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PARAMETRIC COST ESTIMATING TERMINOLOGY

ESTIMATING MODELS

MORE ABOUT STATISTICS

SOFTWARE ESTIMATION PRODUCTS

PARAMETRIC ESTIMATING SYSTEM CHECKLIST

 

 

APPENDIX A

DEFINITIONS OF ESTIMATING TERMINOLOGY

  

APPENDIX A

 

DEFINITIONS OF ESTIMATING TERMINOLOGY

 

 

Algorithmic Models - (also known as Parametric models) produce a cost estimate using one or more mathematical algorithms using a number of variables considered to be the major cost drivers. These models estimate effort or cost based primarily on the Hardware/Software size, and other productivity factors known as cost driver attributes.

 

Analogy - A method of estimating developed on the basis of similarities between two or more programs, systems, items, etc.

 

Analogy Models - use a method of estimating that involves comparing a proposed project with one or more similar and completed projects where costs and schedules are known. Then, extrapolating from the actual costs of completed projects, the model(s) estimates the cost of a proposed project.

 

Analometric - A recent term meaning a method of combining the analogy and parametric estimating methods to form a cost estimate when only 2 relevant data points are available. It is usually combined with the "D" Factor to adjust (up or down) complexity from the 2 point CER regression line.

 

Analysis - decision making context involving time horizons extending into the future. A concrete set of specifications are not usually available. There could be many major uncertainties, and a wide range of alternatives, each having several configurations. Analysis is usually concerned with new equipment proposals and new methods of operation of systems never produced before. Analysis Objectives are to find significant differences in resource requirements among alternatives; and, how will resource requirements for any alternative change as key configuration characteristics vary over their relevant ranges. It is often a "sensitivity" type of investigation.

 

Analysis (NES Dictionary) - a systematic approach to problem solving. Complex problems are simplified by separating them into more understandable elements.

 

Annual Change Traffic (ACT) - the fraction of a software product's source instructions which undergoes change during a year, either through addition or modification. The ACT is the quantity used to determine the product size for software maintenance effort estimation.

 

Anomalies - variances in cost related data caused by an unusual event(s) not expected to recur in the future.

 

As Spent Dollars - the cost, in real year dollars, of a project recorded as the dollars were spent without normalization for inflation.

 

Audit - the systematic examination of records and documents and the securing of evidence by confirmation, physical inspection, or examination.

 

Audit Trail - information allowing the data being used in an estimate to be tracked back to the original source for verification.

 

Benefit (NES Dictionary) - Result(s) attained in terms of the goal or objective rather than in terms of output.

 

Benefit Cost Analysis (NES Dictionary) - an analytical approach to solving problems of choice. It requires: (a) the definition of objectives; (b) identification of alternative ways of achieving each objective; and (c) the identification for each objective or alternative which yields the required level of benefits at the lowest cost. It is often referred to as cost-effectiveness analysis when the benefits of the alternatives cannot be quantified in terms of dollars.

Benefits (NES Dictionary) - advantages which may be quantifiable or non-quantifiable. For example, lowest cost is a benefit, so is the best accuracy and longest range.

 

Bottom-Up Models - use a method of estimation that estimates each component of the project separately, and the results are combined ("Rolled Up") to produce an estimate of the entire project.

 

Calibration - in terms of a cost model, a technique used to allow application of a general model to a specific set of data. This is accomplished by calculating adjustment factor(s) to compensate for differences between the referenced historical costs and the costs predicted by the cost model using default values.

 

Computer-Aided Software Engineering: CASE - identifies a sector of the computer software industry concerned with producing software development environments and tools. The main components of a CASE product are individual tools which aid the software developer or project manager during one or more phases of software development (or maintenance). Other features are a common user interface; interoperability of tools; and a repository or encyclopedia to provide a common tool base and central project database. CASE may also provide for code generation.

 

Configuration Item - hardware or software, or an aggregate of both, which is designated by the project configuration manager (or contracting agency) for configuration management.

 

Configuration Management - a discipline applying technical and administrative controls to (1) identification and documentation of physical and functional characteristics of configuration items; (2) any changes to characteristics of those configuration items; and (3) recording and reporting of change processing and implementation of the system.

