NGAO Construction Project Cost Estimation: Initial Thoughts Richard Dekany NGAO Team Meeting #12 December 13, 2007

2 Outline Cost Estimate Strategy –Draft KAON –Basis of Estimate (BOE) Worksheets Key Questions for Discussion

3 Key Questions for Discussion I Are we ‘designing to cost’? Do we wish to provide cost estimates by project phase? (e.g. multiple BOE for each WBS, multiplexed by phase) –Are these PD, Construction, and Commissioning? What shall we say at SDR re: instrument costs? Shall we document a procurement strategy for ‘big ticket’ equipment purchases? (in addition to BOE supporting material) What form(s) of Estimate verification shall we employ? –Compare against top-down estimate –Compare against concurrent external projects e.g. VLT AO facility (if available)? What other analysis of the CCE should we prepare for SDR? –Consider in order to determine if our methodology provide the needed information e.g. responses to old chestnuts like “how would you absorb a 30% budget cut”

4 Key Questions for Discussion II Our track record in resource estimation during the SD phase was not particularly good. How can we improve upon it? –Subsystem / Task leads generate WBS and WBS dictionary –Resource estimates made ‘bottom-up’ by cognizant engineers –Improved communication channels More budget for travel to reduce costs, not less? –Greater efficiency through larger fractional use of fewer staff Should we include part-time staff ‘efficiency factors’? –What assumptions should we make about co-location of teams working within individual work packages? Option 1: Assume packages will organized along institutional lines Option 2: Allow the estimator to make their own assumptions on team composition and document it - upper management may then modify these assumptions to reflect resource leveling concerns Option 3: Option 1, but add a ‘distributed team’ risk factor for the contingency calculation

5 Summary We proposed to follow a modified version of the TMT cost estimation methodology The draft FRD contains the definitive Accurate Cost Estimation is critical to project success