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ATI's Cost Estimating course
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Summary:
This two-day course covers the primary methods for
cost estimation needed in systems development, including
parametric estimation, activity-based costing, life cycle
estimation, and probabilistic modeling. The estimation
methods are placed in context of a Work Breakdown
Structure and program schedules, while explaining the
entire estimation process.
Emphasis is also placed on using cost models to
perform trade studies and calibrating cost models to
improve their accuracy. Participants will learn how to use
cost models through real-life case studies. Common
pitfalls in cost estimation will be discussed including
behavioral influences that can impact the quality of cost
estimates. We conclude with a review of the state-of-theart
in cost estimation.
Instructor:
What You Will Learn:
- What are the most important cost estimation methods?
- How is a WBS used to define project scope?
- What are the appropriate cost estimation methods for
my situation?
- How are cost models used to support decisions?
- How accurate are cost models? How accurate do they
need to be?
- How are cost models calibrated?
- How can cost models be integrated to develop
estimates of the total system?
- How can cost models be used for risk assessment?
- What are the principles for effective cost estimation?
From this course you will obtain the knowledge and
ability to perform basic cost estimates, identify
tradeoffs, use cost model results to support decisions,
evaluate the goodness of an estimate, evaluate the
goodness of a cost model, and understand the latest
trends in cost estimation
Course Outline:
- Introduction. Cost estimation in context of
system life cycles. Importance of cost estimation in
project planning. How estimation fits into the
proposal cycle. The link between cost estimation
and scope control. History of parametric modeling.
- Scope Definition. Creation of a technical work
scope. Definition and format of the Work Breakdown
Structure (WBS) as a basis for accurate cost
estimation. Pitfalls in WBS creation and how to
avoid them. Task-level work definition. Class
exercise in creating a WBS.
- Cost Estimation Methods. Different ways to
establish a cost basis, with explanation of each:
parametric estimation, activity-based costing,
analogy, case based reasoning, expert judgment,
etc. Benefits and detriments of each. Industryvalidated
applications. Schedule estimation
coupled with cost estimation. Comprehensive
review of cost estimation tools.
- Economic Principles. Concepts such as
economies/diseconomies of scale, productivity,
reuse, earned value, learning curves and prediction
markets are used to illustrate additional methods
that can improve cost estimates.
- System Cost Estimation. Estimation in
software, electronics, and mechanical engineering.
Systems engineering estimation, including design
tasks, test & evaluation, and technical management.
Percentage-loaded level-of-effort tasks: project
management, quality assurance, configuration
management. Class exercise in creating cost
estimates using a simple spreadsheet model and
comparing against the WBS.
- Risk Estimation. Handling uncertainties in the
cost estimation process. Cost estimation and risk
management. Probabilistic cost estimation and
effective portrayal of the results. Cost estimation,
risk levels, and pricing. Class exercise in
probabilistic estimation.
- Decision Making. Organizational adoption of
cost models. Understanding the purpose of the
estimate (proposal vs. rebaselining; ballpark vs.
detailed breakdown). Human side of cost estimation
(optimism, anchoring, customer expectations, etc.).
Class exercise on calibrating decision makers.
- Course Summary. Course summary and
refresher on key points. Additional cost estimation
resources. Principles for effective cost estimation
Tuition:
Tuition for this two-day course is $1150 per person at one of our scheduled public courses.
Please call us at 410-956-8805
or send an email to ati@aticourses.com
for pricing information and on site delivery of this course.
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Ricardo Valerdi, is a Research Associate at MIT and
the developer of the COSYSMO model for
estimating systems engineering effort. Dr.
Valerdi’s work has been used by BAE
Systems, Boeing, General Dynamics, L-3
Communications, Lockheed Martin,
Northrop Grumman, Raytheon, and SAIC.
Dr. Valerdi is a Visiting Associate of the
Center for Systems and Software
Engineering at the University of Southern California where
he earned his Ph.D. in Industrial & Systems Engineering.
Previously, he worked at The Aerospace Corporation,
Motorola and General Instrument. He served on the
Board of Directors of INCOSE, is an Editorial Advisor of
the Journal of Cost Analysis and Parametrics, and is the
author of the book The Constructive Systems Engineering
Cost Model (COSYSMO): Quantifying the Costs of
Systems Engineering Effort in Complex Systems (VDM
Verlag, 2008).