 

Constant Dollars - Computed values which remove the effect of price changes over time (inflation). An estimate is said to be in constant dollars if costs for all work are adjusted to reflect the level of prices of a base year.

 

Contract Work Breakdown Structure - Contract work breakdown structure is defined as the complete work breakdown structure for a contract, i.e., the DoD approved work breakdown structure for reporting purposes and its discretionary extension to the lower levels by the contractor, in accordance with this standard and the contract work statement.

 

Cost (Fisher) - "Economic costs" are benefits lost. It is for this reason that economic costs are often referred to as "alternative costs" or "opportunity costs." It is in alternatives, it is in foregone opportunities, that the real meaning of "cost" must always be found. The only reason you hesitate to spend a dollar, incidentally, is because of the alternative things that it could buy. Some use the word "cost" when referring to resources. Cost of something is measured by the resources used to attain it. Cost of attaining an objective at some point in time is measured by the resources not available for use in attaining alternative objectives. Costs are a measure of other defense capabilities foregone. Money cost is not necessarily the same as economic cost. "Economic cost" implies the use of resources - manpower, raw materials, etc. Dollars are used merely as a convenient common denominator for aggregating numerous heterogeneous physical quantities into meaningful "packages" for purposes of analysis and decision mating.

 

Cost (NES Dictionary) - the amount paid or payable for the acquisition of materials, property, or services. In contract and proposal usage, denotes dollars and amounts exclusive of fee or profit. Also used with descriptive adjectives such as "acquisition cost," or "product cost," etc. Although dollars normally are used as the unit of measure, the broad definition of cost equates to economic resources, i.e., manpower, equipment, real facilities, supplies, and all other resources necessary for weapon, project, program, or agency support systems and activities.

 

Cost Analysis (NES Dictionary) - the accumulation and analysis of actual costs, statistical data, and other information on current and completed contracts or groups of contracts (programs). Cost analysis also includes the extrapolation of these cost data to completion, comparisons and analyses of these data, and cost extrapolations on a current contract with the cost data in the contract value for reports to customers, program and functional managers, and price estimators. In the procurement organizations of the Department of Defense, cost analysis is the review and evaluation of a contractor's cost or pricing data and of the judgmental factors applied projecting from the data to the estimated costs, in order to form an opinion on the degree to which the contractor's proposed costs represent what performance of the contract should cost, assuming reasonable economy and efficiency.

 

Cost Analysis (Large) - the primary purpose of cost analysis is comparison - to provide estimates of the comparative or relative costs of competing systems, not to forecast precisely accurate costs suitable for budget administration. In this context consistency of method is just as important, perhaps more so, as accuracy in some absolute sense. In comparing the costs of military systems, we prefer to speak of "cost analysis" rather than "cost estimation," because the identification of the appropriate elements of cost -- the analytical breakdown of many complex interrelated activities and equipment -- is so important a part of the method. Weapon system cost analysis is much more than an estimate of the cost of the weapon itself. Weapon procurement costs may be relatively small compared to other necessary costs, such as base facilities, training of personnel, and operating expenses; and these other costs may vary greatly from system to system.

 

Cost Benefit Analysis (NES Dictionary) - a technique for assessing the range of costs and benefits associated with a given option, usually to determine feasibility. Costs are generally in monetary terms.

 

Cost Driver Attributes - productivity factors in the software product development process that include software product attributes, computer attributes, personnel attributes, and project attributes.

 

Cost Drivers - The controllable system design or planning characteristics that have a predominant effect on the system's costs. Those few items, using Pareto's law, that have the most significant cost impact.

 

Cost Effectiveness (NES Dictionary) - the measure of the benefits to be derived from a system with cost as a primary or one of the primary measures.

 

Cost Effectiveness Analysis (NES Dictionary) - a method for examining alternative means of accomplishing a desired military objective/mission for the purpose of selecting weapons and forces which will provide the greatest military effectiveness for the cost.

