Practice Symposia Cost Estimating Track

Size: px

Start display at page:

Download "Practice Symposia Cost Estimating Track"

Christina Robertson
5 years ago
Views:

1 Practice Symposia Cost Estimating Track Coordinator: Megan Jones PS-22 Beyond Correlation: Don t Use the Formula That Killed Wall Street Dr. Christian Smart, Missile Defense Agency PS-23 Seven Degrees of Separation: The Importance of Data Christel Petty, Missile Defense Agency PS-24 The Art of Activity Based Costing John Leahy, Booz Allen Hamilton PS-25 Using Stochastic Optimization to Improve Risk Prioritization Eric Druker, Booz Allen Hamilton PS-26 Where Does Your Cost Estimate Go? Emily Stafford, MITRE Corporation Christopher Metz, MITRE Corporation PS-27 Early Stage Cost Estimating for Radars and Sensors Jeremy Goucher, Herren Associates Liz Goff, Herren Associates PS-22: Beyond Correlation: Don t Use the Formula That Killed Wall Street Risk models in cost estimating almost exclusively rely on correlation as a measure of dependency. Correlation is only one measure (among many) of stochastic dependency. It ignores the effect of tail dependency, when one extreme event affects others. This leads to potential outcomes that do not make sense such as a program with a large schedule overrun but no cost overrun. This method has been widely blamed for the financial crisis a few years ago. The copula method is introduced as a way to overcome these deficiencies. Christian Smart, Missile Defense Agency Christian.smart@mda.mil Dr. Christian Smart is the Director for Cost Estimating and Analysis with the Missile Defense Agency. In this capacity he is responsible for leading a 100-person team, and represents the Agency on cost estimating issues with external stakeholders such as OSD CAPE and GAO. Dr. Smart has won seven paper awards at ISPA, SCEA, and ICEAA conferences, including five best of conference paper awards. In 2010 he received an Exceptional Public Service Medal from NASA and in 2009, he was named ISPA s Parametrician of the Year. PS-23: Seven Degrees of Separation: The Importance of Data

2 The popular notion that any two people are linked to one another on average via a chain with six degrees of separation is based on a relatively small sample. Using massive data sets, researchers have since discovered that the average degrees of separation is closer to seven. This highlights the need for complete and thorough data in any analysis, and cost estimating in particular. Despite its importance the collection of high-quality contractor cost data is challenging. Processes for meeting these challenges are presented. Crickett Petty, Missile Defense Agency christel.petty@mda.mil Ms. Christel Crickett Petty is an Operations Research Analyst leading the Research and Models Team for the Missile Defense Agency (MDA) Directorate of Cost Estimating and Analysis. In this role, Ms. Petty oversees the Cost and Software Data Reporting for the entire Missile Defense Agency and serves as a liaison to OSD- CAPE, industry, and all MDA program offices. She earned a Bachelor s degree in Accounting with a minor in Mathematics from the University of Alabama in Huntsville. PS-24 The Art of Activity Based Costing Most practitioners are familiar with Activity Based Costing (ABC) methodology in which the relationship among resources, activities, and cost objects, are recognized. Through this relationship indirect costs can be assigned to services less arbitrarily than through traditional methods. In this presentation, rather than consider the model itself, we will instead focus on the art of acquiring the necessary data to populate the ABC model as it relates to the Federal Government environment. An overall theme of an iterative approach combined with good enough data will be introduced. We will discuss the necessary preparations required even before the first session can take place. How to develop cost objects, activities and their associated definitions and drivers will be reviewed. Straw man and brainstorming tactics will be investigated for these topics. The importance of cost object and activity definitions in subsequent model development will be explained. We will survey the best practices for the allocation of labor to activities. The notion of passing costs from resources through activities to services will be discussed. Approaches to obtaining forecasts in the face of little or no meaningful data will be described. Alternative methods for the construction of both resource and activity drivers will be reviewed. We will discuss when to combine cost objects into one or more services. Techniques for more closely aligning unit costs to unit pricing will be examined. We will close with a conversation on the importance of performing multiple iterations through the model. Bio: John Leahy is a Lead Associate with Booz Allen Hamilton. He has over 35 years experience in business management roles, including cost allocation. He leads a team of costs analysts in the evaluation of a portfolio of IT initiatives including data center services, workstation support, and telecommunications and network services. With the

