Determine Estimates of Effort and Cost

Estimates of effort and cost are generally based on the results of analysis using models or historical data applied to size, activities, and other planning parameters. Confidence in these estimates is based on the rationale for the selected model and the nature of the data. There may be occasions where the available historical data does not apply, such as where efforts are unprecedented or where the type of task does not fit available models. An effort is unprecedented (to some degree) if a similar product or component has never been built. An effort may also be unprecedented if the development group has never built such a product or component.

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

• Collect the models or historical data that will be used to transform the attributes of the work products and tasks into estimates of the labor hours and cost. Historical data include the cost, effort, and schedule data from previously executed projects, plus appropriate scaling data to account for differing sizes and complexity.
• Include supporting infrastructure needs when estimating effort and cost. The support infrastructure includes items needed from a development and sustainment perspective for the product.
• Estimate effort and cost using models and/or historical data. Effort and cost inputs used for estimating typically include:
  • Judgmental estimates provided by an expert or group of experts (e.g., Delphi Method)
  • Risks, including the extent to which the effort is unprecedented
  • Critical competencies and roles needed to perform the work
  • Product and product-component requirements
  • Technical approach
  • WBS
  • Size estimates of work products and anticipated changes
  • Cost of externally acquired work products
  • Selected project life-cycle model and processes
  • Life-cycle cost estimates
  • Capability of tools provided in engineering environment
  • Skill levels of managers and staff needed to perform the work
  • Knowledge, skill, and training needs
  • Facilities needed (e.g., office and meeting space and workstations)
  • Engineering facilities needed
  • Capability of manufacturing process(es)
  • Travel
  • Level of security required for tasks, work products, hardware, software, personnel, and work environment
  • Service-level agreements for call centers and warranty work
  • Direct labor and overhead