Estimation: Cost Management for IT Projects

Friday 6 May 2016 (1 day course)

Registration 8.45 for 9.00 start. Finishing around 5pm.

BCS, 1st Floor, The Davidson Building, 5 Southampton Street, London, WC2E 7HA | Maps
(Approximately 10 minutes walk from Waterloo Station and Charing Cross Station)

BCS Members: Free of charge
Non-Members: £40.00 (including VAT @ 20%)

Tom Gilb Hon FBCS

If you book, and are unable to attend, please cancel your booking via the BCS site and also contact Soheir Ghallab, who is our committee member looking after Tom’s courses. There is normally a waiting list for Tom’s courses.

1 day

Cost to attend:
BCS Members: Free of charge
Non-Members: £40.00 (including vat @ 20% )

Please bring, if possible, a laptop or tablet etc so you can access fully the presentation.


Practical new tools for mastering all resources: short term (during development), Longer term (lifetime technical debt). Money, Time and human resources.


Traditional cost estimation for IT Projects and Operational IT Systems fail us repeatedly and embarrass us.

Our opinion is that his failure of keeping time and budget commitments is unnecessary. There are many well proven, but too little known, methods to avoid the problem.

The methods are simple common sense. Learn to live within your means.

We are going to present several, related and complimentary methods for mastery of the cost problem. These cost control methods are more responsible and more realistic than traditional failed methods. The methods are more robust in the face of uncertainty, change and risks. The cost-management methods are tightly tied to corresponding delivery of stakeholder value. It is structurally difficult to spend too much and not get value for money.

1.1 Purposes: What are the real purposes of cost estimates?

  • Avoiding Budget overrun.
  • Avoiding Deadline overrun.
  • Competitive Fairness.
  • Getting Value for money: Profitability

1.2 Problems: What are the problems, difficulties and risks associated with cost estimations?

  • Changes and additions after the estimates.
  • Different Architecture and different architecture implementation.
  • Human capability differences in implementation
  • Estimation of too large delivery modules.
  • Motivation to increase earnings of suppliers
  • Hiding long term operational costs by reducing short term building costs

1.3 Tools: Overview of our multiple tools for estimation.

  • Decomposition into smaller value delivery modules
  • Prioritization by value for money, and risk levels
  • Design to Cost in the large (architecture)
  • Dynamic Design to Cost after small feedback cycles wrt value delivered and costs incurred
  • Impact Estimation Tables: numeric engineering of multiple cost drivers, esp. qualities.

1.4 Experiences: and cases with our estimation methods.
IBM Cleanroom; Mills and Quinnan.
Quality Delivery and competitiveness for over a decade
Citigroup case: Richard Smith.

1.5 Policies: Management Policies regarding estimation and cost management.

  • Values for costs management.
  • Small value delivery management
  • Supplier Contracts adjusted based on incremental experience (Flexiblecontracts)
  • Value Prioritisation
  • Risk Management
  • Dynamic Design to Cost

1.6 Pitfalls and dangers

Pitfalls with conventional estimation methods

  • No quality or value quantification driver management
  • No simultaneous consideration of multiple conflicting value or quality requirements
  • No differentiation between constraints and targets of critical cost drivers
  • Reliance on volume of functions/function points/user stories/use cases as cost driver
  • No management of architecture costs

Pitfalls with any estimation method, including ours

  • Failure to measure and pilot before scaling up
  • Failure to control suppliers with smart contracts
  • Failure to make sure value actually delivered is the basis for continuing the project
  • Failure to plan, quantify and architect for long term operational and change costs (technical debt management)

About Speaker: Tom Gilb Hon FBCS

Tom Gilb joined IBM in 1958. He has been an international consultant and teacher for 55 years. Written 10 published books. Competitive Engineering (2005), and Value Planning (2016). Developed advanced methods for developing systems of any kind, with emphasis on IT systems and High Quality systems.

He is Honorary Fellow of BCS. See

Tom Gilb and Kai Gilb

Tom Gilb and Kai Gilb have, together with many professional friends and clients, personally developed the Agile methods they teach. The methods have been developed over five decades of practice all over the world in both small companies and projects, as well as in the largest companies and projects. Their website offers free papers, slides, and cases about Agile and other subjects.

There are many organisations, and individuals, who use some or all of their methods. IBM and HP were two early corporate-wide adopters (1980, 1988). Recently (2012) over 15,000 engineers at Intel have voluntarily adopted the Planguage requirements specification methods; in addition to practicing to a lesser extent Evo, Spec QC and other Gilb methods.

Many other multinationals are in various phases of adopting and practicing the Gilb methods. Many smaller companies also use the methods. They have advised top management at UK Companies on Business Agile in 2013 and earlier.