Agile Program Management and Cost Estimating: A Winning Combination

Since emerging in software development in the late 1990s, agile program management has revolutionized projects execution. The agile process emphasizes flexibility, adaptability, and continuous improvement. As agile grows throughout the public sector, it is worth looking at some of the key tenants of the process and how they can improve cost estimating outcomes for customers. By incorporating agile principles, organizations can reduce turnaround times for estimates, incorporate estimating results earlier in the acquisition process, reduce risks, and improve overall project outcomes.

Benefits of Agile Program Management for Cost Estimating:

• Cross-functional team integration: By engaging regularly with program management, engineering, and logistics teams, in addition to the typical schedule and risk integration, estimators can hear requirements from SMEs as they are being set. This means estimators can better judge the uncertainty in technical input and help program managers proactively manage cost risks and opportunities early.
• Iterative and Incremental Development: Traditionally the work of cost estimators really begins when scope documents, such as a Cost Estimating Baseline Document or Cost Analysis Requirements Document, have been drafted. Breaking down the project into smaller increments and estimating as requirements become available spreads the estimating efforts more evenly throughout the acquisition lifecycle. If implemented aggressively, it also reduces the lifecycle estimate timeline, which is particularly beneficial as the life cycle cost estimate is often one of the last acquisition documents to be developed under a waterfall approach. 
• Continuous Improvement: Estimators in an agile framework continually update and refine the estimate as better inputs become available. The waterfall approach is slower; improving the estimate is either delayed until the next estimate update cycle or the development cycle is extended, delaying the program. 
• Customer Collaboration: By establishing a regular drum beat with program managers, the estimating team can feed the cost estimates for the individual elements of the program as they become available. This way, the estimating team gets early buy-in on ground rules and assumptions, data sources, and methodologies. It can be overwhelming to try to understand an entire estimate at one time; spreading these meetings out allows for better feedback and enhances cost transparency.

When all these agile tenants are applied to the estimating environment, cost estimates become powerful decision-making tools for program managers. Not only can developmental timelines for estimates be shortened, but customers can better understand their estimates and have more opportunities to shape them. By being briefed on cost estimates while decisions are still being made, program managers and technical teams can adjust requirements that drive costs before those requirements gain inertia. An agile framework also provides a strong foundation for efforts that seek to reduce cost overruns, such as design to cost and cost as an independent variable and incorporate costs to a greater extent in decision making at every stage of the acquisition lifecycle.

Conclusion

All programs should consider incorporating the agile program management process into their estimating work to reduce development timelines, increase transparency, and reduce risks. In combination with our Adaptive integrated Business Operations (AiBO) offering and Performance Optimization line of business, LMI implements agile management frameworks across a wide range of program offices whether they are software programs or not.

For more information on how to incorporate agile for your customer, contact LMI’s Program Planning & Investment Management Subservice line VP Mark McAlister, or Cost Estimating and Analysis community of practice lead, Benjamin Thomas.