Systems Engineering and Project

Management: Similarities and

Differences for Cost Estimation
Dr. Ricardo Valerdi Massachusetts Institute of Technology

Leone Young Stevens Institute of Technology

COSYSMO Workshop
The University of Southern California (USC)
November 4
th
, 2010




The 25
th
Intl Forum on COCOMO &
Systems/Software Cost Modeling


1

Workshop Agenda
Introductions & Objectives
Research Background
Project Management Cost
Models and Feedback
Survey
Inputs & Discussion

2

1:30 1:35 pm
1:35 1:50 pm
1:50 2:05 pm

2:05 2:35 pm
2:35 2:50 pm

Objectives
Discuss the similarities and differences between systems
engineering and project management
Obtain feedback on a proposed project management
cost estimating model
Conduct survey to determine the expected level of
project management efficiency multipliers
Obtain inputs on the appropriateness and adequacy of
the proposed project management cost model, its cost
factors and drivers
Provide an opportunity for participants to contribute their
expertise and perspective regarding project
management services and influence the direction of
future research
3

4

Research Background:
Systems Engineering (SE) & Project
Management (PM)
Cost Management Project Air Force by Rand
Development Management = Systems Engineering (SE) & Project
Management (PM)
Defense Industry US Air Force Programs (Stem et al., 2006)
Development Management (100/%) = SE (50%) + PM (50%)
SE/PM costs doubled since 1960s

SE/PM as a function of Integrated Logistics
Support (ILS) for a typical Air Force program
(Stem, et al., 2006)

Aircraft SE/PM Costs as a Percentage of Total
Development Cost for All Development
Programs, 1960s1990s (Stem, et al., 2006)

5

Research Background:
Systems Engineering (SE) & Project
Management (PM)
SE Costs significant amount of research has been
conducted
The International Council on Systems Engineering (INCOSE)
surveyed (Honour, 2004):
52% of systems projects spent 5% or less of total systems development cost on
SE tasks
The Constructive Systems Engineering Cost Model (COSYSMO)
As a SE cost estimating tool used by systems engineering, systems cost
estimators, etc (Valerdi, 2006)
PM Cost Estimating?
Methodology?
Tools?
6

Literature limited information on PM related expenditures
or costs
Organizations often do not identify or measure PM costs,
and a survey led by UC Berkeley (Ibbs and Kwak, 2000a, 2000b)
shows:
80% of companies surveyed spend less than 10% of total project
cost (TPC) for PM services
Average = 6% of TPC, Range = 0.3% ~ 15% of TPC
Another survey indicated the average = 10% of TPC (Ibbs and
Reginato, 2002)
Evidently, PM costs varies among organizations
Influential PM Cost Factors: project type, size, # of projects, PM
maturity level (Archibald, 2003)


Research Background:
Systems Engineering (SE) & Project
Management (PM)
7

SE is a methodical, disciplined approach for the design,
realization, technical management, operations, and
retirement of a system. SE is the art and science of
developing an operable system capable of meeting
requirements within often opposed constraints. Systems
engineering is a holistic, integrative discipline, wherein
the contributions of structural engineers, electrical
engineers, mechanism designers, power engineers,
human factors engineers, and many more disciplines are
evaluated and balanced, one against another, to
produce a coherent whole that is not dominated by the
perspective of a single discipline. (NASA, 2007)
Research Background:
Systems Engineering (SE) & Project
Management (PM)
8

Project Management Institute (PMI) - Project
Management Body of Knowledge (PMBOK) guidebook
defines PM as the application of knowledge, skills, tools
and techniques to project activities in order to meet or
exceed stakeholder needs and expectations from a
project (PMI, 2004)

NASA defines PM as the function of planning,
overseeing, and directing the numerous activities
required to achieve the requirements, goals, and
objectives of the customer and other stakeholders within
specified cost, quality, and schedule constraints (NASA,
2007, 2010)
Research Background:
Systems Engineering (SE) & Project
Management (PM)
9

The Overlapping Areas of SE & PM in a Project
(Kossiakoff and Sweet, 2003)
Research Background:
Systems Engineering (SE) & Project
Management (PM)
Technical Skills
Managerial Skills
10

The Roles of Program/Project Manager and Systems Engineer in the
Defense Systems Project Life Cycle Processes
(DOD, 2010)
Research Background:
Systems Engineering (SE) & Project
Management (PM)
11

The Responsibility of Program/Project Manager and Systems Engineer
in the Defense Systems Project Life Cycle Processes
(DOD, 2010)
Research Background:
Systems Engineering (SE) & Project
Management (PM)
Research Model: PM Cost
Estimating Model
November 3rd, 2010
The 25th Intl Forum on COCOMO &
Systems/Software Cost Modeling 12

SE PM
Case 1
SE
Scenario 1:
PM effort = f(SE effort)

Scenario 2:
PM effort f(SE effort)
What is the dependency
between SE & PM?
how much SE effort do we
need to know before we
can determine PM effort
independently?
If possible, how early in LC
can we assess PM effort?
Or it must be done
Interdependently?

