Chapter 2 Costing Techniques Flashcards
The ___________ refers to comparing the cost of an item to be estimated to that of a similar item.
Analogy technique
The _____________ uses a mathematical relationship based on historical data to relate cost to one or more technical, performance, cost, or programmatic parameters.
Parametric technique
The _______ technique involves estimating costs at the lowest definable level and typically applies to Industrial Engineering (IE).
Build-up
__________ is the spread of the range of outcomes that the estimate produces.
Precision
Other techniques include ________ and ___________.
expert opinion, extrapolation from actuals.
_______ conveys whether the range is centered on the true value.
accuracy
Precision and accuracy in cost estimates are ideal, but _______ is more important. _______ can give a false sense of security.
accuracy, Precision
__________ captures the range of possible outcomes of the estimate which characterizes its precision. This is best done as a probability distribution, usually an empirical one resulting from a Monte Carlo simulation which can then be summarized with a confidence interval
Uncertainty
________ refers to the upward shift applied to the cost estimate range to account for the fact that unadjusted estimates tend to be systematically low. This adjustment is intended to eliminate what appears to be an inherent bias in estimates and improves the estimate’s accuracy.
Risk
Cost estimators typically use _________ early in the program life cycle when there is little definition in the new program or a lack of a pre-existing cost model. Most development programs have some heritage in design.
Analogies
What are the advantages and disadvantages of using an Analogy
Advantages:
it can be used before detailed program requirements are known.
An easy Technique to use if a sufficient database exists on a analogous system
Disadvantages:
Tendency to be too subjective in making an analogy
A _______ is one that someone else developed and the raw data is not accessible.
canned CER (Cost Estimating Relationship)
If a CER is ________, it will not provide an adequate cost estimate for the current state. In fact, as technologies change, a dated CER can be exactly wrong. For example, weight often moves from a direct (more weight = more material = more cost) to an indirect (less weight = more advanced material = more cost) relationship
too dated
The ______ method builds estimates for higher-level cost elements by summing or rolling up detailed estimates for lower-level cost elements.
build-up
____________ is the foundation for the build-up technique. They capture how long it takes to perform a particular task, based on time and motion studies done in controlled environments.
Standards development