European Aerospace Working Group On Cost Engineering
Cost Engineering Capability
Improvement Model (CECIM)
Working Group Session 17th April 2002
Dave Lewis & Hugh Pickerin
© Dave Lewis & Hugh Pickerin
1
CECIM Objectives
© Dave Lewis & Hugh Pickerin
2
WHY CECIM??
• To provide a WG Deliverable that will
– Improve the profile of Cost Engineering by
• Describing the CE Body Of Knowledge
• Provide an identity for the domain & for cost
engineering practitioners themselves.
© Dave Lewis & Hugh Pickerin
3
CECIM Objectives
• To encourage the application of bestpractice methodologies & techniques
amongst participants
– Business Improvement Model
• To define scope of Cost Engineering
• To define the competences and functions
that comprise cost engineering
© Dave Lewis & Hugh Pickerin
4
Why “CECIM”?
C E C I M=
(Cost Engineering) + (Capability Improvement Model)
= (better value)+ (better effectiveness)
© Dave Lewis & Hugh Pickerin
5
“The Purpose of CECIM”
• CECIM offers a means by which organisations can
assess their current CE capability and so
determine what actions need to be taken to
improve their capabilities
• For organisations without a formal approach to
CE, it provides a means of becoming familiar with
the activities that constitute best practice.
© Dave Lewis & Hugh Pickerin
6
“The Purpose of CECIM”
• CECIM provides a means to evaluate an
organisations capability. It provides a 6 step
ladder, as a means of defining and
quantifying process improvement
• It can be used in total or in part,
depending on organisational needs
• Higher Levels may not always be justified:
too expensive for some organisations?
© Dave Lewis & Hugh Pickerin
7
CECIM Architecture
© Dave Lewis & Hugh Pickerin
8
CECIM Architecture
© Dave Lewis & Hugh Pickerin
9
The Domain Portion “What Should The Organisation Be Doing?”
Defines the processes of the CE
discipline related to:
– The discipline itself;
– Integration within the project;
– Organisation-wide processes.
Decomposes the discipline into
“Process Areas” (PAs).
– Decomposes the PAs
into “Base Practices” (BPs).
© Dave Lewis & Hugh Pickerin
10
The Capability Portion –
“How Well Is It Performing?”
• Defines 6 increasing levels of process maturity
• Defines Generic Practices for each Capability Level
© Dave Lewis & Hugh Pickerin
11
Domain + Capability = Maturity
© Dave Lewis & Hugh Pickerin
12
CECIM Model Contents
Unique Domain Portion:
• 19 Process Areas.
• 101 Cost Engineering BPs defined
• Typical Work Products identified for each BP.
• Links between BPs established
Domain portion architecture follows SEI format
Generic Capability Portion:
• features 5 Capability Levels (plus level 0).
• comprises 28 common features & generic practices.
Capability portion adopts standard PI definitions (e.g. SEI)
© Dave Lewis & Hugh Pickerin
13
Development Process
© Dave Lewis & Hugh Pickerin
14
Development Process
Step 1
Develop Process
Areas
Step2
Step 3
Develop Purpose
Statements
Develop Base
Practices
Identify
Links
Develop BP
Outputs
Develop Base
Practice
Descriptions
Step 4.3
Step 4.2
© Dave Lewis & Hugh Pickerin
Step 4.1
15
Step 1 – Develop Process Areas
•
•
•
•
•
•
•
•
•
Cost Estimating
Cost Modelling
Cost Control & Analysis
VA/VE & Cost Reduction
Planning
Risk Management
Competences Management
Define Process
Improve Process
•
Integrate Disciplines
•
•
•
•
•
•
•
•
•
Ensure Quality
DTC & CAIV
Supply Chain
Knowledge Management
Capital Asset & Resource
Management
Business Analysis
Business Case Development
Audit
Cost Allocation
© Dave Lewis & Hugh Pickerin
16
Step 2 – Develop Purpose Statements
• Example.The purpose of Cost Estimating is to determine
and communicate a realistic view of the likely cost outturn,
which can form the basis of the ongoing plan for the
execution of the work.
