aid model building.  One of my favorite examples of this is the Tailor Rule of Thumb.  

This is a simple approximation that was used by tailors to determine the wrist, neck, and waist circumferences of a person through one single measurement of the circumference of that person's thumb. The rule states that twice the circumference of a person's thumb is the circumference of their wrist, twice the circumference of the wrist is the circumference of the neck, and twice around the neck is the person's waist. This external benchmark uses average values (2x) for the wide population of the time.  I decided to update this with internal benchmarks, or measurements of my own.  I carried a tape measure for a week and measured everyone who agreed – friends, family, and co-workers.  Based my internal benchmarks, I discovered that a multiplier of 2.3 made the model extremely accurate – it is no secret that we eat more than average New Jersey.  In this way, I combined an external benchmark with internal benchmarks to determine an estimating Rule of Thumb with which I am comfortable. 

We empower our customers with models and tools to arrive at the same comfort level for complex projects.  Most of the luncheon attendees work every day with rigorous models and databases, so they left the luncheon for a new appreciation for the value of Rules of Thumb.