the US CMS WBS elements. The material is extracted from the
US CMS Cost and Schedule Procedures draft of June 30, 1994.
Risk analysis is to be performed for
each WBS element. Results of this analysis will be related to
a contingency which will be listed for each WBS element. The goal
is to make the method of cost estimation and contingency determination
uniform across all WBS elements.
a. Base Cost Estimate
The base cost estimate is the estimated
cost of doing things correctly the first time, unless from
past experience you are fairly certain that it will take more
than once. In other words, contingency should not be included
in the base cost.
b. Cost Contingency
Cost contingency is the amount of additional
money, above and beyond the base cost, that is required to ensure
the project's success. This money is to be used only for omissions
and the unexpected difficulties that may arise. Contingency is
held entirely by US CMS project management and not by individual
subsystem managers or coordinators. Contingency costs are explicitly
part of the total cost estimate.
c. Contingency Estimation
The procedure for estimating cost contingency
is to:
1) Compare the conceptual state of the
element with Table 1 to determine risk factors;
2) Compare the potential risk within
an element with Table 2 to determine the appropriate weighting
factors;
3) Multiply the individual risk factors
by the corresponding weighting factors, and then sum them to determine
the composite contingency percentage;
4) Do this for each element at a chosen
level, preferably level 5 or 6 of the WBS;
5) Calculate the dollar amount of contingency
for an element by multiplying the base cost by the calculated
contingency percentage.
| Technical | Cost | Schedule | Risk Factor |
| Existing design and off the shelf hardware | Off the shelf or catalog item | Not used | 1 % |
| Minor modifications to an existing design | Vendor quote from established drawings | No schedule impact on any other item | 2 % |
| Extensive modifications to an existing design | Vendor quote with some design sketches | Not used | 3 % |
| New design,
nothing exotic | In-house estimate based on previous similar experience | Delays completion of non-critical path subsystem item | 4 % |
| New design, different from established designs or existing technology | In-house estimate for item with minimal experience but related to existing capabilities | Not used | 6 % |
| New design, requires some R&D but does not advance the
state-of-the-art | In-house estimate for item with minimal experience and minimal in-house capability | Delays completion of critical subsystem item | 8 % |
| New design, development of new technology which advances state-of-the-art | Top-down estimate from analogous programs | Not used | 10 % |
| New design, way beyond the current state-of-the-art | Engineering judgment | Not used | 15 % |
| Technical | Cost | Schedule | Risk Weight |
| Not used
| Material cost OR Labor rate | Same for all | 1 |
| Design OR Manufacturing | Material cost AND Labor rate | Not used | 2 |
| Design AND Manufacturing | Not used | Not used | 4 |
In a spreadsheet format, create a copy
of your WBS. Pick a level at which you will do detailed contingency
analysis, and include the following additional columns:
WBS # | Elem. Desc. | |||||||
Input all information following the
procedure outlined above.
Example: (from the SDC Si Tracker)
WBS # | Elem. Desc. | |||||||
| 1.1.1.4.1 | Cooling Rings | |||||||
| 1.1.1.4.2 | Bridge Struc. | |||||||
| 1.1.1.4.3 | Coolant Distr. |
A more detailed example is provided
in the Appendix.
Keep all supporting information used in deriving risk factors. Most of the backup information will be the above spreadsheet itself.