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The three questions you should ask yourself to avoid cost estimation risks

Risk is always present in any undertaking, no matter the size or duration of the project. Risk can jack up program costs, foul up schedules and draw out projects beyond their stated deadlines, and even ultimately derail a program.

That is why professionals in the cost estimation and analysis industry need to bone up on risk mitigation strategies.

“Project risk can be caused by uncertainty and risk events,” according to Dr. David Hulett, a noted leader in Project Management Institute for project risk management and scheduling standards and principal of project management consultant firm Hulett and Associates, LLC., “However, risk mitigation actions often cost money, dampening the improvement from schedule risk mitigation.”

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In one of his presentation titled, Risk Mitigation: Some Good News after the Cost / Schedule Risk Analysis Results, Hulett outline a risk prioritization methodology designed to help cost estimation professionals mitigate risks.

Perhaps one of the most common causes of estimation bias and errors is the pressure to complete a project within a strict schedule.

“Schedule pressure dooms more megaprojects than any other single factor,” said Hulett. “Ambitious managers see early completion as ways for promotions. But, every megaproject has an appropriate pace that becomes known early. Pronouncements do not change this pace.”

To counteract these risks, Hulett recommends that cost estimation professionals ask themselves these questions:

  • Was there pressure put on the estimator or scheduler by prior expectations, statements by management or the customer, or was pressure for early finish implicit in the competitive process?
  • How long would this scope of work take if no pressure for an earlier date were brought to bear?
  • How long would this scope of work take and how much would it cost if the estimates were purely professional, without prior expectations?

Interested in learning more best-practices and strategies from cost estimation experts?

You can gain a better appreciation and understanding of how to use data-driven estimating and analysis techniques in the work by attending the upcoming 3rd Annual Training and Development Workshop of the Canadian Chapter of the International Cost Estimating and Analysis Association (ICEAA Canada).

The two-day event will take place at the Ottawa Westin Hotel on May 1st to 2nd.

Mike Gilmore, former Director of the Operational Test and Evaluation Directorate of the U.S. Department of Defence, will provide attendees with a unique view of the formulation and implementation of DoD policies and programs especially those touching on analyzing operational effectiveness and costs of the U.S. military forces. His talk is titled Speaking Truth to Power: DoD, Congress, and the F-35.

This year’s featured guest speakers include are Andy Prince, manager for the engineering cost office of NASA’s Marshall Space Flight Centre, Murray Brewster, author, and senior defence writer for CBC News, and Roger Ermuth, Assistant Comptroller General of the Treasury Board of Canada Secretariat (TBS).

For a complete lineup of speakers and session topics, and to register for the event, click on this link

For more information on sponsorship opportunities, please contact: Terri Pavelic via email terri@promotivemedia.ca

 

Author: Nestor Arellano

Nestor Arellano is editor of Vanguard Magazine. Nestor is a seasoned journalist who has written extensively on defence and military industry issues as well as technology and business developments. He is also associate editor of Vanguard's sister publication, IT in Canada.

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