Solution Based Estimation for Software ICEAA Workshop Atlanta 2016
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1 Solution Based Estimation for Software ICEAA Workshop Atlanta 2016 Eric van der Vliet Director CGI - Estimation Center CGI Group Inc.
2 Introduction Estimation of software is often seen as a separate activity Input is the defined software solution (architecture / requirements) Estimates are regularly under pressure due to the market price Alignment of architecture and (cost) estimation is critical Solution Based (Cost) Estimation is the solution defined within CGI 2
3 Solution Based Estimation Objectives Traceability from solution to costs The balance between cost and market price From Solution Breakdown Structure to Work Breakdown Structure 3
4 Solution Based Estimating Traceability from solution to cost Architectural Requirements Prioritization Architectural Requirements Architectural Decision Making Architectural Decisions Applying Architectural Strategies Solution Structure Architecture Documentation Solution Blueprint Solution Costing Costing Model Risk and Cost Driven Architecture (RCDA)
5 Enterprise-level Solutions are Heterogeneous applications embedded systems infrastructure SOA implementation systems integration outsourced services... Metrics-based estimation techniques assume homogeneity
6 Solution-Based Estimating Approach to estimate heterogeneous solutions Break down solution into homogeneous components Use Solution Architecture as basis Strong involvement of Solution Architect in estimating process Estimating process results in a Costing Model 6
7 Solution Costing Establish the relationship between a solution architecture and the cost The Solution Architect should understand the costing constraints Solution costing is done to support decision making A costing model is required The basis of costing a solution is: The solution breakdown structure (SBS) The delivery strategy 7
8 Solution Costing Models and responsibilities Solution Architect Cost Engineer Funct Reqs Client Business Issues Non funct Reqs Targeted solution Architect ure SBS Costing model Estimating effort Delivery strategy WBS Schedule Capacity planning Pricing model Business Owner Project/Delivery Manager Project Manager Financial model Financial Engineer 8
9 Workshop 1 Discussion (20 min) Do you recognize the separation between: Cost model Financial model Price model Who should have the role of Cost Engineer? Is this the responsibility of the Solution Architect or an independent role? What is your experience with Cost Engineers for software? What should be the role of a Software Cost Engineer? What should be the role of ICEAA with respect to Software Cost Engineering? 9
10 Solution Based Estimation How it should not work 10
11 Estimating In the project lifecycle Scoping Solution defined by architects First cost indication Solution Collect and analyze actual data Maintain data as input for new estimates Metrics collection EAS Estimating Solution Based Estimate Effort, duration, quality, peak staff Probability Costs vs Market prices Resourcing Risk management Project control Collection of actual data Re-estimation due to scope changes Project control 11
12 Impact of Architecture on Project control Quantified by research* Result Improvement by applying Solution Architecture Budget predictability 2-3 x better Std dev Budget overrun 7 x less 22% 3% Time overrun 6 x less 48% 8% Troubled projects 3 x less 38% 13% Customer satisfaction 1-2 points better 10 point scale Results delivered +10% Specifically correlated with presence of architect and defined solution architecture during budget calculation 50,000 and 2,500,000. Reported by Raymond Slot, PhD Thesis,
13 The solution drives the estimated costs Keep in mind the market price Budget Solution Does this solution meet the customer needs? Are our costs in line with the market? Completeness Estimated costs Market price? Margin Is this a salable solution? Does this solution fit within the available budget? Sales price
14 Solution-Based Estimating Estimating in the bid process Bid Initiation Bid Strategy Proposal Due Diligence Proposal Submission Contract Signing Architectural Requirements Prioritization Architectural Decision Making Applying Architectural Strategies Architecture Documentation Solution Costing Architecture Evaluation Solution Outline Solution Definition After DD Solution BAFO Solution Contracted Solution High-level Estimate Detailed Estimate After DD Estimate BAFO Estimate Contracted Estimate
15 Solution Based Estimation Accuracy of estimates Estimate class Primary characteristics Maturity level of solution definition (% of completion) End Usage Typical purpose of estimate Class 5 0 to 2% Solution concept verification Secondary characteristics Methodology Typical estimating method Class 4 1 to 15% Solution selection Unit costs; Parameters Class 3 10 to 40% First SSR s WBS; Unit cost; Parameters (high level) Class 2 30 to 75% Control or Bid, semi detailed Class 1 65 to 100% Post bid, project start, project change Expected accuracy range Typical variation in low and high range ROM L: -20% to -30% H: +30% to +50% WBS; Unit cost; Parameters (assumptions) WBS; Unit cost; Parameters (detailed level) Based on: AACE International Recommended Practice No. 56R-08; Rev. December 5, 2012; TCM Framework: 7.3 Cost Estimating and Budgeting 15 L: -10% to -20% H: +20% to +30% L: -5% to -15% H: +10% to +20% L: -5% to -10% H: +5% to +15% L: -3% to -5% H: +3% to +10%
16 Solution Based Estimation Solution Breakdown Structure (SBS) Estimating the solution requires a Solution Breakdown Structure The SBS is a deliverable-oriented hierarchical decomposition of the work to be executed Each component Should be clearly and completely defined Has a defined specification and validation approach Will have an assigned responsibility for fulfilling requirements (part of the scope) Has a defined estimation approach Has a defined implementation approach Is delivered by a single organizational entity 16
17 Solution Based Estimation Solution Breakdown Structure (SBS) Solution Infrastructure $ Tools $ Applications $ Maintenance $ Appl-1 $ Appl-2 $ Appl-3 $ Estimate the costs for each element in the SBS Activity based costs (WBS) Fixed unit costs Parameter based costs 17
18 Solution Based Estimation SBS => WBS Solution Infrastructure Tools Applications Maintenance Appl-1 Appl-2 Appl-3 Processtep-6 Processtep-5 Processtep-4 Processtep-3 Processtep-2 Processtep-1 SBS-item-1 SBS-item-2 SBS-item-3 SBS-item-4 WBS SBS-item-5 SBS-item-n 18
19 Solution Based Estimation WBS principles Solution items that need to be developed / set-up Processtep-1 Processtep-2 Processtep-3 Processtep-4 Processtep-5 Processtep-6 Solution items may require different processes / activities SBS-item-1 SBS-item-2 SBS-item-3 SBS-item-4 WBS SBS-item-5 SBS-item-n 19
20 Workshop
21 Solution Based Estimation Example: Package Implementation 1. Configuration 2. Custom built functionality 3. Core module(s) / standard functionality 4. External interfaces 5. Internal interfaces 6. Data 21
22 Solution Based Estimation Example: Package Implementation SBS Package Implementation Configuration Custom built functionality Core modules External interfaces Internal interfaces Data Finance config Internal Clearing Finance Payments Finance Order Converted Ledger Order config Order Routing Order Mail Converted Catalog Fleet Converted Stock 22
23 Solution Based Estimation Summary Architecture and estimation are strongly related SBE: structured way to link heterogeneous architectures to cost Preliminary evidence suggests positive impact: Better scope definition more detailed underpinning of estimate Improved understanding impact of solution on planning & budget Enhanced traceability between cost and solution Costing model, Financial model and Pricing are separate models The price can t be reduced by just reducing the costs Costs can be reduced by changing the solution or delivery model Healthy projects require transparency and traceability 23
24 Thank you!
25 Our commitment to you We approach every engagement with one objective in mind: to help clients succeed 25
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