GAO Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs

Front Cover
Barry Leonard
DIANE Publishing, 2009 - 438 pages
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To use public funds effectively, the gov┐t. must meet the demands of today's changing world by employing effective mgmt. practices and processes, including the measurement of gov┐t. program performance. Legislators, gov┐t. officials, and the public want to know whether gov┐t. programs are achieving their goals and what their costs are. To make those evaluations, reliable cost information is required and fed. standards have been issued for the cost accounting that is needed to prepare that information. This Cost Guide has been developed in order to establish a consistent methodology that is based on best practices and that can be used across the fed. gov┐t. for developing, managing, and evaluating capital program cost estimates. Illustrations.
 

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Contents

Challenges Cost Estimators Typically Face
17
Cost Analysts Skills from NASA GAO04642
18
Using Realistic Assumptions from Space Acquisitions GAO0796
19
Program Stability Issues from Combating Nuclear Smuggling GAO06389
20
Development Schedules from Defense Acquisitions GAO06327
21
Risk Analysis from NASA GAO04642
22
Applying EVM from Cooperative Threat Reduction GAO06692
23
Rebaselining from NASA GAO04642
24
Chapter 3
25
Cost Estimating and EVM Criteria for Federal Agencies Legislation Regulations Policies and Guidance
26
Chapter 4
31
LifeCycle Cost Estimate for a Space System
33
LifeCycle Cost Estimates Types of Business Case Analyses and Other Types of Cost Estimates
34
Cone of Uncertainty
38
Realistic Estimates from Defense Acquisitions GAO05183
39
An Affordability Assessment
40
Typical Capital Asset Acquisition Funding Profiles by Phase
41
Importance of Realistic LCCEs from Space Acquisitions GAO0796
42
Evolutionary and Big Bang Acquisition Compared
43
Incremental Development
44
The Estimate
45
Chapter 5
47
The Estimates Context from DOD Systems Modernization GAO06215
49
Chapter 6
51
Certification Standards in Business Cost Estimating and Financial Management in the Defense Acquisition Education Training and Career Developme...
54
Cost Assessment Team
56
Chapter 7
57
Typical Technical Baseline Elements
58
Defining Requirement from United States Coast Guard GAO06623
60
General System Characteristics
61
Managing Requirements from DOD Systems Modernization GAO06215
63
Technical Baseline Description
64
Chapter 8
65
A ProductOriented Work Breakdown Structure
66
ProductOriented Work Breakdown Structure from Air Traffic Control GAO08756
67
Common Elements in Work Breakdown Structures
68
A Work Breakdown Structure with Common Elements
70
Cost Element Structure for a Standard DOD Automated Information System
72
Developing Work Breakdown Structure from NASA GAO04642
77
Work Breakdown Structure
78
Chapter 9
79
The Importance of Assumptions from Space Acquisitions GAO0796
80
Testing Ground Rules for Risk from Space Acquisitions GAO0796
84
The Industrial Base from Defense Acquisition GAO05183
85
Technology Maturity from Defense Acquisitions GAO05183
86
Informing Management of Changed Assumptions from Customs Service Modernization GAOAIMD9941
87
Ground Rules and Assumptions
88
Chapter 10
89
Fitting the Estimating Approach to the Data from Space Acquisitions GAO0796
91
Basic Primary and Secondary Data Sources
92
Data Anomalies from Cooperative Threat Reduction GAO06692
99
Inflation from Defense Acquisitions GAO05183
102
Data
105
Chapter 11
107
Three Cost Estimating Methods Compared
108
An Example of the Analogy Cost Estimating Method
109
Cost Estimating Methods from Space Acquisitions GAO0796
110
An Example of the Engineering BuildUp Cost Estimating Method
111
An Example of the Parametric Cost Estimating Method
113
Expert Opinion from Customs Service Modernization GAOAIMD9941
118
A Learning Curve
120
Production Rate from Defense Acquisitions GAO05183
122
Developing a Point Estimate
123
Chapter 12
125
The Twelve Steps of HighQuality Cost Estimating Summarized
126
Sizing Metrics and Commonly Associated Issues
127
Common Software Risks That Affect Cost and Schedule
133
Best Practices Associated with Risks in Implementing ERP
138
Common IT Infrastructure Risks
142
Common Labor Categories Described
143
Estimating Software Costs
145
Chapter 13
147
Sensitivity Analysis from Defense Acquisitions GAO05183
149
A Sensitivity Analysis That Creates a Range around a Point Estimate
150
Sensitivity Analysis
151
Chapter 14
153
Changes in Cost Estimate Uncertainty across the Acquisition Life Cycle
155
Point Estimates from Space Acquisitions GAO0796
156
A Cumulative Probability Distribution or S Curve
157
Potential Sources of Program Cost Estimate Uncertainty
160
A Risk Cube TwoDimensional Matrix
164
A Hardware Risk Scoring Matrix
165
A Software Risk Scoring Matrix
166
The Distribution of Sums from Rolling Two Dice
167
A Point Estimate Probability Distribution Driven by WBS Distributions
168
Cost Risk and Uncertainty
176
Chapter 15
179
