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Principles, Process and Practice of Professional Number Juggling (Volume 1 of the Working Guides to Estimating & Forecasting series) sets the scene of TRACEability and good estimate practice that is followed in the other volumes in this series of five working guides. It clarifies the difference between an Estimating Process, Procedure, Approach, Method and Technique. It expands on these definitions of Approach (Top-down, Bottom-up and

Ethereal) and Method (Analogy, Parametric and Trusted Source) and discusses how these form the basis of all other means of establishing an estimate.

This volume also underlines the importance of data normalisation in any estimating procedure, and demonstrates that the Estimating by Analogy Method, in essence, is a simple extension of Data Normalisation. The author looks at simple measures of assessing the maturity or health of an estimate, and offers a means of assessing a spreadsheet for any inherent risks or errors that may be introduced by failing to follow good practice in spreadsheet design and build.

This book provides a taster of the more numerical techniques covered in the remainder of the series by considering how an estimator can potentially exploit Benfords Law (traditionally used in Fraud Detection) to identify systematic bias from third party contributors. It will be a valuable resource for estimators, engineers, accountants, project risk specialists as well as students of cost engineering.

Recenzijas

"In the Working Guides to Estimating and Forecasting Alan has managed to capture the full spectrum of relevant topics with simple explanations, practical examples and academic rigor, while injecting humour into the narrative." Dale Shermon, Chairman, Society of Cost Analysis and Forecasting (SCAF).

"If estimating has always baffled you, this innovative well illustrated and user friendly book will prove a revelation to its mysteries. To confidently forecast, minimise risk and reduce uncertainty we need full disclosure into the science and art of estimating. Thankfully, and at long last the "Working Guides to Estimating & Forecasting" are exactly that, full of practical examples giving clarity, understanding and validity to the techniques. These are comprehensive step by step guides in understanding the principles of estimating using experientially based models to analyse the most appropriate, repeatable, transparent and credible outcomes. Each of the five volumes affords a valuable tool for both corporate reference and an outstanding practical resource for the teaching and training of this elusive and complex subject. I wish I had access to such a thorough reference when I started in this discipline over 15 years ago, I am looking forward to adding this to my library and using it with my team." - Tracey L Clavell, Head of Estimating & Pricing, BAE Systems Australia

"At last, a comprehensive compendium on these engineering math subjects, essential to both the new and established "cost engineer"! As expected the subjects are presented with the authors usual wit and humour on complex and daunting "mathematically challenging" subjects. As a professional trainer within the MOD Cost Engineering community trying to embed this into my students, I will be recommending this series of books as essential bedtime reading." - Steve Baker, Senior Cost Engineer, DE&S MOD

"Alan has been a highly regarded member of the Cost Estimating and forecasting profession for several years. He is well known for an ability to reduce difficult topics and cost estimating methods down to something that is easily digested. As a master of this communication he would most often be found providing training across the cost estimating and forecasting tools and at all levels of expertise. With this 5-volume set, Working Guides to Estimating and Forecasting, Alan has brought his normal verbal training method into a written form. Within their covers Alan steers away from the usual dry academic script into establishing an almost 1:1 relationship with the reader. For my money a recommendable read for all levels of the Cost Estimating and forecasting profession and those who simply want to understand what is in the blackbox just a bit more." - Prof Robert Mills, Margin Engineering, Birmingham City University. MACOSTE, SCAF, ICEAA.

"Finally, a book to fill the gap in cost estimating and forecasting! Although other publications exist in this field, they tend to be light on detail whilst also failing to cover many of the essential aspects of estimating and forecasting. Jones covers all this and more from both a theoretical and practical point of view, regularly drawing on his considerable experience in the defence industry to provide many practical examples to support his comments. Heavily illustrated throughout, and often presented in a humorous fashion, this is a must read for those who want to understand the importance of cost estimating within the broader field of project management." - Dr Paul Blackwell, Lecturer in Management of Projects, The University of Manchester, UK.

