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IWSM MENSURA ConferenceHaarlem, the NetherlandsCost Estimating Challenges in the Future
MCR Global, LLCAvenue du Bourget 42
1130 Brussels, Belgium
www.mcri.com
Paul Marston
7 – 9 October 2019
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A Cycle of Challenges
Complex Analysis
Risk Perspective
Using Risk Analysis
Data Sources & Validity
Decision Making Tools
Dynamic Estimating
Education & Training
Internationalization 1
2
3
4
5
6
7
8
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Challenge 1
▪ How much will this project cost?
▪ Range Estimate and Probability
▪ Non-linear Dependencies
▪ Knowns, Unknowns, Uncertainty…and Risk
Complex Analysis
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Challenge 2
▪ Cost Estimator
▪ Project Manager
Risk Perspective 50% Confidence Level
To a PM, raising the Est CL is Capitulation, not Mitigation
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Challenge 2
▪ How do we buy-down risk?
▪ Covering risk items with Est CL is same as just accepting risk
50% Confidence Level
5
4
3
2
1
1 2 3 4 5
Lik
elih
oo
dConsequence
Mitigation
Investment
must have a
positive
Risk ROI
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Challenge 3
▪ Cost Estimators spend a lot of time performing sophisticated risk analysis, but…
▪ Plays no roll in determining contract type
▪ Plays no roll in determining an appropriate profit rate
▪ Rarely used to quantify or even qualify a risk register
Using Risk Analysis
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Challenge 4
▪ In the future, it will no longer be about lack of data
▪ We will be awash in data
▪ Big Data from many sources could mean “normalization a thing of the past
▪ How we decide validity, accuracy or purity is critical
Data Sources & Validity
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Challenge 5
▪ Back to Challenge 1: We often dump raw information on Decision Makers
▪ We need to develop and utilize better analytics to provide the right answer – optimization or at least “approximization”
▪ Visual information is almost always more effective than tables of numbers
Decision making tools
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Challenge 5
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Challenge 6
▪ Estimating interactive simulations are next frontier
Dynamic Estimating
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Challenge 7
▪ Competition for people with quantitative and analytic skills is likely to grow
▪ What will a Cost Estimator look like in the future; Where will they come from?
▪ Industry, government, consulting, and academia need to re-think our talent pipeline
Education and Training
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Challenge 8
▪ Cost Estimating and Analysis is a worldwide profession
▪ The problems we solve are universal; the analytic methods are common; our approaches are too often parochial
Internationalization
Organizations like NESMA and ICEAA that cross borders,
oceans and continents are critical to the health and growth
of our profession