The Twelve Steps of HighQuality Cost Estimating Mapped to the Characteristics of a HighQuality Cost Estimate
180
Validating the Estimate from Chemical Demilitarization GAO07240R
181
Questions for Checking the Accuracy of Estimating Techniques
183
Independent Cost Estimates from Space Acquisitions GAO0796
187
Eight Types of Independent Cost Estimate Reviews
188
Validating the Estimate
189
Chapter 16
191
Documenting the Estimate from Telecommunications GAO07268
192
ANSI Guidelines for EVM Systems
212
EVM Implementation Guides
214
WBS Integration of Cost Schedule and Technical Information
216
Identifying Responsibility for Managing Work at the Control Account
217
An Activity Network
219
Activity Durations as a Gantt Chart
221
Typical Methods for Measuring Earned Value Performance
225
Earned Value Using the Percent Complete Method Compared to Planned Costs
227
The Genesis of the Performance Measurement Baseline
228
The TimePhased Cumulative Performance Measurement Baseline
229
A PerformanceBased Payments Structured Contract
235
The EVM System Acceptance Process
236
Validating the EVM System from Cooperative Threat Reduction GAO06692
238
Validating the EVM System from DOD Systems Modernization GAO06215
239
Managing Program Costs Planning
240
Chapter 19
243
Integrated Baseline Review Risk Categories
246
IBR Control Account Manager Discussion Template
248
Monthly Program Assessment Using Earned Value
250
Overall Program View of EVM Data
251
A Contract Performance Reports Five Formats
252
Contract Performance Report Data Elements Format 1
253
Cost Performance Reports from Defense Acquisitions GAO05183
255
EVM Performance Indexes
259
Understanding Program Cost Growth by Plotting Budget at Completion Trends
261
Understanding Program Performance by Plotting Cost and Schedule Variances
262
Understanding Expected Cost Overruns by Plotting Estimate at Completion
263
Best Predictive EAC Efficiency Factors by Program Completion Status
266
Rolling Wave Planning
269
Basic Program Management Questions That EVM Data Help Answer
270
Chapter 20
273
ANSI Guidelines Related to Incorporating Changes in an EVM System
274
Maintaining Performance Measurement Baseline Data from National Airspace System GAO03343
275
Elements of an Effective Surveillance Organization
277
Key EVM Processes across ANSI Guidelines for Surveillance
278
A Program Surveillance Selection Matrix
279
A ColorCategory Rating System for Summarizing Program Findings
283
The Effect on a Contract of Implementing an Overtarget Budget
285
Overtarget Budget Funding Implications by Contract Type
286
Common Indicators of Poor Program Performance
287
Steps Typically Associated with Implementing an Overtarget Budget
289
Options for Treating Variances in Performing a Single Point Adjustment
290
Establishing a New Baseline with a Single Point Adjustment
291
Managing Program Costs Updating
295
Appendixes
297
Appendix 2
298
Appendix 3
305
Appendix 4
308
The Budget Process Major Steps and Time Periods
309
Appendix 5
310
Appendix 6
321
Appendix 7
323
Appendix 8
327
Appendix 9
328
ElectronicAutomated Software System Work Breakdown Structure
329
Ground Software Work Breakdown Structure
330
Missile System Work Breakdown Structure
331
Ordnance System Work Breakdown Structure
333
Sea System Work Breakdown Structure
334
Space System Work Breakdown Structure
335
Surface Vehicle System Work Breakdown Structure
336
Unmanned Air Vehicle System Work Breakdown Structure
337
Department of Energy Project Work Breakdown Structure
339
General Services Administration Construction Work Breakdown Structure
340
Automated Information System Enterprise Resource Planning Program Level Work Breakdown Structure
341
Environmental Management Work Breakdown Structure
342
Process Plant Construction Work Breakdown Structure
344
Software Implementation Project Work Breakdown Structure
345
Major Renovation Project Work Breakdown Structure
346
Sample IT Infrastructure and Service Work Breakdown Structure
347
MasterFormat Work Breakdown Structure
351
CSI MasterFormatTM 2004 Structure Example Construction Phase
352
Appendix 10
353
Network Diagram of a Simple Schedule
354
Example Project Schedule
355
Estimated Durations for Remaining WBS Areas in the Schedule
356
Cumulative Distribution of Project Schedule Including Risk
357
A Risk Register for a Spacecraft Schedule
358
A Schedule Showing Critical Path through Unit 2
359
Results of a Monte Carlo Simulation for a Schedule Showing Critical Path through Unit 2
360
Evaluation of Correlation in Spacecraft Schedule
361
Probability Distribution Results for Probabilistic Branching in Test Unit
362
A Project Schedule Highlighting Correlation Effects
363
Risk Results Assuming 90 Percent Correlation between Activity Durations
364
Appendix 11
367
The Anderlohr Method for the Learning Lost Factor
370
Appendix 12
373
Appendix 13
374
Appendix 14
377
IBR Teams Program Summary Assessment Results for Program X
379
Program X IBR Teams Detailed Assessment Results for an Individual Program Area
380
Appendix 15
393
Appendix 16
404
References
405
Image Sources
420

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