1. A Look Inside a High Performing Cost Analysis Organization
2nd Annual ICEAA Canada Workshop
22-23 February 2016
Rick Collins
CEO, Technomics, Inc.
(Office)
(Mobile)

2. Outline Some Critical Context Distinguishing Features
Potential Capability Maturity Model
Closing Food for Thought

3. You Can’t Manage What You Don’t Understand
Credible Cost Estimates
Realistic Budgets
Executable Contracts/Projects
Decision-makers demand & rely on advice from high performing cost organizations
Must avoid starting projects that can’t be finished
Improved Acquisition Outcomes
The right cost estimating capability facilitates
authoritative decision-maker knowledge that enables informed decision making

4. The Big Picture Is one of these ingredients most important?
Credible Cost Analysis
Techniques/Tools
People
Data
Processes
Is one of these ingredients most important?

5. Distinguishing Features – People (1 of 2)
Staff willing & able to think
Staff willing & able to think independently
Staff who ask the right questions
Staff willing & able to convey & defend ‘bad’ news
Staff who can anticipate the next question
Staff who recognize that there is generally more than one way to solve a problem & make the time to do so
Staff who won’t rest on their or others’ laurels
Staff willing & able to perform cost research leading to improved data and techniques/tools
Staff who can see the big picture and will proactively act on that perspective
Staff who understand that they have unique knowledge and value that extends beyond cost and will proactively act on that knowledge
“A fool with a tool is still a fool.”

6. Distinguishing Features – People (2 of 2)
Leaders create the right culture to attract, develop, empower, reward and retain talent that exhibits the aforementioned behaviors
Leaders understand continual investment in data, techniques & tools is essential to analytical credibility
Leaders understand the manner in which results are presented is more important than what’s presented
Leaders understand the ‘right’ analysis at the right time is invaluable; great analysis at the wrong time is useless
Leaders recognize certifications are not a substitute for on-the-job experience practicing the science and art of cost analysis
Leaders recognize importance of rigorous (though not onerous) quality control processes
Leaders ensure their bosses understand organizational value well enough to enable organizational health via marketing, resources, etc.
Leaders orchestrate the optimal investment in & deployment of their assets

7. Distinguishing Features - Processes
Cost Estimating Process
Cost Assessment Process
Other Processes
Data collection & normalization
Cost estimating relationship development
MS Excel cost model development
Risk and uncertainty analysis
Quality control …
Standard processes = repeatability, transparency, accuracy & credibility

8. Distinguishing Features - Data
Authoritative data is readily accessible, well organized & relied upon
Authoritative data is maintained to ensure recency, completeness & efficiency
Foundation for
Credible Analysis
Technical Data
Programmatic Data
Cost Data
Raw and normalized actuals
Quantity, schedule &
other contextual info
Physical and performance parameters
High performing cost orgs do what it takes to get the right data

9. Distinguishing Features – Techniques/Tools
Analytical and visualization methods that enable analytical results ensuing actionable insights
Methods are maintained/enhanced/developed to ensure relevance
Foundation for
Credible Analysis
Data Visualization Tools
‘Cost’ Models – In-house & commercial
Cost Estimating Relationships (CERs)
WBS/cost element-specific algorithms
Automated compilation of CERs
Data graphics that enable more effective
analysis & storytelling
High performing cost orgs invest in developing & acquiring the right enablers

10. Insightful Performance Measurement
Capability Maturity Model
Credible Cost Estimates
Maturing Capability
Realistic
Budgets
Executable
Contracts
Delivery
On Time/At Cost
Monitoring
Planning
Evaluation
Cost Analysis Support Continuum
Informed Assessments & Negotiations
Insightful Performance Measurement
Entry
Basic
Mature
Enabled Outcomes
Technical Baselines ** ü
Quality of Data **
Estimating Techniques **
Automated Tools
Repeatable Processes
Capability Level
Attribute
** Definitions of each capability level follow
Time
High performing orgs routinely look in the mirror, learn and evolve

11. Maturity Levels for Realistic Technical Baselines
Realistic technical baselines provide the necessary inputs for developing a credible cost estimate. Inaccurate and/or missing key technical data typically results in cost estimates based on optimistic assumptions, aka good intentions.
Entry – Technical data elements are collected on ad-hoc basis with no standardization across projects.
Basic – Technical data elements are collected on an ad-hoc basis with standardization across projects.
Mature – Technical data elements are collected and reported in a standard process across programs/projects
High performing cost orgs enable technical baseline realism

12. Maturity Levels for Quality of Data
High quality historical cost, technical and programmatic data is required to develop credible estimates. Quality of data includes many variables such as: granularity (level of detail), volume (number of related projects), relevance (applicability to future projects) and validity/accessibility (each us dependent on having a formal data collection process and system).
Entry – Limited high-level data exist for primarily foreign nation projects. Limited number of relevant Canadian experiences available. The number of actual projects is few and not completely analogous for application. Ad-hoc data collection techniques and storage methods exist.
Basic – More detailed data exist. Small number of Canadian experiences available to analyze and represent some diversity of ship types. Application of data still requires significant extrapolation. Standardized data storage and sharing processes have been defined to support info access and sharing.
Mature – Detailed data exists for many foreign and multiple Canadian projects that represent a healthy population of analogous ship types. A data collection process and system exists with well-defined data collection processes, requirements, validation techniques and web-based sharing.
High performing cost orgs collect the right data

13. Maturity Levels for Estimating Techniques
Valid analytical estimating techniques that accurately represent the data and potential explanatory variables facilitate the credibility of estimates. They also provide the foundation for developing homegrown estimating tools or populating/calibrating commercial estimating tools.
Entry – Existing estimating techniques are used as-is, despite weaknesses that warrant improvement.
Basic – Cost research performed on as-needed basis produces new or updates existing defensible estimating techniques. Standard estimating techniques for some significant elements and phases of cost are available to cost analysts.
Mature – Cost research performed on a routine basis produces new or updates existing defensible estimating techniques. Standard estimating techniques for all significant elements and phases of cost are available to cost analysts   
High performing cost orgs exploit the right data

14. Closing Food for Thought
High performing cost organizations invest to achieve the right balance of the four ingredients
High performing cost organizations understand where/how they are delivering value to the enterprise and leverage this performance information to their advantage