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Schedule and Cost Growth

Background. At the MDA* Risk Working Group of 29/30 May 01, Schedule Risk was a major topicAction Item:Investigate Schedule Risk Content variation Cost risk* PERTTime and budget constraints* The subject of this paper. This work was conducted for and funded by the IC CAIG and MDA. The Hyp

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Schedule and Cost Growth

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    1. Schedule and Cost Growth R. L. Coleman, J. R. Summerville, M. E. Dameron 35th ADoDCAS

    2. Background At the MDA* Risk Working Group of 29/30 May 01, Schedule Risk was a major topic Action Item: Investigate Schedule Risk Content variation Cost risk* PERT Time and budget constraints * The subject of this paper

    3. The Hypothesis Many people believe1 a graph of cost growth vs. schedule growth as illustrated below:

    4. The Data We analyzed data from the RAND Cost Growth Database with both the following characteristics: Programs with E&MD only Because growth is different for those with and without PDRR Programs with schedule data in the requisite fields There were 59 points. The analysis follows.

    5. Descriptive Statistics for Schedule Growth We will look at these descriptive statistics in the following slides Distribution shape Scatter plots Dollar weighting

    6. Schedule Growth Distribution

    7. Basic Statistics of Schedule Change Analyzed data only Mean 1.29 Standard Deviation 0.54 CV 42% 75th %-ile 1.46 61st %-ile 1.29 50th %-ile 1.11 25th %-ile 1.00 Shrinkers 9/59 15.3% Steady 12/59 20.3% Stretchers 38/59 64.4%

    8. Basic Scatterplots – SGF & Sked vs. Dollar Size

    9. The “1/x Pattern”

    10. CGF and SGF vs. Cost Size

    11. Basic Scatterplots – Dollar Size vs. Length

    12. Basic Scatterplots – Length vs. $ Size

    13. Basic Scatterplots – Cost Growth

    14. Basic Scatterplots - Length

    15. Weighting by Length- and Dollar-Size

    16. Sorted Graphs

    17. Correlation and Other Joint Effects

    18. Correlation and Other Joint Effects Between Schedule Growth and Cost Growth We will look for correlation Parametric Non-parametric Trends in sorted data We will investigate the hypothesis for schedule growth vs. cost growth We will normalize by dollar size to eliminate any inadvertent distortion

    19. Correlation - Parametric

    20. Correlation – Non-Parametric Test Cox Stewart Test for Trend test statistic of 18 is within the critical values of 8.41 and 18.59 The non-parametric test cannot reject no correlation Used CGF Sort because CGF had less ties, thus less ambiguity Previous parametric test cannot reject no correlation Moving averages of CGF do not show a rise Conclusion: Cannot reject “no correlation” Visual presentations follow

    21. Patterns in SGF and CGF

    22. Investigating the Hypothesis

    23. CGF by Regime

    24. CGF by Regime

    25. There is a Pattern but Is There a Curve?

    26. Is there a curve? There is no pattern on either side of the data

    27. Is there a Curve?

    28. Normalizing for Dollar Size To Remove Inadvertent Dollar Size Distortion

    29. Size Normalization We know there is a size effect in CGF We think there is a size effect in SGF We must investigate schedule effects free from size effects First we will look at a scatter plot Then we will normalize1 all programs for dollar size, and compare to actuals If there is a pattern in any regime, we will worry If there is no regime pattern, we can conclude there is no dollar size distortion We chose to correct out dollar-size because it is stronger, and because we were worried about a length and SGF correlation causing mischief if we tried to correct it out

    30. Is there a Dollar-Size Bias?

    31. Normed vs Actual CGFs by Regime

    32. Normed vs Actual CGFs by Regime

    33. Correction Factors We must correct for schedule growth, if we can predict it. The form of the correction is unclear:

    34. Hypothesis – The Answer The Hypothesis was about right The below is all we can say for sure Some liberties have been taken with the graph

    35. Conclusions Schedule growth is less extreme than cost growth But patterns are the same There is a cost-size and length effect, just as for cost growth Dollar-larger programs lengthen less Longer programs lengthen less Neither cost nor length predict the other There is a difference in cost growth by schedule-growth regime Relative to Relative to Regime CGF No Change Average Programs that shorten 1.42 1.25 1.14 Programs that stay the same 1.13 1.00 0.91 Programs that lengthen 1.24 1.09 1.00

    36. Modeling Schedule Duration of Networks

    37. Schedule Growth Distributions

    38. Best Fits vs. Empirical Data

    39. Why are Values of 1 more Common? And who cares? There is intense pressure to complete on time, and late finishes are easily discerned The consequence of an early finish is to “ship” a flawed system Flaws can be fixed after testing There is a temptation to drag out work if you are done early Perhaps the implication is that the customer should put less emphasis on finish time and more on test results? In any event, it is altogether likely that there would be cosmetic 1.0 SGFs, and the data would seem to reflect that We will find a way to deal with this in the analysis, and recommend a modeling approach

    40. Extreme Value Distribution Fit The CDF of the data is oddly shaped due to a large number of 1.0’s and fails a Kolmogorov-Smirnov test for the Extreme Value Distribution We believe the disproportionate amount of 1.0’s is politically motivated and not a natural occurrence This causes a “gap” between the empirical and fitted distributions We will next examine a hypothetical distribution with the 1.0’s redistributed along the “gap” area (using the Ext Val fit)

    41. The Hypothetical “Natural” CDF

    42. What the test shows And what it doesn’t show The redistributed data pass a K-S test But, the test cannot take the redistribution of data into account This is analogous to loss of degrees of freedom, but the literature provides no remedy We fully realize that this is not a “valid statistical test” But it strongly suggests that the underlying distribution is the Extreme Value distribution

    43. Hybrid Distribution Alternative The hypothetical natural (re-distributed) distribution is reasonable for use But, if you wish to capture the effects of too many programs appearing to finish “on schedule” then a hybrid distribution should be examined To do this we must consider the probability of 1.0 vs. the rest of the outcomes as discrete cases P(1.0) = 12/59 = 20.3% P(Extreme Value) = 79.7% The Extreme Value parameters would then be estimated from the data with the 1.0’s removed

    44. Hybrid Distribution Alternative

    45. Distribution Conclusions We have shown that the Extreme Value distribution is well supported as the natural distribution We have shown that the pieces of the hybrid distribution fit the data And, the hybrid reproduces the actuals well We recommend using the hybrid But if “political” or “cosmetic” effects are absent, we recommend using the hypothetical natural distribution

    46. Backup

    47. Size Adjustments

    48. Prediction Equation - RAND RDT&E

    49. Prediction Equation - RAND RDT&E

    50. Dispersion – Bounds

    51. Dispersion – Bounds

    52. Basic Statistics of Schedule Change All available schedule data compared to analyzed data Statistic Analyzed All Observations Mean 1.29 1.25 Standard Deviation 0.54 0.51 CV 42% 41% n 59 98 75th %-ile 1.46 1.365 %-ile of the mean 61% 63% 50th %-ile 1.11 1.03 25th %-ile 1.00 1.00 Shrinkers 15.3% 20.4% Steady 20.3% 22.4% Stretchers 64.4% 57.1%

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