Weitere ähnliche Inhalte Ähnlich wie Cost estimating and risk in complex projects (20) Mehr von Association for Project Management (20) Kürzlich hochgeladen (20) Cost estimating and risk in complex projects1. Cost Estimating and Risk in Complex Projects
APM Project Controls event – 2nd October
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Decades of Cost Management Excellence
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2. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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3. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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4. The problem is…….
We commit to delivering complex projects when
– The project definition is still fluid
– The client is still formulating their ideas
– We are still worrying the engineers for fast answers
– Our knowledge of the detail is still developing
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Decades of Cost Management Excellence
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5. This leads to
Wild expectations of the initiator
Lack of clarity of our solution
A “commercially lead” proposal
Cutting of budgets with little consideration for effort need to
deliver
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Decades of Cost Management Excellence
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6. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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8. From a business capture POV
1
2
Top Down Estimate
3
4
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Decades of Cost Management Excellence
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9. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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10. Before we start we need to
Ensure we understand the requirements
– Don’t waste time combing documents by hand, extraction tools support the timely
extraction of details from comments, typically reducing days to hours
Visualise the solution
– Using the requirement captured from the client documents we can build a visual
story board, requirements canvas tools allow us to model several solutions using
visual representations
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Decades of Cost Management Excellence
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11. Then we need to
Generate a top down estimate
Map to the WBS / CBS / OBS
Make a go – no decision before we invest in
detail models
Generate bottom up models
Compare and contrast results
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Decades of Cost Management Excellence
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12. Top down to bottom up
Customer Project WBS
System.
System
Activities
Assembly
Assembly
activities
HW /SW
Component
& Cots
HW/SW
Comp.
& cots
Actvities
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Decades of Cost Management Excellence
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13. Top Down to Bottom up comparison
Top Down Estimate
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Decades of Cost Management Excellence
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14. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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15. And the risk is….
We capture risks that are symptoms
The ones we capture don’t effect
– Cost
– Schedule
Putting risks over 49% in the risk register
Confusing uncertainty with risk
Putting a “contingency” on instead of working the problem
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Decades of Cost Management Excellence
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16. © 2013 PRICE Systems, LLC All Rights Reserved |
Decades of Cost Management Excellence
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17. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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18. We want to be (estimated) together
Initial cost and schedule need to be generated from a technical
definition
You need to generate the joint confidence level
Make sure the estimate is used as the project plan baseline
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Decades of Cost Management Excellence
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19. Generic Mapping applied to the Project
Project
Description
Customer
Project
Base line
Top down
estimated
Top down
results
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Decades of Cost Management Excellence
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20. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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21. Across the total stakeholder community
Solutions
Objectives
MANAGEMENT
Decision Support
Budgeting,
Financial Control,
Procurement
Delivery
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Financial Strategy
Detailed Technical Strategy
Schedule and Cost at Completion
Strategy
Decades of Cost Management Excellence
Bid/No Bid Decision,
Evaluating Alternatives,
Market Strategy Check
Capacity Analysis,
Make or Buy,
Supplier Assessment,
Risk Analysis
Set the base line,
Design-to-Cost,
Good project control ,
Managing the base line
21
22. Where will we spend our time
What's the problem
Key decision points
Estimating cost
Where's the risk
What about schedule
How can we do better
Questions
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Decades of Cost Management Excellence
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23. Any Questions
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25. Back up Slides
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26. What is the Cost Engineering Framework (CEF)
The CEF is a total support environment comprised of processes and interoperable companion
solutions built around PRICE Systems TruePlanning solution that empowers the organisation with
the freedom to select the elements deployed to generate the best return on investment
PRICE Systems utilise, where ever possible, the incumbent solutions within a organisation when
deploying the CEF reducing the initial investment in both licenses and education
Solutions and processes include
– Shipley Process for proposal management
– Visual requirements analysis
– Parametric estimation
• TruePlanning
• Question Based forecasting
• Knowledge based estimation
• Data Driven estimation
– Sensitivity and stochastic analysis
– Detailed estimation
– QDV
– ERM
– Tender preparation
– Proposal to Tender comparison
– Contract management
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Decades of Cost Management Excellence
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27. One Toolset - Two Visions
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2013 Financial Executives International
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28. The change makers
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29. Background
The capability to measure the effectiveness of a contract in vital
to delivering the ROI
Measurement has to be more than just delivered goods and
services
Key performance indicators and Service level agreements should
be distilled from the initial benefits analysis
Government departments are mandated to use competitive
dialogue to ensure solution is both
– Value for money
– Fit for purpose
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Decades of Cost Management Excellence
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30. Contract management begins with the business
requirement
Business
improvement /
change
Tender Marking
schema
requirements
Tender
generation
process
tender
Tender Process
Check
Benefits
Analysis
KPI
SLA
Project delivery
Steady State
Project Controls
Check
Cost and
schedule
generation
Voice of the customer
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Decades of Cost Management Excellence
User Experience
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31. The change deliverers
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2013 Financial Executives International
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32. Why use the Cost Engineering Framework (CEF)
Improve the hit rate for winning profitable projects
Reduce effort needed to generate winning proposals
Create an estimation framework that enables you to do more with less
Capitalise user experience
Capture Knowledge
Leverage learning
Respond to changes in prospect requirements faster and with less effort
Simplify “red team” reviews
Deliver your proposals with confidence and assurance
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33. PRICE Cost Engineering Framework – work flow
example
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34. PRICE Systems – Cost Engineering Framework
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35. Shipley Process
Supports the develop of business needs, benefit arguments and delivery requirements. Including
obtaining the information, validating it and maturing it over any defined timescale to ensure
timely production of documents.
