Principles, Process and Practice of Professional Number Juggling (Volume 1 of the Working Guides to Estimating & Forecasting series) sets the scene of TRACEability and good estimate practice that is followed in the other volumes in this series of five working guides. It clarifies the difference between an Estimating Process, Procedure, Approach, Method and Technique. It expands on these definitions of Approach (Top-down, Bottom-up and
'Ethereal') and Method (Analogy, Parametric and 'Trusted Source') and discusses how these form the basis of all other means of establishing an estimate.
This volume also underlines the importance of 'data normalisation' in any estimating procedure, and demonstrates that the Estimating by Analogy Method, in essence, is a simple extension of Data Normalisation. The author looks at simple measures of assessing the maturity or health of an estimate, and offers a means of assessing a spreadsheet for any inherent risks or errors that may be introduced by failing to follow good practice in spreadsheet design and build.
This book provides a taster of the more numerical techniques covered in the remainder of the series by considering how an estimator can potentially exploit Benford's Law (traditionally used in Fraud Detection) to identify systematic bias from third party contributors. It will be a valuable resource for estimators, engineers, accountants, project risk specialists as well as students of cost engineering.
Rezensionen / Stimmen
"In the Working Guides to Estimating and Forecasting Alan has managed to capture the full spectrum of relevant topics with simple explanations, practical examples and academic rigor, while injecting humour into the narrative." Dale Shermon, Chairman, Society of Cost Analysis and Forecasting (SCAF).
"If estimating has always baffled you, this innovative well illustrated and user friendly book will prove a revelation to its mysteries. To confidently forecast, minimise risk and reduce uncertainty we need full disclosure into the science and art of estimating. Thankfully, and at long last the "Working Guides to Estimating & Forecasting" are exactly that, full of practical examples giving clarity, understanding and validity to the techniques. These are comprehensive step by step guides in understanding the principles of estimating using experientially based models to analyse the most appropriate, repeatable, transparent and credible outcomes. Each of the five volumes affords a valuable tool for both corporate reference and an outstanding practical resource for the teaching and training of this elusive and complex subject. I wish I had access to such a thorough reference when I started in this discipline over 15 years ago, I am looking forward to adding this to my library and using it with my team." - Tracey L Clavell, Head of Estimating & Pricing, BAE Systems Australia
"At last, a comprehensive compendium on these engineering math subjects, essential to both the new and established "cost engineer"! As expected the subjects are presented with the author's usual wit and humour on complex and daunting "mathematically challenging" subjects. As a professional trainer within the MOD Cost Engineering community trying to embed this into my students, I will be recommending this series of books as essential bedtime reading." - Steve Baker, Senior Cost Engineer, DE&S MOD
"Alan has been a highly regarded member of the Cost Estimating and forecasting profession for several years. He is well known for an ability to reduce difficult topics and cost estimating methods down to something that is easily digested. As a master of this communication he would most often be found providing training across the cost estimating and forecasting tools and at all levels of expertise. With this 5-volume set, Working Guides to Estimating and Forecasting, Alan has brought his normal verbal training method into a written form. Within their covers Alan steers away from the usual dry academic script into establishing an almost 1:1 relationship with the reader. For my money a recommendable read for all levels of the Cost Estimating and forecasting profession and those who simply want to understand what is in the 'blackbox' just a bit more." - Prof Robert Mills, Margin Engineering, Birmingham City University. MACOSTE, SCAF, ICEAA.
"Finally, a book to fill the gap in cost estimating and forecasting! Although other publications exist in this field, they tend to be light on detail whilst also failing to cover many of the essential aspects of estimating and forecasting. Jones covers all this and more from both a theoretical and practical point of view, regularly drawing on his considerable experience in the defence industry to provide many practical examples to support his comments. Heavily illustrated throughout, and often presented in a humorous fashion, this is a must read for those who want to understand the importance of cost estimating within the broader field of project management." - Dr Paul Blackwell, Lecturer in Management of Projects, The University of Manchester, UK.
