Tag: Galorath Services

Analyzing Vendor Proposals with Galorath Estimation Success Packages

A large countrywide telecommunications service provider in India needed a framework to evaluate vendor proposals. The IT group within this company was responsible for maintaining and enhancing the IT infrastructure that supports all the business processes within the organization. Most of the work was outsourced to vendors and the group had the responsibility to evaluate the proposals and select the best option.

The Challenge

The organization had a team in charge of managing the vendor proposals. This evaluation team receives an estimate from the vendor that contains a representation of the work to be executed as well as an associated fixed price cost; however, there appeared to be inconsistencies in the bottoms up estimates provided by the vendors. Therefore, this company wanted to improve the estimation maturity and was seeking for a software solution that allows them to evaluate the vendor provided estimates for reasonableness.

Our Solution

The organization contacted Galorath and promptly adopted one of the Galorath Estimation Success Packages. A Galorath senior consultant guided this organization thru the estimation maturity self-assessment process. The assessment revealed that the organization was mostly following “ad-hoc” processes for their evaluations and revealed the areas of highest criticality that needed to be improved.

Galorath developed a remediation plan which included the SEER-SEM parametric estimation tool, Function Points and estimation training as well as the adoption of the Galorath estimation process catalog. Galorath worked with the organization to implement these recommendations and to ensure a seamless adoption of the new processes and tools.

The Result

The organization adopted a formal “Should Cost” evaluation process based on the SEER-SEM tool and requested that the vendors also adopt the SEER-SEM tool. The customer and the vendors now speak a common language and successfully negotiate the proposals using SEER-SEM. The proposal evaluation process now flows smoothly as the vendor comes to the table with a SEER-SEM estimate and the customer has a process in place to evaluate the model.

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Putting a Man on Mars: New Technology Requires New Cost Estimates

In the next few decades, NASA plans to implement human missions to Mars. This is an enormous challenge and will require the development of innovative technologies. Two of these are the use of crewed launch vehicles that use nuclear thermal and solar electric propulsion.

The Challenge

The task was to develop an independent cost estimate for a crewed vehicle that uses nuclear thermal propulsion. Due to the lack of historical precedent and a lack of recently-developed launch vehicles, cost estimating is challenging. A NASA team researching this task asked Galorath to use their space cost estimating expertise to develop a credible estimate.

Our Solution

Galorath personnel faced a similar problem when developing cost estimates for the Constellation program a decade ago, which planned to send human crews to the Earth’s moon and then on to Mars. Comparable launch vehicle programs were decades old, and there were new technologies and new challenging configurations. For that program, Galorath developed a semi-parametric method that combined analogies with statistical studies of trends in the cost of developing technologies, productivities, types of structures, and other factors to develop credible estimates for the program. Galorath applied the same approach to develop a cost estimate for the nuclear thermal powered crewed vehicle.

The Result

Even though these technologies are a decade away from maturity, the ability to develop credible estimates for challenging problems like these provides confidence that such solutions can be implemented while being affordable. That such technologies are financially viable enables decision-makers to invest in these technologies secure in the knowledge that they are not wasting taxpayer dollars on something that is prohibitively expensive.

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Using the Galorath Team to Create ‘Job Shop’ Estimation Efficiencies

A moderately sized company that delivers precision machined parts to the Aerospace market needed better cost estimating tools to more quickly and accurately assess costs and the competitive price for work packages they were pursuing.

The Challenge

The company was a “Job Shop” competing for relatively small quantity runs. The number of estimates and the complexity of the products required considerable effort from senior assets to accurately estimate the effort. This company also has specialized equipment and processes that give it a competitive advantage. The challenge was to create a quick and accurate bid package that required a minimum amount of effort from subject matter experts and management.

Our Solution

The solution chosen was SEER-MFG augmented with the SEER 3-D modeling extension. SEER 3-D takes the features of engineering models (Engineering CAD Models) and maps them into the SEER-MFG estimating model in a matter of seconds. The simple customizing capabilities inherent to SEER-MFG and SEER 3-D were used to tune and calibrate SEER to their specific capabilities.

The Results

After spending approximately one day training on the SEER 3-D tool, custom manufacturing environments, machine tool descriptions, cutter descriptions, and K-Bases were created for a specific, very high-performance machine in their shop. Blind SEER estimates were run on historically successful parts and projects. Results from SEER were very close to the historical actual data. In at least one case, the SEER estimate was less than 3% variance to the actual data.

These users found the opportunity to confidently create accurate estimates far more quickly than their standard process had been previously.

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Should Cost Estimating in the Supply Chain

Value Engineering identifies targets for potential cost reductions. Generally, the major operating expense of contractors in the Aerospace and Defense market is the procurement of materials, products and services. The Supply Chain organization is a logical choice to own and drive Value Engineering initiatives in the organization.

The Challenge

The Supply Chain management of a major Aerospace and Defense contractor was directed to implement Value Engineering for all the Supply Chain organizations across multiple business sectors in the company. The company staffed a corporate Value Engineering Center of Excellence. The contractor had the internal engineering and contract resources, but the client needed to develop the capability to generate defendable Should Cost estimates.

The Solution

The contractor’s engineering team chose Galorath Engineering Services to train internal resources to use SEER-H and SEER-MFG to generate estimates. The team chose to outsource should cost estimating to Galorath Engineering Services while developing internal estimating capabilities.

The Results

Outsourcing the estimating produced significant savings over a 3-year period of performance.

Should Cost Performance Year 1 Year 2 Year 3
Client Total Cost (SW, Training & Services) $355,680 $390,602 $348,144
Total P.O. Value of Hardware, Estimated $44,785,898 $107,616,037 $226,264,637
Net Savings with (SW, Training & Service Cost) $2,725,901 $8,722,089 $7,967,283
Savings is based on a 50% success rate (half of the estimates saved at least 10% of the vendor’s proposed cost)

Outsourcing was self-funding. The savings in the first quarter of year 1 paid for the expenses in that quarter. The cost model was the deliverable for each estimate. Outsourcing produced a library and source of real world estimates for the client’s current and new internal estimators.

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