 

Cost Estimating (Fisher) - "making an estimate" of the cost of something implies taking a rather detailed set of specifications and "pricing them out."

 

Cost Estimating (NES Dictionary) - cost and price estimating is defined as the art of predetermining the lowest realistic cost and price of an item or activity which assure a normal profit.

 

Cost Estimating Relationship - An algorithm relating the cost of an element to physical or functional characteristics of that cost element or a separate cost element; or relating the cost of one cost element to the cost of another element.

 

Cost Estimating Relationships: CER - a mathematical expression which describes, for predicative purposes, the cost of an item or activity as a function of one or more independent variables.

 

Cost Factor - a brief arithmetic expression wherein cost is determined by the application of a factor as a proportion.

 

Cost Model - an estimating tool consisting of one or more cost estimating relationships, estimating methodologies, or estimating techniques used to predict the cost of a system or one of its lower level elements.

 

Cost/Schedule Control System Criteria: C/SCSC - a set of criteria specified by the Federal Government for reporting project schedule and financial information.

 

Current Dollars - Level of costs in the year actual cost will be incurred. When prior costs are stated in current dollars, the figures given are the actual amounts paid. When future costs are stated in current dollars, the figures given are the actual amounts expected to be paid including any amount due to future price changes.

 

Deflators - The de-escalation factors used to adjust current cost/price to an earlier base year for comparison purposes. A deflator is the inverse of an escalator.

 

Delivered Source Instructions: DSIs - the number of source lines of code developed by the project. The number of DSIs is the primary input to many software cost estimating tools. The term DELIVERED is generally meant to exclude non-delivered support software such as test drivers. The term SOURCE INSTRUCTIONS includes all program instructions created by project personnel and proceed into machine code by some combination of preprocessors, compilers, and assemblers. It excludes comments and unmodified utility software. It includes job control language, format statements, and data declarations.

 

Delphi Technique - a group forecasting technique, generally used for future events such as technological developments, that uses estimates from experts and feedback summaries of these estimates for additional estimates by these experts until a reasonable consensus occurs. It has been used in various software cost-estimating activities, including estimation of factors influencing software costs.

 

Detail Estimating: Grass Roots, Bottom-Up - The logical buildup of estimated hours and material by use of blue-prints, production planning tickets, or other data whereby each operation is assigned a time value.

 

Design to Cost: DTC - An acquisition management technique to achieve defense system designs that meet stated cost requirements. Cost is addressed on a continuing basis as part of a system's development and production process. The technique embodies early establishment of realistic but rigorous cost objectives, goals, and olds and thresholds and a determined effort to achieve them. Cost, as a key design parameter, is addressed on a continuing basis and as an inherent part of the development and production process. Cost goals are established early in the development phase, which reflect the best balance among life cycle cost, acceptable performance and schedule.

 

DOD-STD-2167A/498 - a US Department of Defense standard that specifies the overall process for the development and documentation of mission-critical software systems. DOD-STD-2167A/498 has direct connections to five other standards that are not software specific. These five standards are as follows:

            MIL-STD-1521           Technical Reviews and Audit for Systems, Equipments, and Computer Software

            MIL-STD-480 Configuration Control - Engineering       Changes, Deviations, and Waivers

            MIL-STD-481 Configuration Control - Engineering Changes, Deviations, and Waivers (Short Form)

            MIL-STD-490             Specification Practices

            MIL-STD-499             Engineering Management

            MIL-STD-480 and 481 have been superseded by MIL-STD-973. MIL-STD-973 consolidates several earlier standards for configuration management and resolves inconsistencies and ambiguities that existed between them. When DOD-STD-2167A/498 is applied to contract, appropriate tailoring instructions should be included to indicate that the contract is to comply with the more recent MIL-STD-973.

Domain - a specific phase or area of the software life cycle in which a developer works. Domains define developers and users areas of responsibility and the scope of possible relationships between products. The work can be organized by domains such as Software Engineering Environments, Documentation, Project Management, etc.

 

DTC Goals - A cost bogey, in constant dollars, based upon a specified production quantity and rate, established early during system development as a management objective and design parameter for subsequent phases of the acquisition cycle. (see DTC Target).

