Cost Estimating Methodologies Flashcards
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Read the first 6 Cost Estimating Methodologies flashcards as text
What is the 'PRICE H' model and for what type of cost does it estimate?
Answer: PRICE H is a parametric hardware cost estimating model that estimates development and production costs of electronic and mechanical hardware systems
PRICE H (now part of the PRICE True suite) is a widely used parametric model that estimates hardware development and manufacturing costs based on physical and complexity parameters.
What distinguishes a 'will-cost' estimate from a 'should-cost' estimate?
Answer: Will-cost projects what the program is expected to cost given current plans and management; should-cost projects what the program could cost under optimal management and efficiency
Will-cost is a realistic projection based on current program status and historical tendencies, while should-cost challenges inefficiencies to identify achievable cost reduction opportunities.
What is the 'COCOMO II' model used for in Army cost analysis?
Answer: Estimating software development costs based on source lines of code, scale factors, and cost drivers
COCOMO II (Constructive Cost Model) is a widely used parametric software cost estimating model that uses SLOC and adjustment factors to estimate software development effort and cost.
What is 'labor rate' and how does it affect engineering build-up cost estimates?
Answer: The hourly cost of labor including wages, benefits, and overhead; it directly multiplies labor hours to produce labor cost in build-up estimates
Fully burdened labor rates capture total employee cost (base pay, benefits, and indirect overhead), and when multiplied by estimated labor hours yield the labor cost component of the estimate.
What is the purpose of a 'cost model validation' in Army cost analysis?
Answer: To verify that the cost model produces accurate results by testing it against known historical data and comparing its outputs to actuals
Validation checks whether the model's predictions match actual historical outcomes, providing confidence that it will produce reliable estimates for new programs.
In parametric cost estimating, what is 'extrapolation risk'?
Answer: The increased uncertainty when applying a CER to a new system whose technical parameters fall outside the range of the historical data used to develop the CER
CERs are only statistically validated within the range of their historical data; applying them outside that range (extrapolation) introduces unknown error because the relationship may not hold.