Parametric Estimating Handbook, 4th Edition - …

1 International Society of Parametric Analysts Parametric Estimating handbook Fourth Edition April 2008 International Society of Parametric Analysts Parametric Estimating handbook , Fourth Edition Copyright 2008 (Unlimited Rights Granted to the US Government) ISBN # 0-9720204-7-0 . ISPA/SCEA Joint Office 527 Maple Avenue East, Suite 301 Vienna, VA 22180 703-938-5090 Fax 703-938-5091 Table of Contents List of Figures Preface Introduction Part One The Basics of Parametric Analysis CHAPTER 1 Parametric ANALYSIS OVERVIEW Best Practices of the Parametric Analysis Process .. 1-1 The Parametric Model Building Process.

2 1-3 Parametric Model 1-13 cost Estimating Relationships .. 1-16 Data Characteristics and 1-16 Data Normalization .. 1-20 CER Development .. 1-21 CER Validation .. 1-23 Complex Models .. 1-24 Comparison of Complex Models and CERs .. 1-24 Complex Tools in the Estimating Process .. 1-25 Development of Complex Tools .. 1-26 How Good Is the Estimate? .. 1-33 Part Two The Application of Parametric Analysis CHAPTER 2 DATA COLLECTION AND ANALYSIS Data Types and 2-1 Data Sources .. 2-2 Routine Data Normalization Adjustments.

3 2-5 2-6 Non-Recurring and Recurring 2-6 cost Improvement Curve .. 2-7 Production 2-7 Significant Data Normalization Adjustments .. 2-8 Adjustment for Consistent 2-8 Adjustment for Anomalies .. 2-8 International Society of Parametric Analysts i TABLE OF CONTENTS Data Adjustment Analysis Example .. 2-9 Government Evaluation Issues .. 2-10 Other Considerations .. 2-11 Resources .. 2-11 Information in the Wrong 2-11 Differences in Definitions of Categories .. 2-12 The Influence of Temporal 2-12 Comparability Problems.

4 2-12 Database 2-12 CHAPTER 3 cost Estimating RELATIONSHIPS CER Development .. 3-2 cost CERs .. 3-2 Overall CER Development Process .. 3-3 Development Database .. 3-4 Testing the Logic of a CER .. 3-5 CER Development Examples .. 3-5 Developing Simple CERs .. 3-6 Lessons Learned from CER 3-12 Curve Fitting and OLS Regression Analysis .. 3-12 Graphical Method .. 3-13 OLS Regression Analysis .. 3-13 Assumptions, Limitations, and Caveats of OLS .. 3-15 Multiple Regression .. 3-17 Curvilinear Regression and cost Improvement Curve Analysis3-18 Testing the Significance of the 3-19 When to Use a CER.

5 3-23 Strengths .. 3-23 Weaknesses .. 3-23 Examples of CERs in 3-24 Construction .. 3-24 3-24 Weapons Procurement .. 3-24 CERs from the Defense Procurement and Acquisition Policy .. 3-25 cost Estimating Relationship Definition .. 3-25 Steps for Developing a cost Estimating Relationship .. 3-25 Identifying Situations for Use .. 3-26 Developing and Using Estimating Factors .. 3-27 Developing and Using Estimating Equations .. 3-27 Identifying Issues and Concerns .. 3-28 Evaluating CERs .. 3-29 Government Evaluation Criteria .. 3-29 Logical Data Relationships.

6 3-29 Credible Data .. 3-31 ii International Society of Parametric Analysts Parametric Estimating handbook Strength of CER Relationships .. 3-31 CER Validation .. 3-31 Summary of CER 3-32 CHAPTER 4 COMPANY DEVELOPED COMPLEX MODELS Background .. 4-2 General Definitions .. 4-2 Examples of Proprietary Models .. 4-3 The Model Development Process .. 4-4 Step 1: Identifying the Parametric Opportunity .. 4-6 Step 2: Preliminary Model Design .. 4-6 Step 3: Information Systems Needs .. 4-6 Step 4: Data Collection and Analysis .. 4-7 Step 5: Model Development.

7 4-8 Step 6: Calibration and Validation .. 4-10 Step 7: Estimating System Policies and Procedures .. 4-11 Step 8: Internal Approval Process .. 4-12 Step 9: External Approval Process .. 4-12 Step 10: Model Maintenance .. 4-13 Evaluation Criteria .. 4-15 cost Benefit Analysis .. 4-16 Information System Controls .. 4-16 Summary Example: Jet Engine cost Model .. 4-17 Lessons Learned .. 4-17 Best Practices .. 4-18 CHAPTER 5 COMPLEX HARDWARE MODELS Background .. 5-1 Overview of Hardware cost Modeling .. 5-2 The Parametric cost Modeling Process.

8 5-6 Define Objectives .. 5-6 Data Collection and Analysis .. 5-7 Model Calibration .. 5-7 Model Validation .. 5-10 Forward Estimating .. 5-11 Commercially Available Hardware Models .. 5-12 Lessons Learned from the Use of Complex Hardware Models .. 5-12 Best Practices .. 5-14 Conclusions .. 5-14 International Society of Parametric Analysts iii TABLE OF CONTENTS CHAPTER 6 COMPLEX SOFTWARE MODELS Background .. 6-1 Software and Programming Languages .. 6-4 Software Development 6-4 Software Support.

9 6-8 Software Capability Maturity Model Integration (CMMI) 6-9 Manager s Checklist for Validating Software cost and Schedule Estimates .. 6-13 Software Estimating Techniques .. 6-13 Overview of Software Parametric cost Models .. 6-15 Function Point Models .. 6-15 Conversion of Function Points to SLOC .. 6-18 Object Points .. 6-19 Use Case Points (UCPs).. 6-19 Normalized Use Cases (NUCs) .. 6-20 cost Model Selection .. 6-20 Step 1: Determine User Needs .. 6-20 Step 2: Select Candidate Models .. 6-21 Step 3: Choose the Most Appropriate Model or Models.

10 6-21 Step 4: Reevaluate the Choice .. 6-22 Intelligent Use of Software Models .. 6-22 Input 6-23 Model Validation .. 6-23 COCOMO II .. 6-24 Example: REVIC Revised COCOMO Model .. 6-24 Example: Software 6-25 Future Directions of Software Estimating .. 6-26 New Development and Support Concepts .. 6-26 Reuse and COTS Integration .. 6-26 New cost 6-26 Lessons 6-27 Best Practices .. 6-28 6-29 CHAPTER 7 GOVERNMENT COMPLIANCE Regulatory Compliance .. 7-1 The Truth in Negotiations Act (TINA).