 

DTC Parameter - Approved measurable values for selected cost elements established during system development as design considerations and management objectives for subsequent life cycle phases. A DTC parameter may be an objective, goal, or threshold. Values will be expressed it constant dollars, resources required, or other measurable factor(s) that influences costs.

 

DTC Targets - Approved DTC parameters divided into smaller. identifiable tasks or areas of responsibility that serve as requisites for contractors or government activities.

 

DTC Threshold - Costs or values that, if exceeded, will cause a program review.

 

Economics (Hitch and McRean) - economics is concerned with allocating resources. Economizing always means trying to make the most efficient use of the resources available.

 

Economics Analysis (Hitch and McRean) - economic analysis - ranging from just straight thinking about alternative courses of action to systematic quantitative comparisons, to identify or achieve near "optimal" solutions.

 

Economic Analysis (DoDI 7041.3) - a systematic approach to the problem of choosing how to employ scarce resources and an investigation of the full implications of achieving a given objective in the most efficient and effective manner.

Economic Analysis (NES Dictionary) - a systematic approach to a given problem, designed to assist the manager in solving a problem of choice. The full problem is investigated; objectives and alternatives are searched out and compared in light of their benefits and costs through the use of an appropriate analytical framework. Often used to determine the best use of scarce resources.

 

Effectiveness (DoDI 7041.3) - the performance or output received from an approach or program.

 

Effort Adjustment Factor: EAF - a term used in COCOMO to calculate the cost driver attribute's effect on the project. It is the product of the effort multipliers corresponding to each of the cost drivers for the project.

 

Embedded Node - a term used by COCOMO to describe a project development that is characterized by tight, inflexible constraints and interface requirements. The product must operate within (is embedded in) a strongly coupled complex of hardware, software, regulations and operational procedures. An embedded mode project will require a great deal of innovation. An example would be a real-time system with timing constraints and customized hardware.

 

Equivalent Units - the number, or fraction, of completed units at a given time.

 

Estimating (NES Dictionary) - to predict costs. Generation of detailed and realistic forecasts of hours, material costs, or other requirements for a task, subtask, operation, or a part or groups thereof - generally in response to a request for proposal or specific statement of work. The art of approximating the probable worth (or cost), extent, quantity, quality, or character of something based on information available at the time. It also covers the generation of forecasted costing rates and factors with which estimate numbers may be converted to costs, and the application of these costing rates and factors to "estimate numbers" to establish forecasted costs.

 

Expert Judgment Models - use a method of software estimation that is based on consultation with one or more experts that have experience with similar projects. An expert-consensus mechanism such as the DELPHI TECHNIQUE may be used to produce the estimate.

Fixed Year Dollars - dollars that have been adjusted for inflation to a specific year.

 

Historical Data - a term used to describe a set of data reflecting actual cost or past experience of a product or process.

 

Improvement Curve - a graphical representation of improvement curve theory that projects resource requirements versus the number of units produced. Examples include labor hours, labor cost, direct cost including labor and materials. When reflecting only labor hours the curve is usually called a learning curve. When depicting cost, it is normally referred to as a Cost Improvement Curve.

 

Inflation - an increase in the level of prices for the same item(s). Examples of indices that reflect inflation include Consumer Price Index (CPI), Wholesale Price Index, and Producer Price Index. When prices decline it is called deflation.

 

Knowledge Base - the repository of knowledge in a computer system or organization. The collection of data, rules, and processes that are used to control a system, especially one using artificial intelligence or expert system methods.

 

Life Cycle - the stages and process through which hardware or software passes during its development and operational use. The useful life of a system. Its length depends on the nature and volatility of the business, as well as the software development tools used to generate the databases and applications.

 

Management Information Systems - a computer based system of processing and organizing information that provides different levels of management within an organization with accurate and timely information needed for supervising activities, tracking progress, making decisions, and isolating and solving problems.

 

Metric - Quantitative analysis values calculated according to a precise definition and used to establish comparative aspects of development progress, quality assessment or choice of options.