"Alan Jones provides a useful guidebook and navigation aid for those entering the field of estimating as well as an overview for more experienced practitioners. His humorous asides supplement a thorough explanation of techniques to liven up and illuminate an area which has little attention in the literature, yet is the basis of robust project planning and successful delivery. Alan's talent for explaining the complicated science and art of estimating in practical terms is testament to his knowledge of the subject and to his experience in teaching and training." - Therese Lawlor-Wright, Principal Lecturer in Project Management at the University of Cumbria
"Alan Jones has created an in depth guide to estimating and forecasting that I have not seen historically. Anyone wishing to improve their awareness in this field should read this and learn from the best." Richard Robinson, Technical Principal for Estimating, Mott MacDonald
"The book series of 'Working Guides to Estimating and Forecasting' is an essential read for students, academics and practitioners who interested in developing a good understanding of cost estimating and forecasting from real-life perspectives". Professor Essam Shehab, Professor of Digital Manufacturing and Head of Cost Engineering, Cranfield University, UK.
"In creating the Working Guides to Estimating and Forecasting, Alan has captured the core approaches and techniques required to deliver robust and reliable estimates in a single series. Some of the concepts can be challenging, however, Alan has delivered them to the reader in a very accessible way that supports lifelong learning. Whether you are an apprentice, academic or a seasoned professional, these working guides will enhance your ability to understand the alternative approaches to generating a well-executed, defensible estimate, increasing your ability to support competitive advantage in your organisation." - Professor Andrew Langridge, Royal Academy of Engineering Visiting Professor in Whole Life Cost Engineering and Cost Data Management, University of Bath, UK.
"Alan Jones's "Working Guides to Estimating and Forecasting" provides an excellent guide for all levels of cost estimators from the new to the highly experienced. Not only does he cover the underpinning good practice for the field, his books will take you on a journey from cost estimating basics through to how estimating should be used in manufacturing the future - reflecting on a whole life cycle approach. He has written a must-read book for anyone starting cost estimating as well as for those who have been doing estimates for years. Read this book and learn from one of the best." - Linda Newnes, Professor of Cost Engineering, University of Bath, UK.
Alan R. Jones is Principal Consultant at Estimata Limited, an estimating consultancy service. He is a Certified Cost Estimator/Analyst (US) and Certified Cost Engineer (CCE) (UK). Prior to setting up his own business, he has enjoyed a 40-year career in the UK aerospace and defence industry as an estimator, culminating in the role of Chief
Estimator at BAE Systems. Alan is a Fellow of the Association of Cost Engineers and a Member of the International Cost Estimating and Analysis Association. Historically (some four decades ago), Alan was a graduate in Mathematics from Imperial College of Science and Technology in London, and was an MBA Prize-winner at the Henley Management College (... that was slightly more recent, being only two decades ago). Oh, how time flies when you are enjoying yourself.
List of Figures
List of Tables
Foreword
Introduction and objectives
Why write this book? Who might find it useful? Why five volumes?
Why write this series? Who might find it useful?
Why five volumes?
Features you'll find in this book and others in this series
Chapter context
The lighter side (humour)