Cost estimating requires that a detailed understanding of
the scope of work is performed with each project objective
clearly identified and accounted-for in the estimating
process. Cost estimating includes estimating the impact of
lessons learned, risk assessment, currency calculations &
presentations to senior management. Before cost
estimating is commenced, it is important to fully
understand the class of the estimate required & tailor
the process accordingly.
© Dave Lewis & Hugh Pickerin
17
Step 3 – Develop Base Practices
e.g For Cost Estimating
• Understand customer
needs
• Classes of estimates
• Develop metrics
• Create WBS, OBS, PBS,
CBS
• Generate Target costs
• Determine preliminary
schedule
• Generate make/buy plan
• Obtain material costs
• Generate detailed
estimates for in house
work
• Agree foreign exchange
rates
• Compile Works cost
• Calculate Contingency
• Utilisation of learning
curve
• Issue definitive estimate
© Dave Lewis & Hugh Pickerin
18
Step 4.1 – Develop Description for BPs
e.g For Understand Customer Requirements.
Analyse request from customer, internal or external, including
all requirements, specifications etc associated with the
request.
Contact relevant people to ensure clear
understanding and documenting of the needs, statement of
work etc. Prior to commencing any estimating activity,
establish and agree the level or class of estimate (see BP02)
and ensure that all parties are aware of the commercial
considerations (i.e. contract pricing instructions).
© Dave Lewis & Hugh Pickerin
19
Step 4.2 – Develop Description for BPs
e.g. Typical Work Outputs:

Basis of Estimate (BOE)

Hardware and Verification Matrix

Preliminary Design and Development Plan

Industrial Plan
•
Contract pricing instructions (e.g. Fixed,
Firm-Fixed etc.).
© Dave Lewis & Hugh Pickerin
20
Step 4.3 – Develop Description for BPs
Add links e.g
Note: The level to which the customer requirements can
be determined will identify inputs to the “weak points”
in risk identification (PA06/BP01) and determine the
confidence level in the estimate being generated
(PA01/BP02).
© Dave Lewis & Hugh Pickerin
21
Next Steps
• Survey Results today
• Correspondence, particularly comments
leading to future improvement of the
CECIM are welcome to
– Costeng@hotmail.com
– hpickerin@anangle.com
• http://www.anangle.demon.co.uk/eace/products.htm
© Dave Lewis & Hugh Pickerin
22
Copyright Permission:
The EACE wish to acknowledge the prior work
performed under the auspices of the Systems
Engineering Institute at Carnegie Mellon
University.To use the general CMM architecture,
utilise the Capability definitions, reproduce
Figures and adapt Process Areas 06, 08, 09, 10 and
11 royalty-free (these portions Copyright © 1995
by Carnegie Mellon University). CMM and
Capability Maturity Model are service marks of
Carnegie Mellon University
© Dave Lewis & Hugh Pickerin
23
Supplementary Viewgraphs
© Dave Lewis & Hugh Pickerin
24
PA:02 Cost Modelling
•
•
•
•
•
•
•
Preliminary Model design
Identify system information requirements
Data Collection
Data Analysis
Develop Models
Calibrate and validate models
Model Maintenance
© Dave Lewis & Hugh Pickerin
25
PA:03 Cost Control & Analysis
•
•
•
•
•
•
•
•
Establish Requirements
Confirm WBS
Revise Estimate
Establish Baseline(BCWS)
Collect Costs
Performance Measurement(Including EVA)
Estimate to Completion
Assimilation of Lessons Learned
© Dave Lewis & Hugh Pickerin
26
PA: 04 VA/VE & Cost Reduction
•
•
•
•
•
Gather Information
Consider Alternatives
