W2.1_MFO_Benchmarking Study of Estimation 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. I will try to re-calculate the estimates for our completed projects with over budget using the twelve steps GAO’s cost estimating process. Then, later on we compare the results with estimates made based on the estimation process applicable in the company. We will compare the results using the multi attribute decision method and we will see which estimation process is better, the company’s estimation process or the twelve steps GAO’s estimating process.

  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 benchmark against this standard process to extract recommendations to improve further on existing procedures.

Figure 1. GAO Cost Estimating Process

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 1. 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

After find the gap, I will try to re-calculate the estimates for our completed projects with over budget using the twelve steps GAO’s cost estimating process and compare that using four non compensatory models. They are Dominance, Satisficing, Disjunctive, Lexicography

  1. Development of the Outcome for Alternative.

Summary information for each alternative :

Table 2 Estimating Process Data

  1. Selection of Criteria.
  1. Dominance. It is useful screening method for eliminating inferior alternatives from the analysis.
  2. Satisficing. It requires the establishment of minimum or maximum acceptable values for each attribute.
  3. Disjunctive. It relies on comparing the attributes of each alternative to the standard.
  4. Lexicography. By using it, a single attribute is judge to be more important than all other attributes.
  1. Analysis and Comparison of the Alternative.

Non-compensatory model.

Four non-compensatory models, that are (1) dominance, (2) satisficing, (3) disjunctive resolution, and (4) lexicography, will be used.

For evaluation of dominance, pairwise comparison between two alternatives will be done for all attributes, as shown in table 3.

Table 3 Evaluation of Dominance

It is still unclear from above table, which one is dominant with others.

The satisficing model is done by applying acceptable limit, as shown in Table 4, where there are no alternatives that are eliminated.

Table 4 Satisficing Model Evaluation

Table 4 also is used to evaluate the disjunctive resolution, where concluded that all alternatives is acceptable because each has at least one attribute value that meets or exceeds the minimum expectation.

To conduct lexicography, the first should be done is to rank each attribute, as shown in table 4.

Table 5 Attributes Ranking

And then Table 5 shows evaluation using lexicography, where “GAO Cost Estimating Process (A)” has highest rank attribute.

Table 6 Lexicography Evaluation

  1. Selection of the Preferred Alternative.

Based on above alternatives:

  • Dominance. No alternative was selected, because all alternatives did not have dominant attributes than others.
  • Satisficing. It did not produce the best alternative.
  • Disjunctive resolution. All alternatives would be acceptable, because each has at least three attributes that meets the expectation.
  • Lexicography. The final choice would be alternative C because the estimated cost is the top-ranked attribute.

Based on the analysis, the preferred choice is alternative C.

  1. Performance Monitoring and the Post Evaluation of Result.

Monitoring should be conducted during execution of the project to ensure that all requirements are met.


  1. Sullivan, W.G., Wicks, E. M., Koelling, C. P. (2014). Engineering Economy, Chapter 14, page 559 to 617. Pearson. Sixteenth Edition.
  2. W17_YAW_Licensor Selection by Using Multi Attribute Decision. Retrieved from https://kristalaace2014.wordpress.com/2014/06/19/w17_yaw_licensor-selection-by-using-multi-attribute-decision/
  3. W4_Andi_Decision Making Multi Attributes. Retrieved from https://kristalaace2014.wordpress.com/2014/03/21/w4_andi_decision-making-multi-attributes/
  4. 10.3 – module 10-3 – managing change – the owner’s perepctive. Retrieved from http://www.planningplanet.com/guild/gpccar/managing-change-the-owners-perspective