Survey of Step 11

Process Tasks

• Present the documented life cycle cost estimate to management. Include in the presentation information on how the life cycle cost estimate was developed, including:
  • The estimate’s purpose;
    
  • An explanation of the program’s technical and program baseline;
    
  • Estimating ground rules and assumptions;
    
  • A discussion of WBS elements, their costs, data and data sources;
    
  • Sensitivity analysis, risk and uncertainty analysis, contingency, and the confidence level of the estimate;
    
  • Changes from previous estimates;
    
  • Comparison to an independent cost estimate;
    
  • A comparison of the LCCE to the funding profile;
    
  • Any concerns or challenges with the estimate.
    
• Request acceptance of the estimate from management.
• Act on and document feedback.

Best Practices

The documentation provides evidence that the cost estimate was reviewed and accepted by management.

• Management was presented with a clear explanation of the cost estimate so as to convey its level of competence.
• The following was included in the information presented to management:
  • an overview of the program’s technical foundation;
    
  • life cycle costs presented in time-phased and constant year dollars;
    
  • a discussion of changes from any previous estimates;
    
  • a discussion of ground rules and assumptions;
    
  • a description of the estimating method and data sources for each WBS element;
    
• the results of sensitivity analysis and identification of cost drivers;
  
• the results of risk and uncertainty analysis, including S curve cumulative probabilities and risk distributions;
  
• a comparison of the point estimate to an independent cost estimate with explanations for any differences;
  
• a comparison of the life cycle costs and contingency to the funding profile with a discussion of any shortfall and its effect;
  
• conclusions and recommendations;
  
• discussion of any other concerns or challenges; and
• there is documentation showing management’s acceptance of the cost estimate, including recommendations for changes, feedback, and the amount of contingency to reach management’s desired level of confidence.

Likely Effects if Criteria Are Not Fully Met

• If management is not presented with sufficient information about how the estimate was constructed—including the specific details about the program’s technical characteristics, assumptions, data, cost estimating methodologies, sensitivity, and risk and uncertainty—management will not have confidence that the estimate is complete and high in quality.