 

Normalize - to adjust data (normally cost data) for effects like inflation, anomalies, seasonal patterns, technology changes, accounting system changes, reorganizations, etc.

 

Operation (Philip Morse: Notes on Operations Research, MIT Press 1962) - an operation is a pattern of activity of men or of men and machines, engaged in carrying out a cooperative and usually repetitive task, with pre-set goals and according to specified rules of operation.

 

Operational Research (Operational Research Quarterly, Vol. 13, No. 3, 282 (Sept. 1962)) - operational research is the attack of modern science on complex problems arising in the direction and management of large systems of men, machines, materials, and money in industry, business, government, and defense. The distinctive approach is to develop a scientific model of the system, incorporating measurements of factors such as chance and risk, with which to predict and compare the outcomes of alternative decisions, strategies, or controls. The purpose is to help management determine its policies and actions scientifically.

 

Operations Research (Norse, same as above) - the scientific study of operations.

 

Organic Mode - a term used by COCOMO to describe a project that is developed in a familiar, stable environment. The product is similar to previously developed products. Most people connected with the project have extensive experience in working with related systems and have a thorough understanding of the project. The project contains a minimum of innovative data processing architectures or algorithms. The product requires little innovation and is relatively small, rarely greater than 50,000 DSIs.

 

Paradigm - a model, example, or pattern. A generally accepted way of thinking.

 

Parametric Cost Estimate - Estimate derived from statistical correlation of historic system costs with performance and/or physical attributes of the system.

 

Parametric Cost Estimating Methods - Estimating methods based on physical or performance characteristics and schedules of the end items.

 

Parametric Cost Model - A mathematical representation of parametric cost estimating relationships that provides a logical and predictable correlation between the physical or functional characteristics of a system, and the resultant cost of the system. A parametric cost model is an estimating system comprising cost estimating relationships (CERs) and other parametric estimating functions, e.g., cost quantity relationships, inflation factors, staff skills, schedules, etc. Parametric cost models yield product or service costs at designated levels and may provide departmentalized breakdown of generic cost elements. A parametric cost model provides a logical and repeatable relationship between input variables and resultant costs.

 

Parametric Estimating - a mathematical procedure where product or service descriptors (parameters) and cost algorithms directly yield consistent cost information.

 

Platform - hardware or software architecture of a particular model or family of computers. The term sometimes refers to the hardware and its operating system.

 

Procedures - manual procedures are human tasks. Machine procedures are lists of routines or programs to be executed, such as described by the Job Control Language (JCL) in a mini or mainframe, or the batch processing language in a personal computer.

 

Process - the sequence of activities (in software development) described in terms of the user roles, user tasks, rules, events, work products, resource use, and the relationships between them. It may include the specific design methodology, language, documentation standards, etc.

 

Production Rate - the number of items produced in a given time period (e.g., items/month).

Program Evaluation (DoDI 7041.3) - is the economic analysis of on-going actions to determine how best to improve an approved program/project based on actual performance. Program evaluation studies entail a comparison of actual performance with the approved program/project.

 

Program Evaluation and Review Technique: PERT - a method used to size a software or hardware product and calculate the Standard Deviation (SD) for risk assessment. For example, the PERT equation (beta distribution) estimates the Equivalent Delivered Source Instructions (EDBIs) and the SD based on the analyst's estimates of the lowest possible size, the most likely size, and the highest possible size of each Computer Program Component (CPC).

 

Program Work Breakdown Structure - A program work breakdown structure covers the entire acquisition cycle of a program, consists of at least the first three levels of a work breakdown structure, as prescribed by MIL-STD-881B, and its extension by the DoD Component and/or contractor(s). The program work breakdown structure has uniform element terminology, definition, and placement in the family-tree structure.

 

Rapid Prototyping - the creation of a working model of a software module to demonstrate the feasibility of the function. The prototype is later refined for inclusion in a final product.

 

Rayleigh Distribution - a curve that yields a good approximation to the actual labor curves on software projects.

 

Real-Time - (1) Immediate response. The term may refer to fast transaction processing systems in business; however, it is normally used to refer to process control applications. For example, in avionics and space flight, real-time computers must respond instantly to signals sent to them.

