W2_MFO_Benchmarking Study of Estimating Process

  1. Problem Definition

Accuracy in project estimating process becomes one of the issues in our project implementation, because sometimes ending over-budgeted or extremely under-budgeted.

  1. Identify the Feasible Alternative

Accuracy verification has been done through well established technical methods and procedures. One of them is illustrated in the figure below and that method is adapted from GAO’s “Best Practices in Capital Budgeting”. This process is mainly four stages, initiation and research, assessment, analysis and presentation. I will try to benchmarked against this standard process to extract recommendations to improve further on existing procedures.

Figure 1. GAO Cost Estimating Process

  1. Development of the Outcome for Alternative

Parameters which are trying to be analysis base on The Twelve Steps of a High-Quality Cost Estimating Process from GAO’s “Best Practices in Capital Budgeting”. I will compare our estimating process with the twelve steps and I will try to find the gap between GAO and estimating process. Each of the 12 steps is important for ensuring that high-quality cost estimates are developed and delivered in time to support important decisions

 

Table 1: The Twelve Steps of a High-Quality Cost Estimating Process

  1. Selection Criteria

A resume after we compare our estimating process with The Twelve Steps of a High-Quality Cost Estimating Process from GAO’s “Best Practices in Capital Budgeting” as shown as below table.

Table 2. The comparison between our estimating process with The Twelve Steps of a High-Quality Cost Estimating Process

The results show that there are some gaps in our estimation process. There are some processes that we don’t do which can affect the accuracy in our estimation process.

  1. Analysis and Comparison of the Alternative

Result in Table 2 shows that the there are some gaps in our estimation process. There are some processes that still not did yet which can affect the accuracy in our estimation process. The summary of the gap obtained can be seen in the table 3. Only Step 1 which already appropriate with The Twelve Steps of a High-Quality Cost Estimating Process, the other step has not been done in part or in whole and needs to be improved to make our estimation process better.

Table 3. Summary of the gap obtained

  1. Selection of the Preferred Alternative

Base on table 3 there are many steps that must be improved in our estimation process, but one of the most important to improve and very influential to the accuracy of the estimation process is in the assessment step consisting of step 3 to 7, especially in terms of making WBS. So far, we have never made WBS before making an estimate, causing our estimates to be inaccurate. So, the first step to improved our estimating process can be start with making WBS.

  1. Performance Monitoring and the Post Evaluation of Result

Monitoring should be conducted during estimating process to ensure that all requirements are met. We can start with develop Cost estimating checklist.

 

Reference:

  1. GAO (March 2009). GAO Cost Estimating and Assessment Guide, A Reliable Process for Developing Credible Cost Estimates pages 8-11. Retrieved on 12th July 2014 from http://www.gao.gov/new.items/d093sp.pdf
  2. Musallam Al-Awaid (Sept, 2014), Oman Oil and Gas Cost Estimating vs the GAO’s Best Practices in Capital Budgeting – a Benchmarking Study, Retrieved on 4th Aug 2017 from http://pmworldjournal.net/wp-content/uploads/2014/09/pmwj26-sep2014-Al-Awaid-Oman-oil-and-gas-cost-estimating-FeaturedPaper2.pdf
 

3 thoughts on “W2_MFO_Benchmarking Study of Estimating Process”

  1. Dear Dr. Paul,

    please kindly ignore words count requirement for this week blog posting, because it is related to my final paper, and i can’t just simplify the word.

    Thanks
    Fakhri

     
  2. Pak Fakhri,
    Y had earned yourself a very respectable 4 stars n ths pstng, EXCEPT FR THE FACT Y DIDN’T MEET THE TECHNICAL SPECIFICATINS!!! T remind y, hw many REFERENCES are required fr each blg psting? How many did you provide?

    Seeing how you have t d ths ver agan, what I’d like t see y d is als fix Step #4- Selectin Criteria. What you should put in this section is “What is the “passing” or “acceptable” grade or score to determine what is an “acceptable” cost estimating model?

    And for that, you are more than likely going to have to create either a MULTI-ATTRIBUTE SCORING MODEL (See Guild’s CAR or Chapter 14 in your Engineering Economy) OR some sort of SWOT analysis, with a “PASS” or “FAIL” grade.

    BR,
    Dr. PDG, Jakarta

     
  3. PS Didn’t you read my advice to others? That the first place to start your research is with the Guild’s CAR? Start there and you will have your 3 references….

    Good nite, Pak…

    BR,
    Dr. PDG, Jakarta

     

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