Hitting the TargetCost and Schedule Navigation Techniques

Robert Hanna

Agenda

How does Deep Space Navigation work?

What is so difficult about cost and schedule monitor and control?

Applying navigation techniques to cost and schedule analysis

Navigation Basics

Navigation Basics

Choosing a TargetProbabilistic Analysis is done for a planet body surface (contour plots)

Target A: Probability of a safe landing is 40%

Target B: Probability of a safe landing is 60%

Target C: Probability of a safe landing is 85%

Multiple Observations Reduce Uncertainty

A Bias

Observations may be offset by contributing factors

Station locations, measurement techniques and environment can all contribute

A bias accounts for the constant error introduced

Stochastic Parameters

Some aspects change over time

specific events

specific conditions

A parameter can respond to changes over time and environment

The Challenge

Project Budgets

Budgets are determined before the complexity of the work is discovered

Project cost estimates are created to meet a single, inflexible value

In negotiations, lower budgets are accepted without changes in scope

Project Progress

Schedule milestones are inflexible

Changing implementation approaches change task definitions

Estimates carry a lot of uncertainty

What can go wrong

Take an example:

A project has to complete 100 tasks

Estimates are off by 20%

Resource allocations are off by 15%

Financial Reporting is off by 5%

Progress measures are off by 30%

Impact: Total Errors could be over 50%!

Applying Navigation Techniques to Cost and Schedule Monitor and

Control

Understanding Uncertainty

Distributions not Delta Functions

$12M $12M $14M$10M

One value, many assumptions

Most Likely

Best Case Worst Case

Cost

Likelihood

(Three Point Estimation)

100%

How Does the Negotiation go?

Sponsor

What is your cost estimate?

Will it fit under a $80 million dollar cap?

Oh yeah? Can you do the job for $10 million less?

Project Manager

$90 Million

Sure, we crashed it down to $75 Million

Yeah, we scoured it down to $65 Million

How Should the Negotiation go?

Sponsor

What is your cost estimate?

Will it fit under a $80 million dollar cap?

Oh yeah? Can you do the job for $10 million less?

Project Manager

At $90 Million, we are 80% confident of cost success

At $75 Million, we have a 65% confidence

Sure, but at $65 Million we are only 50% confident

Estimator Bias

Estimates are like Observations

People are always wrong, but they are consistently in how they are wrong

Multiple Observations lead to greater accuracy

Estimator BiasApply the Bias to future estimates by estimator

Systemic Bias - ResourcesResource Availability versus Commitments

Apply the Bias to future allocations

Systemic Bias - FinancialContractor Performance (bids versus actuals by vendor)

Financial Reporting Systems

Example: Costs were planned for a task using the average rate for a senior engineer pay grade

The complexity of the task called for the most skilled senior engineers near the top of the pay grade biasing costs upwards

Performance BiasTask performance reporting has a bias that changes over time

90% complete disease

Actual

Reported

0%

0% 50% 90% 100%

25% 50% 75% 100%

Performance BiasWeighted Milestone Approach

Acts like a stochastic parameter

25% at start of the task

50% when the task is well understood

75% at the first report of completion

100% at verification of completion

Earned Value AnalysisGarbage In = Garbage Out

Use biased estimates for BCWS

Apply biased performance measures for BCWP

Understand financial biases for ACWP

Summary

Use Distributions

Understand and apply biases in all areas of the project

Immediate, accurate ETC and EAC calculations

Fast response to funding changes

Higher probability of completing on budget