"Alan Jones provides a useful guidebook and navigation aid for those entering the field of estimating as well as an overview for more experienced practitioners. His humorous asides supplement a thorough explanation of techniques to liven up and illuminate an area which has little attention in the literature, yet is the basis of robust project planning and successful delivery. Alans talent for explaining the complicated science and art of estimating in practical terms is testament to his knowledge of the subject and to his experience in teaching and training." - Therese Lawlor-Wright, Principal Lecturer in Project Management at the University of Cumbria

"Alan Jones has created an in depth guide to estimating and forecasting that I have not seen historically. Anyone wishing to improve their awareness in this field should read this and learn from the best." Richard Robinson, Technical Principal for Estimating, Mott MacDonald

"The book series of Working Guides to Estimating and Forecasting is an essential read for students, academics and practitioners who interested in developing a good understanding of cost estimating and forecasting from real-life perspectives". Professor Essam Shehab, Professor of Digital Manufacturing and Head of Cost Engineering, Cranfield University, UK.

"In creating the Working Guides to Estimating and Forecasting, Alan has captured the core approaches and techniques required to deliver robust and reliable estimates in a single series. Some of the concepts can be challenging, however, Alan has delivered them to the reader in a very accessible way that supports lifelong learning. Whether you are an apprentice, academic or a seasoned professional, these working guides will enhance your ability to understand the alternative approaches to generating a well-executed, defensible estimate, increasing your ability to support competitive advantage in your organisation." - Professor Andrew Langridge, Royal Academy of Engineering Visiting Professor in Whole Life Cost Engineering and Cost Data Management, University of Bath, UK.

"Alan Joness "Working Guides to Estimating and Forecasting" provides an excellent guide for all levels of cost estimators from the new to the highly experienced. Not only does he cover the underpinning good practice for the field, his books will take you on a journey from cost estimating basics through to how estimating should be used in manufacturing the future reflecting on a whole life cycle approach. He has written a must-read book for anyone starting cost estimating as well as for those who have been doing estimates for years. Read this book and learn from one of the best." - Linda Newnes, Professor of Cost Engineering, University of Bath, UK.

