Presents an accessible approach to the cost estimation tools, concepts, and techniques needed to support analytical and cost decisions
Written with an easy-to-understand approach, Cost Estimation: Methods and Tools provides comprehensive coverage of the quantitative techniques needed by professional cost estimators and for those wanting to learn about this vibrant career field. Featuring the underlying mathematical and analytical principles of cost estimation, the book focuses on the tools and methods used to predict the research and development, production, and operating and support costs for successful cost estimation in industrial, business, and manufacturing processes.
The book begins with a detailed historical perspective and key terms of the cost estimating field in order to develop the necessary background prior to implementing the presented quantitative methods. The book proceeds to fundamental cost estimation methods utilized in the field of cost estimation, including working with inflation indices, regression analysis, learning curves, analogies, cost factors, and wrap rates. With a step-by-step introduction to the practicality of cost estimation and the available resources for obtaining relevant data, Cost Estimation: Methods and Tools also features:
* Various cost estimating tools, concepts, and techniques needed to support business decisions
* Multiple questions at the end of each chapter to help readers obtain a deeper understanding of the discussed methods and techniques
* An overview of the software used in cost estimation, as well as an introduction to the application of risk and uncertainty analysis
* A Foreword from Dr. Douglas A. Brook, a professor in the Graduate School of Business and Public Policy at the Naval Postgraduate School, who spent many years working in the Department of Defense acquisition environment
Cost Estimation: Methods and Tools is an excellent reference for academics and practitioners in decision science, operations research, operations management, business, and systems and industrial engineering, as well as a useful guide in support of professional cost estimation training and certification courses for practitioners. The book is also appropriate for graduate-level courses in operations research, operations management, engineering economics, and manufacturing and/or production processes.
Autorentext
Gregory K. Mislick is Senior Lecturer in the Department of Operations Research and Program Manager for the Masters Degree Program in Cost Estimating and Analysis at the Naval Postgraduate School (NPS). A retired U.S. Marine Corps Lieutenant Colonel aviator and past associate dean of the Graduate School of Operational and Information Sciences at NPS, his research interests includes life cycle cost estimating and modeling, probability and statistics, regression analysis, learning curves, and optimization.
Daniel A. Nussbaum, PhD, is Visiting Professor in the Department of Operations Research at the Naval Postgraduate School in Monterey, California. With over 30 years of professional experience providing financial estimating and analysis services to senior levels of the U.S. Federal government, Dr. Nussbaum's research interests includes cost/benefit analyses, life cycle cost estimating and modeling, and financial modeling.
Inhalt
Foreword xiii
About the Authors xvii
Preface xix
Acronyms xxiii
1 Looking Back: Reflections on Cost Estimating 1
Reference 10
2 Introduction to Cost Estimating 11
2.1 Introduction 11
2.2 What is Cost Estimating? 11
2.3 What Are the Characteristics of a Good Cost Estimate? 13
2.4 Importance of Cost Estimating in DoD and in Congress. Why Do We Do Cost Estimating? 14
2.4.1 Importance of Cost Estimating to Congress 16
2.5 An Overview of the DoD Acquisition Process 17
2.6 Acquisition Categories (ACATs) 23
2.7 Cost Estimating Terminology 24
Summary 30
References 31
Applications and Questions 31
3 Non-DoD Acquisition and the Cost Estimating Process 32
3.1 Introduction 32
3.2 Who Practices Cost Estimation? 32
3.3 The Government Accountability Office (GAO) and the 12-Step Process 33
3.4 Cost Estimating in Other Non-DoD Agencies and Organizations 38
3.4.1 The Intelligence Community (IC) 38
3.4.2 National Aeronautics and Space Administration (NASA) 38
3.4.3 The Federal Aviation Administration (FAA) 39
3.4.4 Commercial Firms 39
3.4.5 Cost Estimating Book of Knowledge (CEBOK) 40
3.4.6 Federally Funded Research and Development Centers (FFRDCs) 41
3.4.7 The Institute for Defense Analysis (IDA) 41
3.4.8 The Mitre Corporation 42
3.4.9 Rand Corporation 42
3.5 The Cost Estimating Process 43
3.6 Definition and Planning. Knowing the Purpose of the Estimate 43
3.6.1 Definition and Planning. Defining the System 47
3.6.2 Definition and Planning. Establishing the Ground Rules and Assumptions 48
3.6.3 Definition and Planning. Selecting the Estimating Approach 49
3.6.4 Definition and Planning. Putting the Team Together 51
3.7 Data Collection 52
3.8 Formulation of the Estimate 52
3.9 Review and Documentation 53
3.10 Work Breakdown Structure (WBS) 53
3.10.1 Program Work Breakdown Structure 53
3.10.2 Military-Standard (MIL-STD) 881C 56
3.11 Cost Element Structure (CES) 56
Summary 58
References 59
Applications and Questions 59
4 Data Sources 61
4.1 Introduction 61
4.2 Background and Considerations to Data Collection 61
4.2.1 Cost Data 63
4.2.2 Technical Data 63
4.2.3 Programmatic Data 64
4.2.4 Risk Data 64
4.3 Cost Reports and Earned Value Management (EVM) 65
4.3.1 Contractor Cost Data Reporting (CCDR) 65
4.3.2 Contract Performance Report (CPR) 66
4.3.3 EVM Example 70
4.4 Cost Databases 74
4.4.1 Defense Cost and Resource Center (DCARC) 75
4.4.2 Operating and Support Costs Databases 75
4.4.3 Defense Acquisition Management Information Retrieval (DAMIR) 76
Summary 76
Reference 77
Applications and Questions 77
5 Data Normalization 78
5.1 Introduction 78
5.2 Background to Data Normalization 78
5.3 Normalizing for Content 80
5.4 Normalizing for Quantity 81
5.5 Normalizing for Inflation 83
5.6 DoD Appropriations and Background 87
5.7 Constant Year Dollars (CY$) 88
5.8 Base Year Dollars (BY$) 90
5.9 DoD Inflation Indices 91
5.10 Then Year Dollars (TY$) 95
5.11 Using the Joint Inflation Calculator (JIC) 97
5.12 Expenditure (Outlay) Profile 99
Summary 103
References 103
Applications and Questions 103
6 Statistics for Cost Estimators 105
6.1 Introduction 105
6.2 Background to Statistics 105
6.3 Margin of Error 106
6.4 Taking a Sample 109
6.5 Measures of Central Tendency 110
6.6 Dispe...