Using your Cost Estimate to Answer Budget Questions
Methods & Models Track
We can use the budget and estimate together to answer three key questions. First, is the budget sufficient for my program and are there years with budget shortfalls? Second, if the budget changes how will it affect my program? Third, which estimate elements should be watched carefully to remain on budget? The focus of this presentation is to show modeling techniques used to answer these questions and to propose how to display the results to management.
Cost analysis and estimating is a critical part of the acquisition process. It supports government management with valuable information, allowing them to make informed decisions. At different stages in the acquisition process, estimates are used to determine budget requests, provide insights about the program, and identify the cost impact of alternative execution strategies. As the project evolves it is often useful to examine the differences between the budget and the estimate. This presentation identifies simple modeling techniques that can be added to any cost estimate to maximize its budget analysis capabilities including when the estimate represents a uncertainty adjusted result. The presentation also shows recommended reports that can show management the estimate and the budget together in one easy to understand/easy to explain view. Additionally, it shows how to generate budget/estimate deltas to determine shortfalls and surpluses and details how to quickly run “what if” drills should the estimate or budget change. Finally, the presentation presents several techniques to identify the most important cost elements, point estimate drivers and sources of cost uncertainty (targets for risk mitigation) which become the elements that should be tracked to stay on budget.
This presentation is suitable for those that have to build cost estimates and program managers that need more concise reports that compare the program estimate to the budget.
Melissa A. Cyrulik, Tecolote Research Inc. – Chantilly, VA
Senior analyst in the Software Products/Services Group at Tecolote Research Inc. She has over 10 years of cost estimating experience, developing life cycle cost estimates and analysis of alternatives and supporting groups with their own estimates. She has over eight years experience as an ACEIT training instructor teaching cost estimating, statistical analysis and risk modeling. Currently, Ms. Cyrulik is the lead ACEIT Trainer responsible for developing the training materials and training the instructor team. Ms. Cyrulik holds a Bachelors of Science in Industrial Engineering from Northeastern University in Boston, Massachusetts.