List of Figures
xiv
List of Tables
xvi
Foreword xix
1 Introduction and objectives
1(14)
1.1 Why write this book? Who might find it useful? Why five volumes?
2(1)
1.1.1 Why write this series? Who might find it useful?
2(1)
1.1.2 Why five volumes?
2(1)
1.2 Features you'll find in this book and others in this series
3(4)
1.2.1
Chapter context
3(1)
1.2.2 The lighter side (humour)
3(1)
1.2.3 Quotations
3(1)
1.2.4 Definitions
4(1)
1.2.5 Discussions and explanations with a mathematical slant for Formula-philes
5(1)
1.2.6 Discussions and explanations without a mathematical slant for Formula-phobes
5(1)
1.2.7 Caveat augur
6(1)
1.2.8 Worked examples
6(1)
1.2.9 Useful Microsoft Excel functions and faculties
7(1)
1.2.10 References to authoritative sources
7(1)
1.2.11
Chapter reviews
7(1)
1.3 Overview of chapters in this volume
7(1)
1.4 Elsewhere in the `Working Guide to Estimating & Forecasting' series
8(5)
1.4.1 Volume I: Principles, Process and Practice of Professional Number Juggling
9(1)
1.4.2 Volume II: Probability, Statistics and Other Frightening Stuff
9(2)
1.4.3 Volume III: Best Fit Lines and Curves, and Some Mathe-Magical Transformations
11(1)
1.4.4 Volume IV: Learning Unlearning and Re-Learning Curves
11(1)
1.4.5 Volume V: Risk, Opportunity, Uncertainty and Other Random Models
12(1)
1.5 Final thoughts and musings on this volume and series
13(2)
References
14(1)
2 Methods, approaches, techniques and related terms
15(28)
2.1 What is the difference between a method, approach and technique?
15(1)
2.2 Estimating Process
16(2)
2.3 Estimating Approaches
18(5)
2.3.1 Top-down Approach
19(1)
2.3.2 Bottom-up Approach
20(2)
2.3.3 Ethereal Approach
22(1)
2.4 Estimating Methods
23(11)
2.4.1 Analogical or Analogous Method
23(6)
2.4.2 Parametric Method
29(3)
2.4.3 `Trusted Source' Method
32(1)
2.4.4 Methods that are arguably not methods (in their own right)
32(2)
2.5 Estimating Techniques
34(1)
2.6 Estimating Procedures
34(2)
2.7 Combining Approaches and Methods
36(3)
2.7.1 Choice of Estimating Approach for a chosen Estimating Element
37(1)
2.7.2 Choice of Estimating Method for a chosen Estimating Approach
38(1)
2.7.3 Choice of Estimating Technique for a chosen Estimating Method
39(1)
2.8
Chapter review
39(4)
References
42(1)
3 Estimate TRACEability and health checks
43(31)
3.1 Basis of Estmiate, TRACEability and estimate maturity
43(3)
3.1.1 Building bridges between two estimates
45(1)
3.2 Estimate and Schedule Maturity Assessments (or health checks)
46(8)
3.2.1 Estimate Maturity Assessment (EMA)
46(5)
3.2.2 Schedule Maturity Assessment (SMA)
51(1)
3.2.3 Cost and Schedule Integration Maturity Assessment (CASIMA)
52(2)
3.3 Good Practice Spreadsheet Modelling (GPSM)
54(15)
3.3.1 Level of documentation (T, M)
55(1)
3.3.2 No hidden worksheets, columns or rows (T, M)
55(1)
3.3.3 Colour coded cells and worksheet tabs (U, S)
56(3)
3.3.4 Locked calculation cells and protected worksheets and workbooks (S)
59(1)
3.3.5 No hard-coded constants unless axiomatic (M)
59(2)
3.3.6 Left to Right and Top to Bottom readability flow (U)
61(2)
3.3.7 Avoid data generated by macros ... Unless there is a genuine benefit (S, T)
63(1)
3.3.8 Avoid Array Formulae (T, U, M)
63(1)
3.3.9 Avoid dynamic links to external data (S)
64(1)
3.3.10 Use Named Ranges for frequently used table arrays (M, U)
65(1)
3.3.11 Use full syntax within Excel (M)
66(1)
3.3.12 Break complex calculations into smaller simpler steps (T, M)
66(1)
3.3.13 Column and row alignment across worksheets (T)
66(1)
3.3.14 Unambiguous units of measure (U)
67(1)
3.3.15 Input data validation (U)
67(1)
3.3.16 Independent model verification and validation (S)
67(2)
3.4 Inherent Risk in Spreadsheets (IRiS)
69(3)
3.5
Chapter review
72(2)
References
73(1)
4 Primary and Secondary Drivers; Accuracy and precision
74(19)
4.1 Thank goodness for Juran and Pareto
74(1)
4.1.1 What's the drive behind the Drivers?
74(1)
4.2 Primary Driven
75(2)
4.2.1 Internal and external Drivers
76(1)
4.3 Secondary Drivers
77(1)
4.4 Practical issues with Drivers
78(5)
4.4.1 Sub-classification of Primary Drivers
81(1)
4.4.2 Avoid pseudo-drivers
82(1)
4.4.3 Things are rarely black or white
83(1)
4.5 Accuracy and precision of Primary and Secondary Drivers
