How is the Solution Based Estimation approach applied at CGI and how does this improve the set-up and verifiability of primary estimates.

1. © CGI Group Inc. CONFIDENTIAL
Estimation – part of an organisation’s DNA
Solution Based Estimation (SBE)
March 10, 2015
Eric van der Vliet

2. CGI is a global end-to-end IT and business
process services leader
World’s 5th largest independent IT and BPS firm
100+ mission-critical
IP-based
solutions
$10B
annual revenue
4,500 clients
across the globe
68,000 professionals,
75% shareholders
High-end business and
IT consulting
400 offices,
40 countries
around the world
System integration,
IT and business process
outsourcing
9/10
client satisfaction score for the
past 10 years

3. MIDDLE EAST AND AFRICA
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4. Onshore, nearshore and offshore integrated
global delivery network
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Moncton, NB
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5. CGI Estimation Centre
• Tasks
• Verify primary estimates (2nd Estimates)
• Metrics collection and analysis
• Improve primary estimates
• Objectives
• More accurate and precise estimates
• Improved project control
• Use of historical data
• My Role
• Operation in Europe, Asia-Pac
• Estimation improvement corporate
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6. Solution Based Estimation

7. How it should not work
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8. • Resourcing
• Risk management
• Project control
• Collection of actual data
Estimation in the project life cycle
• Scoping
• Solution defined by architects
• First cost indication (ROM)
EAS
Solution
Estimates
Project
execution /
control
Metrics
collection
• Solution based estimates
• Standard solution elements
• Fixed unit costs
• Parameter based costs
• WBS based estimates
• Collect and analyze actual data
• Maintain data as input for new estimates
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9. Impact of Architecture on Project Control
Quantified by research*
Result Improvement by applying Solution Architecture
Budget predictability 2-3 x better Std dev 32  13
Budget overrun 7 x less 22%  3%
Time overrun 6 x less 48%  8%
Troubled projects 3 x less 38%  13%
Customer satisfaction 1-2 points better 10 point scale
Results delivered +10%
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*Survey among 49 software development projects between
€50,000 and €2,500,000. Reported by Raymond Slot, PhD
Thesis, 2010.
Specifically correlated with presence of architect and defined solution
architecture during budget calculation

10. Project/Delivery Manager
Project Manager
Cost EngineerSolution Architect
Estimating effort
Responsibilities
Client
Business
Issues
Funct
Reqs
Non
funct
Reqs
Targeted
solution
SBS
Architect
ure
Costing
model
WBS Schedule
Delivery
strategy
Financial
model
Pricing
model
Capacity
planning
Financial
Engineer
Business Owner
Client
Business
Issues
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11. Solution Based Estimation
• Solution Architecture and Estimation are strongly related
• The solution architect is responsible for the solution costs
• The architect can be supported by a cost engineer
• Solution Based Estimation requires
• Solution Breakdown Structure (SBS)
• Estimation of each element in the SBS
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EAS
Solution
Estimates
Project
execution /
control
Metrics
collection

12. Solution Breakdown Structure (SBS)
• The SBS is a deliverable-oriented decomposition of the work
• Is a view on the architecture during architectural design
• Includes the overall solution
• Infrastructure
• Package implementation
• Development
• Services
• Each component
• Should be clearly and completely defined
• The requirements should be identified
• Can have it’s own estimation approach
• Can have a different implementation approach
• Will have an assigned responsibility
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13. Solution Breakdown Structure - Example
• Estimate the costs for each element in the SBS
• Activity based costs (WBS)
• Fixed unit costs
• Parameter based costs
Solution
Infrastructure Tools MaintenanceApplications
$
$ $ $ $
Appl-1 Appl-2 Appl-3$ $ $
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14. Estimation Classification
Primary
characteristics
Secondary characteristics
Estimate class Maturity level of
solution definition
(% of completion)
End Usage
Typical purpose of
estimate
Methodology
Typical estimating
method
Expected
accuracy range
Typical variation in
low and high range
Class 5 0 to 2% Solution concept
verification
ROM L: -20% to -30%
H: +30% to +50%
Class 4 1 to 15% Solution selection Unit costs;
Parameters
L: -10% to -20%
H: +20% to +30%
Class 3 10 to 40% First Solution
Review
WBS; Unit cost;
Parameters
(high level)
L: -5% to -15%
H: +10% to +20%
Class 2 30 to 75% Bid stage,
semi detailed
WBS; Unit cost;
Parameters
(assumptions)
L: -5% to -10%
H: +5% to +15%
Class 1 65 to 100% Post bid, project
start, project
change
WBS; Unit cost;
Parameters
(detailed level)
L: -3% to -5%
H: +3% to +10%
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Based on: AACE International Recommended Practice No. 56R-08; Rev. December 5, 2012;
TCM Framework: 7.3 – Cost Estimating and Budgeting

15. SBS => WBS
SBS-item-1
SBS-item-2
SBS-item-3
SBS-item-4
SBS-item-5
SBS-item-n
Processtep-1
Processtep-2
Processtep-3
Processtep-4
Processtep-5
Processtep-6
WBS
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Solution
Infrastructure Tools MaintenanceApplications
Appl-1 Appl-2 Appl-3
Delivery
strategy

16. Fixed unit costs / Parameter based costs
Input
(Solution Breakdown)
Parameters /
Metrics
Standard
components
Estimation
Tooling
Reporting
(Effort, Duration, Costs,
Probability, Labor, Quality)
Estimation process
Metrics process
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17. Parameter based costs – Infra example
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18. Parameter based costs – example
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19. Summary
• Start with a Solution Breakdown Structure before estimating the costs
• Make the SBS part of the architectural design
• Maturity level of the SBS determines the accuracy of the estimates
• Define the right estimation approach for each SBS element
• Verify the traceability from estimate to the solution and vice versa
• Treat the cost model, financial model and pricing model separately
• Costs can’t be reduced by just reducing the estimates
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20. Thank you!
eric.van.der.vliet@cgi.com
Tel. 06-12872250

21. Our commitment to you
We approach every engagement with one
objective in mind: to help clients succeed
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