Many suggested both SE/PM
are related, but their costs
and efforts were rarely
mentioned

Research Model: PM Cost
Estimating Model
November 3rd, 2010
The 25th Intl Forum on COCOMO &
Systems/Software Cost Modeling 13

SE
Case 2
SE
PM
Scenario 1:
PM effort = f(SE effort)

Scenario 2:
PM effort f(SE effort)
Is SE part of PM?
Eisners view (2008) on
SE/PM
Is it common in industries?


Research Model: PM Cost
Estimating Model
November 3rd, 2010
The 25th Intl Forum on COCOMO &
Systems/Software Cost Modeling 14

PM
Case 3
SE
SE
Scenario 1:
PM effort = f(SE effort)

Scenario 2:
PM effort f(SE effort)
If PM is part of SE
how much SE effort do
we need to know before
we can determine PM
effort?


This view is usually shared in
SE oriented communities &
govt entities

15

Research Model: PM Cost
Estimating Model
Model #1 ~ Synthesized via COSYSMO (Valerdi, 2005)




Where,
PM
NS
= effort in Person Months (Nominal Schedule)
A = calibration constant derived from historical project data
k = {REQ, IF, ALG, SCN}
w
k
= weight for easy, nominal, or difficult size driver

k
= quantity of k size driver
E = represents diseconomies of scale
EM = effort multiplier for the jth cost driver. The geometric product results in an overall
effort adjustment factor to the nominal effort.

[
=

|
|
.
|

\
|
u + u + u =
14
1
, , , , , ,
) (
j
j
E
k
k d k d k n k n k e k e NS
EM w w w A PM
SE PM
Case A: PM = f(SE)
16

Research Model: PM Cost
Estimating Model
Potential model parameters were predetermined through various
knowledge sources (e.g. books, scholar publications, research
whitepapers, dissertations, professional and government publications,
etc.)
Aerospace Engineering
Civil Engineering
Computer Science
Construction Engineering and Management
Defense/Military
Engineering Management
Government
Information Technology
Management Information Systems
Professional Societies
Project Management
Risk Management
Software Engineering
Systems Engineering

17

Research Model: PM Cost
Estimating Model
The initial 18 PM effort multipliers are listed as following:


These initial PM cost
indicators were determined
to be possibly correlated to
factors that have effects on
SE/PM cost adjustment
factors (Akintoye, 2000;
Anderson and Brown, 2004;
Crawford et al., 2005; de
Wit, 1988; Hamaker and
Componation, 2005;
Hartman and Ashrafi, 2002;
Honour, 2010; NASA, 2010;
Valerdi, 2005)
1. Scope Understanding
2. Scope Volatility
3. Scope Growth
4. Requirements Volatility
5. Requirements Growth
6. Budget Constraints
7. Schedule Span
8. Project Complexities
9. Systems Complexities
10. Documentation Level
11. Level of Service Requirements
12. Stakeholder Cohesion
13. Project Management Maturity
14. Project Management Experience/Continuity
15. Process Capability
16. Technology Maturity and Risk
17. Tool Support
18. Multisite Coordination


Research Model: PM Cost
Estimating Model
November 3rd, 2010
The 25th Intl Forum on COCOMO &
Systems/Software Cost Modeling 18

PM SE
System
Complexity
Project
Complexity
Is PM effort proportional to SE effort?
What if PM f(SE) ?
19

Research Model: PM Cost
Estimating Model
Model #2




Where,
PM
NS
= effort in Person Months (Nominal Schedule)
A = calibration constant derived from historical project data
k = {REQ, PCR, CST, SCM, DCL}
w
k
= weight for easy, nominal, difficult, or low, medium, high size driver

k
= quantity of k size driver
E = represents diseconomies of scale
EM = project management efficiency multiplier for the jth cost driver. The geometric
product results in an overall effort adjustment factor to the nominal effort.