            (2) Any electronic operation that is performed in the same time frame as its real-world counterpart. For example, it takes a fast computer to simulate complex, solid models moving on screen at the same rate they move in the real world. Real-time video transmission produces a live broadcast.

 

Re-engineering - process of restructuring and redesigning an operational (or coded) hardware or software system or process in order to make it meet certain style, structure, or performance standards.

 

Resource Analysis (Fisher) - systematically determining the economic resource impact of alternative proposals for future courses of action.

 

Resources (Fisher) - raw materials, skilled personnel, scarce materials or chemicals, etc.

 

Resources (NES Dictionary) - consists of facilities, equipment, management, personnel, laboratories, and scientific, technical, and manufacturing capability.

 

Reusability - ability to use all or the greater part of the same programming code or system design in another application.

 

Reuse - software development technique that allows the design and construction of reusable modules, objects, or units, that are stored in a library or database for future use in new applications. Reuse can be applied to any methodology in the construction phase, but is most effective when object oriented design methodologies are used.

 

Schedule - a time display of the milestone events and activities of a program or project.

 

Scope - a definition of how, when, where, and what a project is expected to include and accomplish.

 

Security - the protection from accidental or malicious access, use, modification, destruction, or disclosure. There are two aspects to security, confidentiality and integrity.

 

Semi-detached Mode - a term used by COCOMO to describe a project that is developed somewhere between organic and embedded. The team members have a mixture of experienced and inexperienced personnel. The software to be developed has some characteristics of both organic and embedded modes. Semi-detached software can be as large as 300K DSIs.

 

Should Cost Estimate - An estimate of contract price which reflects reasonably achievable economy and efficiency. It is generally accomplished by a team of procurement, contract administration, cost analysis, audit and engineering representatives performing an in-depth analysis of cost and cost effects. Its purpose is to develop realistic cost objectives.

 

Software Development Life Cycle - the stages and process through which software passes during its development. This includes requirements definition, analysis, design, coding, testing, and maintenance.

 

Software Development Life Cycle Methodology - application of methods, rules, and postulates to the software development process to establish completeness criteria, assure an efficient process, and develop a high quality product.

 

Software Method - (or Software Methodology) - focuses on how to navigate through each phase of the software process model (determining data, control, or uses hierarchies; partitioning functions; and allocating requirements) and how to represent phase products (structure charts; stimulus-response threads; and state transition diagrams).

 

Software Tool - program that aids in the development of other software programs. It may assist the programmer in the design, code, compile, link, edit, or debug phases.

 

Systems Analysis (Fisher) - Systems analysis may be defined as inquiry to assist decisionmakers in choosing preferred future courses of action by (1) systematically examining and reexamining the relevant objectives and the alternative policies or strategies for achieving them; and (2) comparing quantitatively where possible the economic costs, effectiveness {benefits), and risks of alternatives.

 

Technical Non-Cost Data - engineering variables that describe the item, subsystem or system. The source of this data includes engineering documents, engineering drawings and works of a technical nature which are specified to be delivered pursuant to the contract.

 

Top-Down Models - use a method of estimation that estimates the overall cost and effort of the proposed project derived from global properties of the project. The total cost and schedule is partitioned into components for planning purposes.

 

Update - to update an estimate or CER means to utilize the most recent data to make it current, accurate and complete.

 

Validation - in terms of a cost model, a process used to determine whether the model selected for a particular estimate is a reliable predictor of costs for the type of system being estimated.

 

Work Breakdown Structure - A work breakdown structure is a product-oriented family tree, composed of hardware, software, services, data and facilities which results from system engineering efforts during the development and production of a defense material item, and which completely defines the program. A work breakdown structure displays and defines the product(s) to be developed or produced and relates the elements of work to be accomplished to each other and to the end product. MIL-STD 881B is the modern standard for developing a WBS. (See Appendix B for more information.)

 

Workstation - high-performance, single user microcomputer or minicomputer that has been specialized for graphics, CAD, CAE, or scientific application.

 

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