Developing a Framework for Improving the Quality of Cost Estimates
Cost estimating is a knowledge intensive task, involving a high degree of subjectivity.
Consequently, many of the current cost estimating (CE) processes lack formalisation,
often resulting in the branding of cost estimating as a “part art, part science”
discipline. This thesis is concerned with understanding the factors that influence the
quality of the cost estimating process. The aim is to develop a framework that will
improve the perceived quality of cost estimates, by minimising the subjectivity
involved the current CE process.
A literature review examines the shortcomings of the current CE processes. It was
identified that there is a lack of methodologies for eliciting CE knowledge, as well as
mixed views across authors regarding the CE knowledge requirements. In addition,
the review identifies that the current methods for assessing the quality of cost
estimates are unstructured and highly subjective. By adopting a case study
approach, the current CE processes across a number of organisations were captured,
resulting in the identification of their weaknesses. A detailed study was carried out
regarding the knowledge associated with the cost estimation of complex mechanical
hardware products. This led to the development of a Knowledge Elicitation (KEL)
methodology, tailored to the needs of cost estimators.
Through the use of a survey study, it was identified that the quality of a cost
estimate is dependent on the fulfilment of a number of inherent characteristics. It
was demonstrated that there was some variation in the relative contribution of each
characteristic influencing the overall quality of the estimating process. These findings
were implemented in a prototype software tool, which cost estimators could use to
assess and quantify the quality of their estimates. A framework was developed based
on the merge of the prototype tool and the KEL methodology. The framework’s
purpose is to aid cost estimators in acquiring all the necessary knowledge for
developing cost estimates of good quality. Novice cost estimators will find the
application of the framework particularly beneficial, since they lack the experience
and knowledge in a particular domain.
In conclusion, it was demonstrated through the case studies that the use of the
proposed framework provides novice cost estimators with a formalised process for
developing cost estimates of quality similar to the one of experts. The framework
was applied on case studies within the aerospace and automotive industry, and their
results were validated by experts within the collaborating organisations. As a result
of this study’s findings, key areas for future research were identified. The adoption of
this approach by cost practitioners could provide increased credibility to their work
and a higher level of confidence in their cost estimates.
Advisor:Roy, Rajkumar (supervisor); Wainwright, Charles (supervisor)
School Location:United Kingdom
Source Type:Master's Thesis
Date of Publication:03/01/2008