[
=

|
|
.
|

\
|
u + u + u =
5
1
, , , , , ,
) (
j
j
E
k
k d k d k n k n k e k e NS
EM w w w A PM
20

Research Model: PM Cost
Estimating Model
Requirements
& Scope (REQ)
Project
Complexity &
Risk (PCR)
Constraints
(CST)
Stakeholder
Cohesion &
Multisite
Coordination
(SCM)
Document &
Comm Level
(DCL)
REQ
Efficiency: PPT
PCR Efficiency:
PPT
CST Efficiency:
PPT
SCM
Efficiency: PPT
DCL Efficiency:
PPT
E
E
=
PMNS
X
X
X
X
X
PPT =Project Management Capability and Maturity on People, Process & Tools


Consolidated 5 Cost Factor Categories
21

Research Model: PM Cost
Estimating Model
Cost Factor #1
Requirements & Scope (REQ)

How well understood is the project?
Scope of requirements
Number of requirements
How well they are defined
Statement of Work (SOW), Work Breakdown Structure
(WBS), etc
Volatility/Rate at which they are changing
Expect any new/additional requirements ~ Requirement
Creep?




Related
& Depends on SE
22

Research Model: PM Cost
Estimating Model
Cost Factor #2
Project Complexity & Risk (PCR)

How much risk is there?
What is the level of risk for the project?
What is stakeholders risk attitude risk adverse?
How difficult is it to assess the risk?
How complex is the project?
Project Complexities
organizational, technological/product
e.g. PM related integration, coordination, etc
Number of known project complexity and risks

Related
& Depends on SE
23

Research Model: PM Cost
Estimating Model
Cost Factor #3
Constraints (CST)

How tight are the constraints?
Schedule Span
Time constraints
Deliverable date
Amount of slack time allowed
Budget Constraints
Money/Cost constraints
Resource Constraints
Human Resources
Function/Feature
Minimum acceptable features
Quality
Minimum acceptance by customers


Partially related
to SE
24

Research Model: PM Cost
Estimating Model
Cost Factor #4
Stakeholder Cohesion & Multisite Coordination
(SCM)

Amount of external PM work to be done
Number of stakeholders
Diversity of stakeholders
e.g., have opposing goals/objectives, have different world
views
Communication challenges
external clients, internal clients, contractors,
languages, time zone difference, etc



25

Research Model: PM Cost
Estimating Model
Cost Factor #5
Documentation & Communication Level (DCL)

Amount of internal PM work to be done
Amount and complexity of required documentation
e.g., project plan, resource management plan, status
reports, etc
Amount and complexity of required communications
Cubical/office noise
Solving project issues
e. g., number, length and frequency of meetings, etc




26

Research Model: PM Cost
Estimating Model
Requirements
& Scope (REQ)
Project
Complexity &
Risk (PCR)
Constraints
(CST)
Stakeholder
Cohesion &
Multisite
Coordination
(SCM)
Document &
Comm Level
(DCL)
REQ
Efficiency: PPT
PCR Efficiency:
PPT
CST Efficiency:
PPT
SCM
Efficiency: PPT
DCL Efficiency:
PPT
E
E
=
PMNS
X
X
X
X
X
PPT =Project Management Capability and Maturity on People, Process & Tools


5 PM Efficiency Multipliers (PPT)
27

Research Model: PM Cost
Estimating Model
Project Management Efficiency Multipliers

Capability & Maturity of People, Process & Tools (PPT)

People Capability PM Attributes*
Communication skills
PM experience
Information sharing willingness
Delegates appropriately
Well-organized
Supports and motivates project team
Open-minded and flexible
Provide constructive criticism
Positive attitude
Technical competency
Team builder & player
Ability to evaluate and select project resources
Goal oriented
Courage and conflict solving skills
Problem solver
Take initiative
Creativity
Integrator (team, PM activities, etc)
Decision making skills

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Research Model: PM Cost
Estimating Model
Project Management Efficiency Multipliers (contd)

Capability & Maturity of People, Process & Tools (PPT)

Process Maturity**
PM process maturity (CMMI, The Berkeley PM Process Maturity Model)
Organization PM maturity (PMI-OPM3)
Initial
Repeatable
Defined
Managed
Optimized

Tool Support**
Level of tool automation
Very few primitive tools
Basic/Micro tools
Extensive/Few Integrative tools
Moderately integrated environment
Fully integrated environment

*Adapted from Software Development Cost Estimating Guidebook (USAF Air Logistics Center, July, 2009) & Essentials of Project and systems
Engineering Management (Eisner, 2008)
**Adapted from Software Development Cost Estimating Guidebook (USAF Air Logistics Center, July, 2009)





Survey
Please take some time to answer each question

Feel free to ask questions
29

Questions for Discussion
In industry, if the same person who performs both
SE/PM functions, how do you estimate such effort?

Which case and effort function scenario do you think is
more realistic? Why?

How do industry corporations and government estimate
PM cost & effort?
What type of tool & method do they use?

How can the propose model become more practical and
applicable for industry use?
What is missing in this research?

30

Additional Questions?
Suggestions?
Comments?



Thank You Very Much for Your Time!!!
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