Analyse Alternatives
Develop Proposals
Implementation
© Dave Lewis & Hugh Pickerin
27
PA:05 Planning
•
•
•
•
•
•
•
Establish Requirements
Confirm WBS
Preliminary Schedule
Critical Path Analysis
Set Target Schedules
Schedule Status
Lessons Learned
© Dave Lewis & Hugh Pickerin
28
PA:06 Risk Management
•
•
•
•
•
Risk Identification
Risk Analysis
Financial Quantification
Risk reduction planning
Risk monitoring & control
© Dave Lewis & Hugh Pickerin
29
PA:07 Competence Management
• Identify needed improvements in skills &
knowledge
• Evaluate & select appropriate mode of acquiring
knowledge & skills
• Prepare training manuals
• Train personnel
• Maintain records of training & experience
© Dave Lewis & Hugh Pickerin
30
PA:08 Define Organisations Cost
Engineering Process
• Establish goals for the organisation cost
engineering process
• Develop a well defined standard cost engineering
process
• Define guidelines for tailoring the standard
process for special situations
© Dave Lewis & Hugh Pickerin
31
PA:09 Improve Organisation Cost
Engineering Process
• Appraise Strengths & Weaknesses of the
Existing Process
• Plan Improvements
• Communicate Process Improvements to
Affected Groups
© Dave Lewis & Hugh Pickerin
32
PA:10 Integrate Disciplines
• Involve the Disciplines that are Essential to
Successful Cost Engineering
• Establish methods for interdisciplinary
co-ordination
• Develop and Communicate Goals
• Communicate Results
© Dave Lewis & Hugh Pickerin
33
PA:11 Ensure Quality
• Ensure Defined Process is Adhered to
• Measure the Quality of the Cost
Engineering Process
• Analyse Quality Measurements to Develop
Recommendations for Quality Improvement
• Initiate Activities that Address Identified
Quality Issues or Quality Improvement
Opportunities
© Dave Lewis & Hugh Pickerin
34
PA:12 Design To Cost & CAIV
• Understand mission goals. Affordability,
engineering & management plans
• Identify candidate solutions
• Cost/performance/schedule/risk trade studies
• Refine mission requirements to meet cost
constraints
• Track progress during project life cycle
© Dave Lewis & Hugh Pickerin
35
PA:13 Supply Chain Management
•
•
•
•
•
•
•
Prepare make/buy plan
Issue RFO’s
Review supplier quotes
Select supplier
Analyse & negotiate claims & changes
Approve invoices & milestone achievement
Close out
© Dave Lewis & Hugh Pickerin
36
PA:14 Knowledge Management
• Identify strategic knowledge needs and
assets
• Mobilise and capitalise assets
• Identify and implement mechanisms for
knowledge capture and retention
© Dave Lewis & Hugh Pickerin
37
PA:15 Capital Asset & Resource
Management
•
•
•
•
•
Obtain resource requirements
Probabilistic analysis on future projects
Manage resource requirements
Review resource requirements
Initiate plan to cover shortfalls
© Dave Lewis & Hugh Pickerin
38
PA:16 Business Analysis
•
•
•
•
Monitor efficiencies
Benefits tracking and analysis
Identify profitable business
Overheads forecasting
© Dave Lewis & Hugh Pickerin
39
PA:17 BUSINESS CASE
DEVELOPMENT
• Market analysis
• Financing scheme analysis
• Compilation of the business plan
© Dave Lewis & Hugh Pickerin
40
PA:18 AUDIT
•
•
•
•
•
Agree approach to audit
Review estimating process
Carry out audit
Negotiate findings
Implement agreement
© Dave Lewis & Hugh Pickerin
41
PA:19 Cost Allocation
• Decide basis of direct and indirect
allocation
• Establish cost that are compatible with
direct and indirect allocation
• Publish cost allocation
• Apply cost allocation to the estimating
process
© Dave Lewis & Hugh Pickerin
42