83(5)
4.5.1 Accuracy, precision and Drivers -- A Pareto perspective
86(1)
4.5.2 Cone of Uncertainty
86(2)
4.6 3-Point Estimates as a measure of relative accuracy and uncertainty
88(1)
4.7 Precision as an expression of appropriate or inappropriate exactness
89(2)
4.8
Chapter review
91(2)
References
92(1)
5 Factors, Rates, Ratios and estimating by analogy
93(42)
5.1 Estimating Metrics
93(3)
5.1.1 Where to use them
94(1)
5.1.2 The views of others
95(1)
5.1.3 Underlying Linear Relationship
96(1)
5.2 Rates
96(5)
5.3 Factors
101(4)
5.4 Ratios
105(1)
5.5 Dealing with multiple Rates, Factors (and Ratios)
106(17)
5.5.1 Anomalous analogies
107(2)
5.5.2 Analogies with an additive model
109(7)
5.5.3 Analogies with a multiplicative model
116(7)
5.6 Sensitivity Analysis on Factors, Rates and Ratios
123(10)
5.6.1 Choosing a Sensitivity Range quantitatively
123(2)
5.6.2 Choosing a Sensitivity Range around a measure of Central Tendency
125(4)
5.6.3 The triangulation option
129(1)
5.6.4 Choosing a Sensitivity Range around a High-end or Low-end Metric
129(1)
5.6.5 Choosing a Sensitivity Range when all else fails
130(3)
5.7
Chapter review
133(2)
References
134(1)
6 Data normalisation - Levelling the playing field
135(63)
6.1 Classification of data sources - Primary, Secondary and Tertiary Data
137(4)
6.1.1 Primary Data
137(1)
6.1.2 Secondary Data
138(1)
6.1.3 Tertiary Data
139(2)
6.1.4 Quarantined Data
141(1)
6.2 Types of normalisation Methods and Techniques
141(1)
6.3 Normalisation can be a multi-dimensional problem
142(11)
6.3.1 Error related
143(1)
6.3.2 Volume, quantity or throughput related -- Economies of Scale
143(2)
6.3.3 Scale conversion - Fixed and Variable Factors
145(2)
6.3.4 Date or time related
147(1)
6.3.5 Life Cycle related
148(2)
6.3.6 Key groupings - Role related
150(1)
6.3.7 Scope related (subjective)
151(2)
6.3.8 Complexity -- Judgement related (subjective)
153(1)
6.4 The estimator as a time traveller
153(25)
6.4.1 Use of time-based indices `Now and Then'
154(5)
6.4.2 Time-based Weighted Indices
159(6)
6.4.3 Time-based Chain-linked Weighted Indices
165(4)
6.4.4 The doubling rule for escalation
169(3)
6.4.5 Composite Index: Is that not just a Weighted Index by another name?
172(1)
6.4.6 Using the appropriate appropriation approach
173(5)
6.4.7 Use of time as an indicator of other changes
178(1)
6.5 Discounted Cash Flow -- Normalising investment opportunities
178(14)
6.5.1 Discounted Cash Flow -- A form of time travel for accountants
178(3)
6.5.2 Net Present Value (NPV)
181(7)
6.5.3 Internal Rate of Return (IRR)
188(3)
6.5.4 Payback Period
191(1)
6.5.5 Strengths and weaknesses of different DCF techniques
191(1)
6.6 Special types of formulaic normalisation techniques
192(1)
6.7 Layering of normalisation for differences in analogies
193(3)
6.8
Chapter review
196(2)
References
197(1)
7 Pseudo-quantitative qualitative estimating techniques
198(8)
7.1 Delphi Technique
198(2)
7.2 Driver Cross-Impact Analysis
200(4)
7.3 A brief word or two about solution optimisation
204(1)
7.4
Chapter review
205(1)
References
205(1)
8 Benford's Law as a potential measure of cost bias
206(9)
8.1 Scale Invariance of Benford's Law
210(2)
8.2 Potential use of Benford's Law in estimating
212(2)
8.3
Chapter review
214(1)
References
214(1)
Glossary of estimating and forecasting terms 215(19)
Legend for Microsoft Excel Worked Example Tables in Greyscale 234(1)
Index 235
Alan R. Jones is Principal Consultant at Estimata Limited, an estimating consultancy service. He is a Certified Cost Estimator/Analyst (US) and Certified Cost Engineer (CCE) (UK). Prior to setting up his own business, he has enjoyed a 40-year career in the UK aerospace and defence industry as an estimator, culminating in the role of Chief

Estimator at BAE Systems. Alan is a Fellow of the Association of Cost Engineers and a Member of the International Cost Estimating and Analysis Association. Historically (some four decades ago), Alan was a graduate in Mathematics from Imperial College of Science and Technology in London, and was an MBA Prize-winner at the Henley Management College ( that was slightly more recent, being only two decades ago). Oh, how time flies when you are enjoying yourself.