1. Strykowsky 1Office of Science Review August 15, 2007 Office of Science Project Review NCSX August 15-17, 2007 Cost and Schedule Ron Strykowsky

2. Strykowsky 2Office of Science Review August 15, 2007 Topics Cost, Schedule and Contingency Development Process Basis and Assumptions Contingency Cost Summary Schedule Summary Cost Profile Manpower

3. Strykowsky 3Office of Science Review August 15, 2007 Process of Establishing a new Project EAC Developed Guidelines for Job Managers (realistic not best case) Estimates Prepared Independent Management Review (led by head of PPPL engineering)* PU Estimating Workshop (May 1-4)* Refined Estimating packages Reformatted for consistency Further Estimate review for completeness and realism Estimate uncertainty and Risk* Formally documented basis of estimate* Updated overhead and labor rates Prepared resource Loaded Schedule Design evolution of critical scope (task forces) Risk brainstorming meeting* Contingency analysis process (probabilistic approach)* Re-iterate Resource Loaded Schedule June 4 PU Review* Follow-up actions Final Updates, Packaging, Documentation (signed WAF’s) Statused through end of June ( CPI = 1.2 and SPI = 1.03 for two months ) Office of Science Review August 15-17 * =NEW

4. Strykowsky 4Office of Science Review August 15, 2007 Refined Estimating packages (table 1 of 6) Table 1 - Work Approval Form Package includes copy of the resource loaded schedule

5. Strykowsky 5Office of Science Review August 15, 2007 Refined Estimating packages (table 2 of 6) Table 2 - Design

6. Strykowsky 6Office of Science Review August 15, 2007 Refined Estimating packages (table 3 of 6) Materials and Procurements

7. Strykowsky 7Office of Science Review August 15, 2007 Refined Estimating packages (table 4 of 6) Fabrication and Assembly

8. Strykowsky 8Office of Science Review August 15, 2007 Refined Estimating packages (table 5 of 6) Estimate Uncertainty and Risk

9. Strykowsky 9Office of Science Review August 15, 2007 Refined Estimating packages (table 6 of 6) Basis of estimate

10. Strykowsky 10Office of Science Review August 15, 2007 Key Planning Basis and Assumptions ETC forward from May 1 st, 2007 Cost Incurred from April 1, 2003 (MIE project inception) MIE project scope only. (Excludes research preparations and conceptual design) GPP and Infrastructure not part of MIE project. (Progress coordinated and tracked by Erik Perry) BA constraints (FY07= $16.77 FY08 = $15.9, FY09 = $18.56*) Scope unchanged from current baseline Institutional Overhead Rates Standard work week 8hrs/day 5 days/ week (Exception coil winding, Field period assy (sta5 FPA#3), and Final Machine assy) Holidays Contingency Allocation by fiscal year (commensurate with risk & cost uncertainty) Realistic task durations (anticipate manpower shortages & priorities) Task durations - more detail on critical path and near term * = assumed

11. Strykowsky 11Office of Science Review August 15, 2007 Cost Basis - Resource types and Rates Resource Types, labor and overhead rates Overhead and escalation rates Labor Skills (hourly rates) Non-Labor Resource

12. Strykowsky 12Office of Science Review August 15, 2007 Contingency - Process Structured process with support of consultant Job Manager and Project Team input Objective was to assess and analyze all areas of uncertainty and risk that might affect the cost and schedule estimates Used Probabilistic Risk Analysis Techniques (Monte Carlo Analysis) Recommend Contingency Allowances that provide 90% confidence level that proposed baseline will not be exceeded. Project Manager Experience

13. Strykowsky 13Office of Science Review August 15, 2007 Contingency - Components CostSchedule Estimate Uncertainty $ months + Risk $ months + Schedule (stretch-out) $ + Schedule Mitigation (i.e. 2 nd shift) $ + Project Manager Experience $ Total $ Months

14. Strykowsky 14Office of Science Review August 15, 2007 Contingency – Estimate Uncertainty Both cost estimates and schedule durations have inherent levels of uncertainty Uncertainty is a direct result of degree of design maturity and the complexity of the elements involved – in effect, how much definition exists to provide a basis for the estimates Uncertainty levels can be described in terms of ranges around the point estimates developed by Job Managers and the Project Management team Used standard industry and DOE estimate classifications to describe individual job estimates Used determination of design maturity and complexity to equate to estimate classification Also solicited Job Manager opinions regarding expected range around estimates (+ or – some % of the estimate)

15. Strykowsky 15Office of Science Review August 15, 2007 Contingency – Estimate Uncertainty Per AACEI Recommended Practice 18R-97, Cost Estimate Classification System – As Applied to Engineering, Procurement, and Construction in the Process Industries Five classes of estimates with associated accuracy ranges, dependent on level of project development and definition and estimating techniques used Equated the five estimate classes to a design maturity and complexity matrix for NCSX Basis for Estimate Ranges Design Complexity Design MaturityLowMediumHigh Low-15%+25%-20%+40%-30%+60% Medium-10%+15%-15%+25%-20%+40% High-5%+10%-10%+15%-15%+25% Estimate Uncertainty Matrix

