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Knowledge-based, Risk-based, and Web-based Cost Estimation

Risk Track

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We will introduce the Vanguard SystemTM, a new cost estimating software solution that focuses on knowledge-based generative costing models. As technology evolves and diversifies, costing by analysis (generative costing) rather than costing by analogy (parametric costing) is emerging as a critically necessary planning capability. Generative costing methods calculate the aggregate cost of an object by decomposing it into estimates for individual processes, activities, resources, or whatever fundamental units are required.

The Vanguard System is the first enterprise software solution to adequately satisfy all of the requirements of generative costing, which include among others the abilities to:

• Capture costing knowledge that is spread throughout an organization and synthesize it into quantitative component models;
• Make component models available and reusable through a central model library;
• Collaboratively and concurrently assemble component models into hierarchical models;
• Automatically handle the intricate complexities of combining component models built by people in different countries using different measurement systems, different time scales, etc.;
• Automatically construct visual diagrams that match the logical structure of the underlying cost model in order to tackle complex, and sometimes ill-structured, cost models;
• Replace point estimates for any parameter with fuzzy values and conditional branches that reflect risk and uncertainty assumptions and assess the full range and likelihood of potential outcomes using Monte Carlo simulation;
• Allow stakeholders to interact with models and results using an intuitive web interface (for viewing results, exploring assumptions, performing what-if analyses, etc.); and
• Integrate directly with other software systems such as databases, spreadsheets, enterprise planning systems, Web applications, and even other costing tools (for example, parametric costing applications such as the SEER products).

As a case study, we will discuss how Rolls-Royce is currently using the Vanguard System to develop complex manufacturing cost models of their next generation jet engines.


Brian Lewis
Dr. Brian Lewis is the Vice President of Professional Services at Vanguard Software Corporation, a leading vendor of decision support systems (DSS) for cost estimation. In this position, he is responsible for all aspects of Vanguard’s consulting, custom solution development, technical support, and training services. Dr. Lewis been published in both trade and academic journals on topics ranging from quantitative modeling to seaport security and has been a presenter at numerous conferences and meetings for corporations, government, and trade organizations. He received a Ph.D. from the Georgia Institute of Technology, a M.S. from the University of Michigan, and a B.S. from the University of California, Berkeley, all in the fields of industrial engineering and operations research.