3 application of activity based costing (ABC) principles he is able to make investment and management information more transparent. Through a series of workshops he facilitates the alignment of IT investments with strategic and performance goals. With the application of ABC principles he is able to make investment and management information more transparent. Before that, he was the project manager for a two year transition of a classified Government client s multi-million dollar IT services organization from an appropriated entity to a self-funded working capital business. He facilitated weekly meetings among all of the stakeholders in the project. He led a series of ABC workshops over a multi-week period. Prior to that, Mr. Leahy was working with information technology branches for a U.S. Government classified client. By studying their operations he has developed cost models that fairly attributed the cost of IT services to the consuming components of the client on a fee for service basis. Mr. Leahy is recognized as a key contributor to the Cloud Computing costs body of knowledge. He presented Lessons Learned on Achieving Cloud Computing Cost Savings to the Practical Software and Systems Management Users Group Annual Conference in July, PS-25: Using Stochastic Optimization to Improve Risk Prioritization Minimizing the cost of complex programs is critical for government agencies trying to meet their missions in today s fiscal. Today, identifying cost-savings measures is a manual procedure where an analyst must make an educated guess as to what risks to mitigate. This process is manual and slow. This paper will outline a methodology for using the emerging field of stochastic optimization to automate the identification of cost-savings measures on complex programs. Eric Druker, Booz Allen Hamilton druker_eric@bah.com Eric Druker serves as Chief Technologist for Booz Allen s NextGen Analytics solutions. Eric has 10 years of experience performing analysis for a variety of government and commercial clients. Eric is an internationally recognized expert in cost and schedule risk analysis and is one of only a few individuals to be awarded two International Cost Estimating & Analysis Association s (ICEAA) Analyst of the Year Awards. PS-26: Where Does Your Cost Estimate Go? You have spent several months developing your cost estimate and presenting it to the customer. Now what? This paper will track what happens to your cost estimate after it has been delivered to the customer. It will follow the estimate through the budget formulation process, ultimately becoming a part of the President s Budget. It

4 will also discuss the cost estimator s role during the budget process, and the influence of the budget process on future estimates. Emily Stafford, MITRE Corporation estafford@mitre.org Emily Stafford has been a cost analyst for over eight years. She currently works as a Senior Cost Analyst at the MITRE Corporation, where she supports the cost estimating and analysis activities of the Program Execution (PEO) Defense Healthcare Management Systems (DHMS), primarily focused on the Defense Medical Information exchange (DMIX) program. Prior to joining MITRE, she worked at TASC, Inc. for five years. Ms. Stafford received a Bachelor s of Science in Mathematics from Pennsylvania State University in 2007 and earned an MBA from George Washington University in Christopher Metz, MITRE Corporation cmetz@mitre.org Christopher Metz has been a cost analyst for over six years. He is currently a Senior Cost Analyst at The MITRE Corporation, where he supports the cost estimating and analysis activities of the Program Execution Office (PEO) Defense Healthcare Management Systems (DHMS), primarily focused on the Defense Healthcare Management System Modernization (DHMSM) program. Prior to joining MITRE, he worked at MCR Federal, LLC. Mr. Metz received a Bachelor of Science degree in Applied Computational Mathematics from Virginia Tech in PS-27: Early Stage Cost Estimating for Radars and Sensors Understanding the cost of a project as early as possible is critical for decision makers to quickly identify which projects have the highest value based on cost and technical advancement. Additionally, early cost analysis will help project managers by identifying cost drivers which will require attention during the monitoring and controlling phase of the project. This study proposes a method for analyzing cost prior to a complete requirements description. Specifically, the presenters examine a series of parametric approaches for identifying the hardware production cost of radars and sensors based on various system descriptors. The data set includes inputs from both old and new systems, as well as ground-based, sea- based, and airbased systems, which results in a model that is widely applicable and statistically significant at the 5% level. Furthermore, the framework for this study is easily adaptable to a variety of data sets and could be used to examine the costs of other types of hardware based defense and commercial systems. The presenters will describe their dataset, methodology, and results, as well as explain the minimum data required and process by which others could perform the same analysis. Jeremy Goucher, PMP, CCEA, Herren Associates Phone: (202) Fax: (202) jeremy.goucher@jlha.com Jeremy Goucher has over 14 years of professional cost estimating, financial planning, and leadership experience. Currently Mr. Goucher leads a team of cost

5 analysts at Herren Associates in support of the Naval Sea Systems Command Cost Estimating and Industrial Analysis Division (NAVSEA 05C). In this role, Mr. Goucher is responsible for delivering cost analyses for existing and future combat systems for surface combatants, aircraft carriers, and amphibious warships. Previously, Mr. Goucher supported the Program Executive Office Integrated Warfare Systems (PEO IWS) by providing financial planning and risk mitigation strategies for the AEGIS Ship Integration and Test Program. Prior to supporting the Department of the Navy, Mr. Goucher was a Sergeant in the US Army where he led a team of four soldiers in stateside and overseas missions. Mr. Goucher received his Bachelors in Economics from the University of Maryland (College Park) and his Masters in Economics from Syracuse University. Mr. Goucher has previously written and presented on a variety of cost estimating and economic topics. Liz Goff, PCEA, Herren Associates Phone: (202) Fax: (202) elizabeth.goff@jlha.com Ms. Goff has over three years of experience providing cost estimating support to both Navy and Marine Corps clients. Ms. Goff currently supports NAVSEA 05C and played an integral role in the development of the Ship Self Defense System (SSDS), Lightweight Torpedo (LWT) MK 54 Mod 1, and LHA 8 Electronics/Ordnance estimates. Previously, Ms. Goff supported Program Manager for Marine Air-Ground Task Force (MAGTF) Command, Control, and Communications (PM MC3) through the development of a dynamic cost model for the Tactical Service Oriented Architecture (TSOA) program, and Cost Analysis Requirements Descriptions (CARDs) for various MC3 programs. Ms. Goff holds a Bachelors in Economics from The College of William and Mary.

Practice Symposia IMP / IMS Track

Practice Symposia IMP / IMS Track Coordinator: Dale Gillam PS-19 Implementing the GAO Scheduling Best Practices within an Organization Brian Evans, MCR, LLC Kathy Evans, MCR, LLC PS-20 Schedule Margin