Quotations
Definitions
Discussions and explanations with a mathematical
slant for Formula-philes
Discussions and explanations without a mathematical
slant for Formula-phobes
Caveat augur
Worked examples
Useful Microsoft Excel functions and facilities
References to authoritative sources
Chapter reviews
Overview of chapters in this volume
Elsewhere in the 'Working Guide to Estimating & Forecasting' series
Volume I: Principles, Process and Practice of Professional
Number Juggling
Volume II: Probability, Statistics and Other Frightening Stuff
Volume III: Best Fit Lines and Curves, and
Some Mathe-Magical Transformations
Volume IV: Learning, Unlearning and Re-Learning Curves
Volume V: Risk, Opportunity, Uncertainty and Other Random Models
1.5 Final thoughts and musings on this volume and series
References
2
Methods, approaches, techniques and related terms
2.1 What is the difference between a method, approach and technique?
2.2 Estimating Process
2.3 Estimating Approaches
2.3.1 Top-down Approach
2.3.2 Bottom-up Approach
2.3.3 Ethereal Approach
2.4 Estimating Methods
2.4.1 Analogical or Analogous Method
2.4.2 Parametric Method
2.4.3 'Trusted Source' Method
2.4.4 Methods that are arguably not methods (in their own right)
2.5 Estimating Techniques
2.6 Estimating Procedures
Combining Approaches and Methods
Choice of Estimating Approach for a chosen Estimating Element
2.7.2 Choice of Estimating Method for a chosen
Estimating Approach
2.7.3 Choice of Estimating Technique for a chosen
Estimating Method
2.8 Chapter review
References
3
Estimate TRACEability and health checks
3.1 Basis of Estimate,TRACEability and estimate maturity
3.1.1 Building bridges between two estimates
3.2 Estimate and Schedule Maturity Assessments (or health checks)
3.2.1 Estimate Maturity Assessment (EMA)
3.2.2 Schedule Maturity Assessment (SMA)
3.2.3 Cost and Schedule Integration Maturity Assessment (CASIMA)
3.3 Good Practice Spreadsheet Modelling (GPSM)
3.3.1 Level of documentation (T, M)
3.3.2 No hidden worksheets, columns or rows (T, M)
Colour coded cells and worksheet tabs (U, S)
Locked calculation cells and protected worksheets
and workbooks (S)
No hard-coded constants unless axiomatic (M)
Left to Right and Top to Bottom readability flow (U)
Avoid data generated by macros ... Unless there is a
genuine benefit (S,T)
Avoid Array Formulae (T, U, M)
Avoid dynamic links to external data (S)
Use Named Ranges for frequently used table arrays (M, U)
Use full syntax within Excel (M)
Break complex calculations into smaller simpler steps (T, M)
Column and row alignment across worksheets (T)
Unambiguous units of measure (U)
Input data validation (U)
Independent model verification and validation (S)
Inherent Risk in Spreadsheets (IRiS)
Chapter review
References
Primary and Secondary Drivers; Accuracy and precision
Thank goodness for Juran and Pareto
What's the drive behind the Drivers?
Primary Drivers
Internal and external Drivers
Secondary Drivers
Practical issues with Drivers
Sub-classification of Primary Drivers
Avoid pseudo-drivers
Things are rarely black or white
Accuracy and precision of Primary and Secondary Drivers
Accuracy, precision and Drivers - A Pareto perspective
Cone of Uncertainty
3-Point Estimates as a measure of relative accuracy
and uncertainty
Precision as an expression of appropriate or inappropriate exactness
Chapter review
References
Factors, Rates, Ratios and estimating by analogy
Estimating Metrics
Where to use them
The views of others
5.1.3 Underlying Linear Relationship
5.2 Rates
5.3 Factors
5.4 Ratios
5.5 Dealing with multiple Rates, Factors (and Ratios)
5.5.1 Anomalous analogies
5.5.2 Analogies with an additive model
5.5.3 Analogies with a multiplicative model
5.6 Sensitivity Analysis on Factors, Rates and Ratios
Choosing a Sensitivity Range quantitatively
Choosing a Sensitivity Range around a measure of Central Tendency
The triangulation option
Choosing a Sensitivity Range around a High-end or Low-end Metric
5.6.5 Choosing a Sensitivity Range when all else fails
5.7 Chapter review
References
6
Data normalisation - Levelling the playing field
6.1 Classification of data sources - Primary, Secondary and Tertiary Data
6.1.1 Primary Data
6.1.2 Secondary Data
6.1.3 Tertiary Data
6.1.4 Quarantined Data
6.2 Types of normalisation Methods and Techniques
6.3 Normalisation can be a multi-dimensional problem
Error related
Volume, quantity or throughput related - Economies of Scale
6.3.3 Scale conversion - Fixed and Variable Factors
6.3.4 Date or time related
6.3.5 Life Cycle related
6.3.6 Key groupings - Role related
6.3.7 Scope related (subjective)
6.3.8 Complexity - Judgement related (subjective)
6.4 The estimator as a time traveller
6.4.1 Use of time-based indices 'Now and Then'
6.4.2 Time-based Weighted Indices
6.4.3 Time-based Chain-linked Weighted Indices
The doubling rule for escalation
Composite Index: Is that not just a Weighted Index by another name?
Using the appropriate appropriation approach
Use of time as an indicator of other changes
Discounted Cash Flow - Normalising
investment opportunities
Discounted Cash Flow - A form of time travel for accountants
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback Period
Strengths and weaknesses of different DCF techniques
Special types of formulaic normalisation techniques
Layering of normalisation for differences in analogies
Chapter review
References
Pseudo-quantitative qualitative estimating techniques
Delphi Technique
Driver Cross-Impact Analysis
A brief word or two about solution optimisation
Chapter review
References
Benford's Law as a potential measure of cost bias
Scale Invariance of Benford's Law
Potential use of Benford's Law in estimating
Chapter review
References
Glossary of estimating and forecasting terms
Legend for Microsoft Excel Worked Example Tables in Greyscale
Index