16. Strykowsky 16Office of Science Review August 15, 2007 Contingency – Estimate Uncertainty Estimate Uncertainty Matrix by WBS ETC and Estimate Range

17. Strykowsky 17Office of Science Review August 15, 2007 Contingency – Estimate Uncertainty Established estimate range for each job using the Estimate Uncertainty Matrix Also had Job Managers describe expected accuracy (as + and – % of base estimate) - as a check on Matrix Used Monte Carlo Analysis to determine overall project cost probability profile - both approaches yielded similar results (adopted standard approach as conservative. ~1-2% higher than job mgrs) Each job estimate was treated as an independent variable –Triangular Distributions –Base Estimate as Most Likely Value –Low End of Range as Minimum Value –High End of Range as 80% confidence level* Cost Estimate Uncertainty Result = $8,036k * 20% chance that cost could be even higher than uncertainty matrix

18. Strykowsky 18Office of Science Review August 15, 2007 Contingency – Estimate Uncertainty Schedule Duration Uncertainty Established estimate range only for Critical and Near Critical Path activities using same approach as for cost Used Monte Carlo Analysis to determine overall project schedule probability profile Each critical path activity treated as independent variable –Triangular Distributions –Base Estimate as Most Likely Value –Low End of Range as Minimum Value –High End of Range as 90% confidence level (higher than for costs since schedule workarounds may be possible) Did not add schedule cont. for some activities (those that could be worked on second shift) – BUT added cost allowance for shift supervision, support and shift differential costs (schedule mitigation cost) Result = 7.9 months

19. Strykowsky 19Office of Science Review August 15, 2007 Contingency – Risk Risk Assessment and Analysis Identified risks –Job Manager and Project Team Input and Brainstorming Assessed Risks –Likelihood of Occurrence –Cost and Schedule Impact Ranges Ranked risks to focus management attention and mitigation actions (Risk mitigation actions included in baseline estimates) Used Monte Carlo Analysis model to assess probable residual impacts (after mitigation) on cost and schedule baseline Process will continue – identification of additional risks and management of identified risks. Result = $1,282k and 3.8 months

20. Strykowsky 20Office of Science Review August 15, 2007 Contingency – Cost of Schedule Contingency Risk Assessment and Analysis Cost impact of schedule contingency –Oversight/management cost = $202k/mo. Cost impact of schedule mitigation by use of second shift –During field period assembly for add’l supervision, metrology, support crews = $64k/mo. Result = $355k Result = $2,347

21. Strykowsky 21Office of Science Review August 15, 2007 Contingency – Project Manager’s Increment Additional contingency added to attain 27% cost contingency based upon; Recent Experience with WX-7 Recent NCSX experience Undefined risk “Unknown unknowns” Adopt schedule contingency of 11 months

22. Strykowsky 22Office of Science Review August 15, 2007 Contingency – Results CostSchedule Estimate Uncertainty $8,036 (16%) 7.8 + Risk $1,282 (3%) 3.8 + Schedule (stretch-out) $2,347 (5%) - + Schedule Mitigation (i.e. 2 nd shift) $ 355 (1%) - + Project Manager Experience $1,711 Proposed Baseline Contingency = $ 13,731 (27%) 11 Months

23. Strykowsky 23Office of Science Review August 15, 2007 Contingency – Results Allocated by WBS

24. Strykowsky 24Office of Science Review August 15, 2007 Based on deliverables and/or tasks provided by the job managers Varied from resource loaded schedules to deliverables and resource estimate only Established tasks, internal milestones (PDR’s, FDR’s, contract awards) Task durations based on realistic resource loadings, crew sizes, # shifts Logically linked Non-critical path tasks scheduled with BA constraints with free float to critical path Schedule iterated based on Ongoing design evolutions causing estimates to vary Contingency quantification exercises Resource leveling exercises (techs, key engrs) Scheduling - Process

25. Strykowsky 25Office of Science Review August 15, 2007 Results – Preliminary Cost

26. Strykowsky 26Office of Science Review August 15, 2007 Results – Cost Profile Contingency scheduled consistent with risks and uncertainties Plan consistent with Funding

27. Strykowsky 27Office of Science Review August 15, 2007 Results – Preliminary Schedule (Summary)

28. Strykowsky 28Office of Science Review August 15, 2007 Results – Milestones

29. Strykowsky 29Office of Science Review August 15, 2007 Results – Prelim. Resource Loaded Schedule

30. Strykowsky 30Office of Science Review August 15, 2007 Results – Manpower Manpower requirements being satisfied Future needs achievable

31. Strykowsky 31Office of Science Review August 15, 2007 SUMMARY Project has followed a disciplined path for updating its cost and schedule estimates highlighted by; Formal & consistent basis of estimate Independent reviews by PPPL engineering and PU Focus on center of the error bars (realistic) estimates from job managers Project has followed a methodical process for quantifying cost as well as schedule contingency. Probabilistic contingency methodology for cost and schedule estimate uncertainty Probabilistic contingency methodology for quantifying cost and schedule risk Initiated a formal risk registry that will be integrated into our work planning process Project has produced a proposed baseline cost estimate backed-up by a resource loaded schedule and detailed estimate basis.