Analogy Technique

1
Analogy Technique

• Chapter 11

2
Analogy - Method

• Comparative analysis of similar systems
• Adjust costs of an analogous system to estimate
  the new system
• Adjustments could be based on
• Programmatic information
• Physical characteristics
• Performance
• Government vs. Commercial practices
• Contract specifics
• Economic trends

3
Description

• Analogy estimates are usually characterized by
  use of a single historical data point serving as
  the basis for a cost estimate.
• Use of this methodology is considered risky
  because the historical data is too limited to
  allow statistical estimating.
• The analogy is an estimate based on a relative
  scaling of a historical data point.
• New program cost (scaling factor) x (old
  program cost)
• The scaling factor should not simply be a point
  estimate, but rather a most likely range.
• Provides uncertainty information.
• The analogy technique is most useful when the new
  system is primarily a new combination of existing
  subsystems for which recent historical cost data
  are available.
• Also useful in early milestone, ill-defined
  programs, and as a check on estimates used by
  other methods relatively quick to do!

4
Analogy - Application

• Used early in the program life cycle
• Data is not available to support using more
  detailed methods
• Not enough data exists for a number of similar
  systems, but can find cost data from a single
  similar system
• The best results are achieved when
• Similarities between old and new systems are high
• Adjustments can be quantified
• Subjective adjustments are minimized
• Can be used as a cross check for other methods

5
How to Develop an Analogy

• Using a known items value, apply quantified
  adjustments to that item which measure the
  differences when compared to the new.
• This requires good actual data and someone to
  quantify the differences.
• Recent historical data should be similar not only
  in performance characteristics, but also similar
  from the standpoint of manufacturing technology.
• Questions to ask when assessing the relative
  differences between the old and the new item
• How much different is the new compared to the
  old?
• What portion of the old is just like the new?
• How many components will be exactly the same?
• What is the ratio of complexity between the two
  systems?

6
Analogy Estimating Technique

• Cost Estimating Method by which we assume our new
  system will behave cost-wise like a similar
  historical system
• Define the new system in terms of
• -- Design or Physical Parameters
• -- Performance Characteristics
• -- Known Similar System(s)
• Develop a WBS for the New and Historical System
• Map Historical System WBS to New System WBS so
  they look similar
• Obtain Data on Historic Systems Design,
  Performance and Cost.
• -- CY?
• -- Learning Curve?
• -- Any burdens that need to be removed?

7
Utility of Analogy Technique

• Many new programs consist of modified or improved
  versions of existing components, combined in a
  new way to meet a new need.
• In the analogy technique we break the new system
  down into components (usually via a WBS) that can
  be compared to similar existing components.
• The basis for comparison can be in terms of
  capabilities, size, weight, reliability, material
  composition, or a less well-defined, but often
  used, term, complexity.
• When production and development cost estimates
  are needed, the analogy technique offers several
  approaches.
• Separate development and production estimates,
  each based on data related specifically to
  development and production.
• Production estimates based on production data,
  then use historical ratio factors to estimate
  development costs.

8
Analogy Its like one of these

• Attribute Old System New System
• Engine F-100 F-200
• Thrust 12,000 lbs 16,000 lbs
• Cost 5.2M ?
• Q What is the unit cost of the F-200?
• A 5.2M (16,000/12,000) 6.9M

Tip The mischief in analogy most often arises
in the adjustment. Why do we so readily believe
a linear relationship on weight which passes
through the origin?