Shipley describes how to structure the proposal document using the mature information.
Shipley provides the rigour to go from an initial concept to a full clearly articulated proposal
making best use of time.
Covers full proposal life cycle
model
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Decades of Cost Management Excellence
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36. Visualisation of your clients needs
Allows you to master costs, performance and time as part of the PRICE CEF.
Enables performance, cost and time information to be captured, visualised and analysed logically, at Subject Matter
Expert, Programme Management Office and Board levels.
Solution includes dependency and relationship mapping for stakeholders, business
needs, risks, objectives, benefits, outcomes, initiatives and requirements into a rich network.
Enables models to be continuously matured and updated with ease.
Generate proposal document structures and tender evaluation models in accordance with Shipley process.
Provides the environment needed to maintain and update the models that underpin concept to proposal approach.
The requirements describe the results that initiatives that the solution must output to deliver the outcomes and
performance changes described in the benefits analysis. The requirements describe constraints, nature and
performance of results.
By proposal generation we have a full map of why each requirement exists, the initiatives it relates to, the
dependencies between requirements and how we anticipate the fulfilment of each requirement will contribute to
performance and ultimately success. This develops a clear understanding of the value of each requirement.
It should be noted that requirements and initiatives describe the effort needed by all parties involved in delivery to
achieve success, including the organisation issuing the tender.
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Decades of Cost Management Excellence
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37. Realisor
Visual requirements analysis
Map the customers needs to
your capability
Compare alternative
approaches
Visual presentation of
your solution benefits to
your client
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Decades of Cost Management Excellence
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38. Question Based Estimation
Early day evaluation of the ability of the organisation to deliver to the requirements
Alternatives easily review and compared
Simple question based interface that the user can maintain
Interactive with TruePlanning
Questions define the
solution
System returns matches and
automatically calculates inputs
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Decades of Cost Management Excellence
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39. Knowledge Bases … Epick
Fast, consistent development of WBS for new projects
Reuse information effortlessly
Web enabled interface for TruePlanning
Document and manage all inputs and outcomes
Version control
Manage Multiple project portfolios
Capitalise your organisational knowledge
Create local knowledge nuggets
Consistent approach to estimation
Clear visualisation of project phases
Reduces effort needed to create estimates
Local cost object and structure library
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Decades of Cost Management Excellence
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40. Leverage Actual Insights Representing Your Own History…. TrueFindings
Integrated knowledge management, provided through PRICE TrueFindings, takes the refinement
of private historical data one step further by enabling the inclusion of your findings into the PRICE
TruePlanning cost estimation framework. The insights of that in-house data can also benefit life
cycle cost management plans.
Just as the PRICE® Cost Models provide the benefit of past experience refined from tens of
thousands of projects, PRICE TrueFindings provides the value of historical experience and trends
from your own organization within your cost estimation process. Doing so improves confidence in
capacity analysis, supplier assessment, and risk analysis for better budgeting, financial
control, and procurement.
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41. Top down forecasts of Cost, effort and Schedule …TruePlanning
Estimation of design, manufacture and in service cost, effort and schedule
Estimate Mechanical, Electronic, Software development and Systems Integration effort
Technology based inputs removing optimism bias
Reduced effort with no loss of fidelity
Generate base line schedule for
project plan with no additional
effort
Full Life cycle costing
• Design
• Systems Integration
• In-service
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42. Arrisca
Fast evaluation of all excel workbooks, MS Project files and TruePlanning projects
Sensitivity analysis
Uncertainty analysis
Risk adjusted s-curves
Validation and verification
Cost and effort model assurance
Sensitivity analysis identifies the biggest
drivers fast
Risk and Uncertainty adjusted cumulative
frequency graphs (S-Curves)
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Decades of Cost Management Excellence
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43. CAPPe
Knowledge driven detailed estimation tool
No need to maintain excel workbooks
Generates costs from process plans
Define and manage
–
Parts
–
Plans
–
Estimates
–
Materials
Maintain costs for multiple countries and periods
Calculates machine, material and labour costs
Knowledge Driven
Estimation
Detailed estimation to challenge
suppliers
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Decades of Cost Management Excellence
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44. QDV
Top down to bottom up comparison
Proposal Knowledge management
WBS Management
Project fiscal modelling
Capture basis of estimate
Compare top down to bottom up
estimates
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Decades of Cost Management Excellence
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45. Manage proposal risks ….. riskHive ERM
Simple risk construction using structured inputs
Low implementation overhead, start fast spend less
Focused on supporting business winning
Supports top down and bottom up models
Supports easy risk
registration, no complex
screens
Unique visualisation drives
better risk definition
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Decades of Cost Management Excellence
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