PP.SP 1.5 Estimate Effort and Cost

Estimates of effort and cost are generally based on results of analysis using models or historical data applied to size, activities, and other planning parameters. Confidence in these estimates is based on rationale for the selected model and the nature of the data. There can be occasions when available historical data do not apply, such as when efforts are unprecedented or when the type of task does not fit available models. For example, an effort can be considered unprecedented if the organization has no experience with such a product or task.

Unprecedented efforts are more risky, require more research to develop reasonable bases of estimate, and require more management reserve. The uniqueness of the project should be documented when using these models to ensure a common understanding of any assumptions made in the initial planning phases.

Estimates address all processes and activities performed by the project for the project lifecycle, including an estimate of effort and cost for supplier work. The project estimate includes detailed estimates for activities performed by the acquirer and its stakeholders. The acquirer should include members of their technical community (e.g., systems, hardware, software engineers) to ensure all technical considerations have been accounted for in the estimates. As the project evolves, these estimates can be revised based on changed conditions (e.g., new circumstances encountered during execution of the supplier agreement).

In addition to creating an estimate for the project work products, the acquirer is encouraged to have its estimate and WBS reviewed by individuals external to the project to ensure that the project estimation and WBS can be validated.

Example Work Products

1. Estimation rationale
2. Project effort estimates
3. Project cost estimates

Subpractices

1. Collect models or historical data to be used to transform the attributes of work products and tasks into estimates of labor hours and costs.

Effort estimation at the work product and task level needs to be established for acquirer work. Effort estimation for supplier deliverables and processes should be established as well.

Many parametric models have been developed to help estimate cost and schedule. The use of these models as the sole source of estimation is not recommended because these models are based on historical project data that may or may not be pertinent to the project. Multiple models and methods can be used to ensure a high level of confidence in the estimate.

Historical data should include the cost, effort, and schedule data from previously executed projects and appropriate scaling data to account for differing sizes and complexity.

2. Include supporting infrastructure needs when estimating effort and cost.

The supporting infrastructure includes resources needed from a development and sustainment perspective for the product.

Consider the infrastructure resource needs in the development environment, the test environment, the production environment, the operational environment, or any appropriate combination of these environments when estimating effort and cost.

 

3. Estimate effort and cost using models, historical data, or a combination of both.

 

The amount of supplier work for a project largely determines the amount of acquirer work required to manage the project and the supplier. Effort for the acquirer includes (1) effort associated with defining the scope of the project; (2) effort associated with the development of the solicitation and supplier agreement; agreement and technical management; project planning, monitoring, and control; acquisition requirements development, verification, and validation; configuration management; measurement and analysis; process and product quality assurance; requirements management; and risk management; (3) operating and maintenance effort associated with the sustainment of the solution; and (4) disposal effort.